Music Hardware - 2020 OP2

A. Agenda
The purpose of this document is to review the 2020 Music Hardware OP2, discuss changes 2020 OP2 Timeline - Music Infrastructure
versus OP1 and align on next steps prior to finalizing in the AWS Continuous Planning Tool Date Milestone
(CPT). We are working backwards from a CPT load deadline on 12/6/19, these figures will 12/4/19 Internal Infra Review (Alok, Kelly)
12/6/19 CPT Load Deadline (Prelim)
be used for a Dan Jedda - DAC Infrastructure review on 12/12/19. Following the DAC
12/6/19 Narratives Due
review, we have a brief window to make final adjustments prior to a final CPT lock on 12/12/19 DAC Infra Review (Dan Jedda)
12/17/19. As we will be held accountable to these figures throughout 2020 we are looking 12/17/19 CPT Load Deadline (Final)
to:

1. Confirm we are comfortable with the proposed Amazon Music budget and the increases vs. OP1 (Kelly, Alok)
2. Obtain sign-off at a Fleet level that each team can manage 2020 activity within their budget (Tech STOs). Detailed reviews
have been completed with Metrics, Search and Applied Science Fleets. Fleet specific details will be distributed follow
today’s discussion (appendix 8)
3. Validate AWS product level requirements for capacity planning (Abhilash, Ian)

B. Planning Process
Baseline hardware expense is derived at a Fleet/AWS Product level by applying forecasted metric driver growth to recent usage
trends. Seasonality including peak period ramps are considered to derive the baseline forecast. During the OP2 planning process we
asked Fleet teams to provide 2020 proposed projects that will drive incremental hardware expense, surface cost savings ideas and
confirm drivers of expense by AWS product. Planned project and cost savings activities are then applied to the baseline forecast to
develop our 2020 OP2 plan (appendices 1-3 for details).

C. OP2 Summary
Music Hardware Expense for 2020 OP2 (rate neutral-using the ($M) @ 2020 IMR Rates $ Variance - I/(D) % Variance - I/(D)
2020 OP2 2020 OP2
estimated 2020 rate card) reaches $61M, growing $15.5M or 2019 vs. 2020 2020 OP2 2019 vs. 2020 2020 OP2
Fleet Owner 2018 Act Forecast 2020 OP1 2020 OP2 2019 YoY OP1 YoY YoY OP1 YoY
34% vs. 2019. Annual growth compares to 36% YoY growth in Metrics
Search
Dustin
Amlan
$3.7
$4.3
$10.2
$11.3
$9.3
$10.0
$13.7
$11.2
$6.5
$7.0
$4.4
$1.1
$3.5 175%
($0.1) 163%
48%
11%
35%
(1%)
revenue and includes efforts to drive efficiency and implement Voice
Delivery
Julie
Jonathan
$2.9
$2.8
$6.4
$4.7
$8.9
$6.5
$10.1
$6.2
$3.5
$1.9
$1.3
($0.3)
$3.7 118%
$1.5 66%
15%
(5%)
58%
32%

