It's still less than $9/month over the course of a year. It's approximately a $2/month increase. Skipping one Starbucks coffee would cover the cost difference for almost two months.

We frequently order from Amazon and use their video service and find lots of value in both. This won't cause us to bat an eyelash. It's not a significant increase relative to the value (assuming you use Amazon's services enough to make it worthwhile).

Now we're into some game theory. Perhaps the best thing is for the group to reject Prime. (assuming your premise of price hikes after putting little guys out of business is Amazon's plan; they could also just push suppliers downward, like the duopoly of supermarkets in Australia currently are)

As an individual, you are likely better off taking Prime until it is no longer the best deal.

What do you mean by "heavily subsidized shipping service"?

Amazon is the new Walmart, just worse because you definitely have no local employees. :)

It's generally more efficient to have a delivery truck bring a range of packages to you vs stocking a local store which you need to dive to. Of course efficiency = fewer jobs which people often object to but from a consumer perspective buying online takes less time and costs less so it's going to keep 'wining'. Now in theory amazon could raise prices but setting up a website with distribution costs far less than setting up a nationwide network of retail stores which should keep them reasonably honest long term.

Local retailers always have the option to sell their products via Fulfillment By Amazon.