controls as we push to leverage our significant investments in Applied Science

AMC
Gert
Tyler
$0.6
$3.5
$1.9
$3.5
$2.2
$4.0
$4.7
$4.5
$1.2
($0.0)
$2.6
$0.5
$2.9 188%
$1.0 (1%)
118%
12%
156%
30%
Client Services BLR Himanshu $2.2 $2.6 $4.1 $3.0 $0.4 ($1.1) $0.4 21% (26%) 16%
hardware (in 2019 Infra costs are expected to grow at 101% vs Client Services Jonathan $1.0 $2.0 $4.3 $3.0 $1.0 ($1.3) $1.0 96% (31%) 53%
Clients Jonathan $1.2 $1.6 $2.3 $2.1 $0.4 ($0.2) $0.5 30% (7%) 31%
Revenue growth of 53%). Slowing and ultimately reducing Subscriber Meghana $0.2 $0.5 $1.2 $1.2 $0.3 $0.0 $0.7 106% 0% 147%
ALPs Tony $0.1 $0.4 $0.2 $0.6 $0.3 $0.4 $0.2 347% 186% 41%
hardware expense growth will require commitment to Free Tier
Total
Sheron $0.0
$22.7
$0.0
$45.5
$0.0
$53.8
$0.6
$61.0
$0.0
$22.8
$0.6
$7.2
$0.6
$15.5 101% 13% 34%
operational excellence and ownership by each Fleet to deliver Business Drivers
$ Variance - I/(D) % Variance - I/(D)
on expense budgets. 2019
2020 OP2
vs. 2020 2020 OP2
2020 OP2
2019 vs. 2020 2020 OP2
Fleet 2018 Act Forecast 2020 OP1 2020 OP2 2019 YoY OP1 YoY YoY OP1 YoY
Revenue $1,173 $1,799 $2,450 $2,450 626 0 651 53% 0% 36%
Music Hardware expense of $61M reflects a $7.2M (+13%) Avg Customers 27 41 57 59 14 2 18 53% 3% 43%
Total Music Plays 78,636 120,068 184,347 169,531 41,433 (14,817) 49,462 53% (8%) 41%
increase vs. OP1. Increased OP2 expense is driven by the Total Utterances 60,631 67,942 101,078 95,490 7,311 (5,588) 27,547 12% (6%) 41%
Avg Tracks 100 118 137 142 18 5 24 18% 3% 20%
Metrics fleet +$4.4M related to rapid Events growth and a Total Events 1,649,255 3,774,613 7,147,821 9,089,187 2,125,358 1,941,366 5,314,574 129% 27% 141%

rising cost structure. As discussed during our Metrics Fleet Review in October; increased Events (+27% vs. OP1, +141% YoY) and
rising cost/event (COPPA, Coyote projects) represent a $12M headwind, however are mitigated by SQS to Kinesis (~$5M) and Events
Audit/Deprecation (~$3M) projects (see appendix #4).

OP2 expense growth is further impacted by incremental projects from Applied Science (+$2M vs. OP1):

• Personalization ML Models (+$0.8M) - Embedding models (Cuttlefish, DeepCuts) are used to Amazon Music - OP2 Infra Bridge
2020 OP1 $54 Notes
select content for personalized recommender widgets on Browse Home and in marketing Metrics - Events Growth $7 27% Increase
emails, Stations playback, ‘My Discovery Mix’, similar songs/albums/artists lists and Play Metrics - $/Event
Applied Science Projects
Growth $5
$2
COPPA, Coyote

Music. In 2020, they will also be used in personalized search. We will add new and improved Baseline Trend Impact $2
Search, Voice, AMC
(+), Client Services (-)
embedding models to ensemble recommenders to improve the quality of our personalized New Fleets - ALPs, Free Tier $1 ALPs, Free Tier
Voice Personalization Project $1
experiences and increase customer engagement. New models will also help us make ----------------------------------------------------
recommendations responsive to most recent customer feedback (e.g. likes/dislikes). The SQS to Kinesis Migration ($5)
Metrics Events Deprecation ($3)
proposed budget assumes 8 new models (in addition to 4 existing models at $40K per month) Efficiency Improvements ($2)
Scaling Planner,
Flexible Fleets
to be introduced incrementally between January and July at a cost of $10K per month per 2020 OP2 $61
model.
• Mystique Personalized Playlists (+$0.5M) - Personalized playlists are industry table stakes and Amazon Music launched ‘My

1
Music Hardware - 2020 OP2

Discovery Mix’ in Q4 2019 as our first product in this space. We expect to launch two additional personalized playlists in support of a
2020 goal to increase play days per week.
• Supporting New Use Cases in Bist (+$0.3M) – Support additional load caused by teams onboarding and launching new use cases,
we need to scale the Bist service beyond organic growth.
• Bist Experimentation and Development (+$0.2M) - In 2020, we plan to develop more advanced bandit algorithms to improve all
customer experiences that are and will be powered by Bist, such as contextual ranking of content and widgets on Browse Home, the
Play Music CX.
• Music Feature Repository (+$0.2M) - The Music Feature Repository will allow us to use larger feature sets in personalization use-
cases such as content selection and content ranking, which results in a better personalization, e.g. by considering high-value action
features such as likes/dislike.
• Applied Science Experimentation (+$0.2M) - The Amazon Music Metrics team is deprecating Sandpiper and the existing cost for
respective compute resources will be federated to client teams. Our team will need to provision respective EC2 or Sagemaker
capacity to enable the team’s Applied Scientists to continue offline experimentation (excluding Bist).

Additional changes to OP2 are related to new Voice Projects +1M (Intent History, Dynamic Hint System and Customer Profiles) and
the addition/expansion of ALPS and Free Tier emerging Fleets +$1M. Baseline cost increases (+$2M) are offset by efficiency
projects (-$2M).

D. AWS Product Changes

Music Hardware Expense - By AWS Product
From an AWS product standpoint expense growth of $ Variance - I/(D) % Variance - I/(D)
13% vs. OP1 is driven by: 2019
2020 OP2
vs. 2020 2020 OP2
2020 OP2
2019 vs. 2020 2020 OP2
Fleet 2018 Act Forecast 2020 OP1 2020 OP2 2019 YoY OP1 YoY YoY OP1 YoY
•SNS +220% and SQS +93% - Related to the growth of VPC EC2
Public EC2
$8.2
$2.5
$13.5
$5.5
$18.0
$7.1
$14.3
$11.1
$5.3
$2.9
($3.7)
$4.0
$0.8
$5.6
64%
116%
(21%)
56%
6%
103%
Events. Long term; the Kinesis Migration project will Amazon Simple Queue Service $2.9
Amazon Simple Notification Service $0.7
$4.4
$2.5
$4.6
$2.6
$8.9
$8.2
$1.4
$1.9
$4.3
$5.6
$4.5
$5.7
48%
274%
93%
220%
103%
223%
slow events growth by reducing duplication DynamoDB $1.8 $2.9 $5.2 $5.3 $1.1 $0.1 $2.4 63% 1% 83%
S3 $2.4 $4.7 $5.4 $5.3 $2.3 ($0.1) $0.6 97% (2%) 12%
•Public EC2 +56% - Driven by new 2020 hardware Cloudfront
Redshift
$2.2
$0.9
$2.9
$2.0
$3.4
$3.2
$3.7
$2.7
$0.7
$1.1
$0.2
($0.5)
$0.8
$0.7
33%
116%
6%
(14%)
27%
34%
projects Amazon Kinesis Firehose $0.3 $1.1 $0.5 $2.3 $0.8 $1.8 $1.2 245% 346% 110%
AmazonCloudWatch $0.3 $0.7 $0.5 $1.2 $0.4 $0.8 $0.5 106% 159% 71%
•Amazon Kinesis Firehose +346% - Related to the Elasticsearch Service
AWS IoT
$0.3
$0.3
$0.7
$0.7
$0.5
$0.8
$0.8
$0.8
$0.4
$0.4
$0.3
($0.0)
$0.1
$0.1
160%
150%
57%
(0%)
20%
13%
planned Metrics Migration project from SQS to AWS CloudTrail
Amazon Simple Workflow Service $0.7
$0.2 $0.4
$0.5
$0.4
$0.3
$0.6
$0.5
$0.2
($0.1)
$0.2
$0.2
$0.1
$0.0
125%
(21%)
37%
57%
32%
3%
Kinesis Total $22.7 $45.5 $53.8 $61.0 $22.8 $7.2 $15.5 101% 13% 34%

•VPC EC2 -21% - Related to Utilization improvements throughout 2019

E. Risks/Opportunities
• Risks – $ TBD
•Metrics Project Assumptions - SQS to Kinesis Migration delays
•AWS Rates – Potential increased AWS rates in OP2 vs. OP1
•Unbudgeted Projects – New 2020 initiatives or items identified during functional OP1 discussions
•Auto Approval – To improve speed and hardware turnaround time select fleets have been granted Auto Approval status. Finance
will monitor to ensure expense trends do not materially change, however this test represents a risk.

• Opportunities - $ TBD
•AWS Regional Discounts - Prices in CMH and ARN will be discounted to IAD and DUB by 30% to incentivize migrations from
Washington DC to Columbus and Dublin to Stockholm
•S3 Intelligent Tiering – Moving storage (transcoded assets) from frequent access to infrequent access
•Continued Efficiency Gains – JIT Scaling, Utilization, R.I. usage…

2
Music Hardware - 2020 OP2

F. Appendices
Appendix 1 – 2020 Hardware Projects
Proj
Fleet Name Project Name Hardware $
1 Applied Science Additional Personalization ML models $0.8
2 Applied Science Mystique v2 (Personalized Playlists) $0.5
3 Search Realtime logs $0.4
4 Client Services BLR Starlight $0.4
5 Metrics Data Quality Rules Engine $0.3
6 Voice Context Casting $0.3
7 Voice Customer Profiles $0.3
8 Voice Intent History $0.3
9 Voice Dynamic Hint System $0.3
10 Applied Science Supporting new use cases in Bist $0.3
11 Search Library ES Migration $0.3
12 AMC Product Graph Transfer Cost $0.2
13 Metrics Interactive query service for Andes $0.2
14 Search Search ML $0.2
15 Applied Science Applied Science Experimentation $0.2
16 Applied Science Bist experimentation and development $0.2
17 Applied Science Music Feature Repository $0.2
18 Search ES 7 upgrade $0.2
19 Applied Science CX Optimization service $0.1
20 Metrics Real-time Metrics Service $0.1
21 Voice Conversational Systems $0.1
22 Voice Stations Feedback and Insights $0.1
23 Voice SLU Platform / N-Best $0.1
24 Metrics TRS Deprecation $0.1
25 Applied Science Silvereye ML Search projects $0.1
26 Other $0.4
27 Total $6.4
Fleet Summary
28 Applied Science $2.3
29 Voice $1.5
30 Search $1.2
31 Metrics $0.7
32 Client Services BLR $0.4
33 AMC $0.3
34 Ingestion $0.0
35 Total $6.4

Appendix 2 – 2020 Cost Savings Initiatives

Proj
Fleet Name Project Name Savings
1 Metrics SQS to Kinesis $5
2 Metrics Events deprication $3
3 TBD Flexible Fleets $1
4 TBD Scaling Planner $1
5 TBD S3 Intelligent Tiering TBD
6 TBD Data Center Credits TBD
7 Total $10

Appendix 3 – Fleet/Product Expense Drivers

3
Music Hardware - 2020 OP2

AWS Product AMC Applied Science ALPS Business Operations Client Services Client Services BLR Clients Metrics Delivery Search Subscriber Voice
maxof (Customers +
CloudFront IO X X X X X X X X Items + Plays) X X X
CloudFront Transfer X X X X X X X X Customers + Items X X X
max of (Customers +
Items + Plays + max of (Customers + Items
DynamoDB IO Tracks Customers Customers Plays Plays Customers Customers X Utterances) Utterances + Plays + Utterances) Plays
DynamoDB Storage Tracks Customers + Items Customers Plays Plays Customers Customers X Customers + Items Customers Customers + Items Plays
EbsIoOffering Tracks Customers Customers Customers Customers Customers Customers Customer Customers + Items X Customers + Items Customers
EbsPiopsOffering Tracks Customers Customers Customers Customers Customers Customers Customer Customers + Items X Customers + Items Customers
EbsStorageOffering Tracks Customers Plays Customers Customers Customers Customers Customer Customers + Items X Customers + Items Customers
Elastic Search Plays Customers + Items X Tracks X Tracks Plays
maxof (Customers + maxof (Customers +
Events + Items + Plays + Events + Items +
PublicEc2Offering Plays Customers + Items Customers Customers Customers Customers Customers (WW events) x (customers) Utterances) X Utterances) Plays
maxof (Customers + maxof (Customers +
Events + Items + Plays + Events + Items +
PublicEc2RiOffering Plays Customers + Items Customers Customers Customers Customers Customers (WW events) x (customers) Utterances) Plays Utterances) Plays
RDS Instance Hours Tracks X X X X X X X X X X Customers
RdsPiopsOffering Tracks Customers X Customers Customers Customers Customers X X X X Customers
RdsRiOffering Tracks Customers X Customers Customers Customers Customers X X X X Customers
RdsStorageOffering Tracks Customers X Customers Customers Customers Customers X X X X Customers
Tracks*publishing
Redshift OnDemand events/track X X X X X X (WW events) x (customers) Items X X X
Tracks*publishing
RedshiftRiOffering events/track X X X X X X (WW events) x (customers) Items Plays X X
S3 Tracks Customers Customers Customers Customers Customers Customers (WW events) x (customers) Items Customers Customers + Items Plays
Tracks*publishing
SNS events/track Plays Plays Plays Plays Plays Plays WW events Events X Customers + Events Customers
SQS Plays Plays Plays Plays Plays Plays Plays WW events Events Tracks Customers + Events Customers
maxof (Customers + maxof (Customers +
DM Gadgets - Tracks Events + Items + Plays + Events + Items +
VPC EC2 Customers Customers Customers Tracks Customers Rest - NA customers Customers Customers Utterances) 2*Utterances Utterances) Plays
AWS Other/Cloudsearch,elastic
Plays transcoder,Neptune,simple
Tracks workflow
Customers Tracks Tracks Tracks Tracks Tracks Customers + Events X X Customers
AWS Other/all except item
Plays
and play relatedCustomers Customers Customers Customers Customers Customers customers Customers + Events Customers Items Customers

Appendix 4 – Metrics Cost Savings Projects

SQS/SNS to Kinesis Migration. In 2019 Q4, we executed Project Coyote, which was the Timeline Milestones
2020
Savings
precursor for deprecating our SQS queues, however added extra costs in the interim. SQS to Kinesis Migration
Deprecate 1 Kinesis Firehose (original "All
Coyote created two key Kinesis streams which will be the replacement for 3 SQS queues in Q1 Events"), Deprecate 1 Kinesis Firehose $1.8
(Instant Dashboard)
Q1 2020, and later will also replace 2 SNS topics. In 2018, SQS costed $0.50 per 1M events Deprecate 2 SQS (PERS-input), 1 VPC EC2
Q2 $1.7
per queue and we had 3 queues (2 in Metrix and 1 in AMC). After we enabled batching Q3
fleet, 3 Kinesis Firehose, 1 Redshift (TRS)
Deprecate 1 SQS $1.6
reads in November 2018, we reduced SQS cost to $0.29 per 1M events per queue (42% Metrics Event Deprication
Q1 Deprecating 47% of Harley Flex Events $1.0
savings). There are further improvements we could make to SQS, but moving to Kinesis is Q2-Q4 Deprecation of legacy events $2.0
low risk, provides high cost savings upside, and is the right infrastructure move overall as
proven by industry and other Amazon teams. Our current un-optimized Kinesis Firehose costs about $0.08 per 1M events and there
are further optimizations that could be made to bring that cost down in the future. Completion of SQS and SNS projects and efforts
to optimize costs on Kinesis via compression or batch reads/writes represent annual savings of $4M-$7M. The project is currently
scheduled for Q1 2020.

Events Audit / Deprecation. Our biggest opportunities for cutting cost by eliminating events are in two places. First, 6.3% of events
currently sent are legacy, and via an expedient audit could be deprecated. Second, 58.5% of events are Flex events. By performing
an audit of Flex event usage and requiring Flex owners to explain their usage need and value, we can net significant events
reduction. Furthermore, ~ 85% of Flex events are related to Harley monitoring, and the Harley team has already proposed an option
to reduce the Flex events logged by moving to sampling instead of 100% reporting. We are currently negotiating a timeline in 2020.
If we reduce event volume by 20-40% via these two methods, we effectively reduce our go forward cost projection by 20-40% at the
point at which the events are disabled. We believe it is reasonable to save an additional $2M-$4M in 2020 costs with this project.
Deprecation efforts would require bandwidth and a point person from major Music Fleets.

Appendix 5 – Music Hardware Expense Growth

Appendix 6 – Music Hardware Cost per Customer

4
Music Hardware - 2020 OP2

Appendix 7 – Music Hardware Product Mix

Appendix 8 – Music Hardware 2020 Expense by Month

5
 $0.0
$0.0
$0.0
$0.0
$0.0
$0.1
$0.1
$0.0
$0.1
$0.1
$0.2
$0.2
$0.3
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0

$0.0
$0.1
$0.1
$0.2
$0.2
$0.3
$0.3
$0.4
$0.4
$0.5
$0.5
Jan-18 Jan-18 Jan-18 Jan-18 Jan-18
Mar-18 Mar-18 Mar-18 Mar-18 Mar-18
May-18 May-18 May-18 May-18 May-18
Jul-18 Jul-18 Jul-18 Jul-18 Jul-18
Product 2020 Expense

Sep-18 Sep-18 Sep-18 Sep-18 Sep-18

Nov-18 Nov-18 Nov-18 Nov-18 Nov-18
Jan-19 Jan-19 Jan-19 Jan-19 Jan-19
Mar-19 Mar-19 Mar-19 Mar-19 Mar-19
May-19 May-19 May-19 May-19 May-19

Voice
Jul-19 Jul-19 Jul-19 Jul-19 Jul-19

Clients

Free Tier
Catalog
Sep-19 Sep-19 Sep-19 Sep-19 Sep-19
Amazon Music

Nov-19 Nov-19 Nov-19 Nov-19 Nov-19

Jan-20 Jan-20 Jan-20 Jan-20 Jan-20
Music Hardware - 2020 OP2

Mar-20 Mar-20 Mar-20 Mar-20 Mar-20

May-20 May-20 May-20 May-20 May-20
Jul-20 Jul-20 Jul-20 Jul-20 Jul-20
Sep-20 Sep-20 Sep-20 Sep-20 Sep-20
Nov-20 Nov-20 Nov-20 Nov-20 Nov-20
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8

$0.0
$0.0
$0.0
$0.1
$0.1
$0.1
$0.1
$0.1
$0.0
$0.1
$0.1
$0.2
$0.2
$0.3
$0.3
$0.4
$0.0
$0.1
$0.2
$0.3
$0.4
$0.5
$0.6
$0.7
$0.8
$0.9
$1.0

Jan-18 Jan-18 Jan-18 Jan-18

Mar-18 Mar-18 Mar-18 Mar-18

May-18 May-18 May-18 May-18

Jul-18 Jul-18 Jul-18 Jul-18

Sep-18 Sep-18 Sep-18 Sep-18

Nov-18 Nov-18 Nov-18 Nov-18

Jan-19 Jan-19 Jan-19 Jan-19

Mar-19 Mar-19 Mar-19 Mar-19

May-19 May-19 May-19 May-19

ALPS
Jul-19 Jul-19 Jul-19 Jul-19

6
Metrics

Delivery

Sep-19 Sep-19 Sep-19 Sep-19

Nov-19 Nov-19 Nov-19 Nov-19

Jan-20 Jan-20 Jan-20 Jan-20

Mar-20
Client Services BLR

Mar-20 Mar-20 Mar-20

May-20 May-20 May-20 May-20

Jul-20 Jul-20 Jul-20 Jul-20

Sep-20 Sep-20 Sep-20 Sep-20

Nov-20 Nov-20 Nov-20 Nov-20

$0.0
$0.0
$0.0
$0.1
$0.1
$0.1
$0.1
$0.1
$0.0
$0.1
$0.2
$0.3
$0.4
$0.5
$0.6
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6

$0.0
$0.1
$0.1
$0.2
$0.2
$0.3
$0.3
$0.4

Jan-18 Jan-18 Jan-18

Jan-18
Mar-18 Mar-18 Mar-18
Mar-18
May-18 May-18 May-18
May-18
Jul-18 Jul-18 Jul-18
Jul-18
Sep-18 Sep-18 Sep-18
Sep-18
Nov-18 Nov-18 Nov-18
Nov-18
Jan-19 Jan-19 Jan-19
Jan-19
Mar-19 Mar-19 Mar-19
Mar-19
May-19 May-19 May-19
May-19
Search

Jul-19 Jul-19 Jul-19

Jul-19
Sep-19 Sep-19 Sep-19
Sep-19
Subscriber

Nov-19 Nov-19 Nov-19

Nov-19
Client Services

Jan-20 Jan-20 Jan-20

Applied Science

Jan-20
Mar-20 Mar-20 Mar-20
Mar-20
May-20 May-20 May-20
May-20
Jul-20 Jul-20 Jul-20
Jul-20
Sep-20 Sep-20 Sep-20
Sep-20
Nov-20 Nov-20 Nov-20
Nov-20