Amazon throws down the gauntlet; challenges iTunes Store with Amazon MP3 digital music download service

27Sep07

Amazon has gotten into the ring with Apple’s iTunes Store to challenge the latter’s dominance in the digital music download arena. MacWorld UK reported that Amazon has launched a public beta trial of its digital music download service, Amazon MP3.

Jeremy Horwitz of iLounge.com have tried out Amazon MP3 and he reports that:

  • Songs are sold in the MP3 format DRM-free at 256kbps.
  • Pricing is much better than the iTunes Store. For a high bitrate DRM-free download, iTunes charges $1.29. In AmazonMP3, per song is $0.89 or $0.99.
  • This beta trial has 2 million tracks to choose from.

Amazon also has the Amazon MP3 Downloader application which will automatically add downloaded music from Amazon MP3 to iTunes or Windows Media Player. This removes the extra steps required to add the track downloaded to itunes or WMP.

Mmm… Crow tastes good.
These turn of events might have been precipitated by Steve Jobs open letter entitled “Thoughts on Music.” What the open letter boils down to is Apple wants to provide DRM-free songs but the big four music labels, Universal, Sony BMG, Warner and EMI, are refusing to allow Apple to do so. He challenged these companies to drop DRM. in response, Warner Music’s Edgar Bronfman, Jr. said the Warner Music will never drop DRM.

“We advocate the continued use of [digital rights management] in the protection of our-and our artists’ intellectual property.”

However, Wired reported in their piece about Amazon MP3 that:

Edgar Bronfman, Jr., the Warner Music Group chairman, told Goldman Sachs investors in New York last week he was considering removing DRM from Warner’s music downloads — this just months after suggesting Warner would never abandon DRM.

Fishy, fishy, fishy.
As noted, Amazon MP3’s tracks are much cheaper than the iTunes Store’s offering. The issue here is, how could it be cheaper when for a fact the big four music labels ahev been fighting Apple for them to have the option of variable pricing. This scheme will allow them to set higher prices for the latest songs and sell old or not so popular songs at a lower cost. Apple didn’t like this idea, $0.99 has simpler and less confusing.

But 256kbps, DRM-free at $0.89 or $0.99 seems to run counter against what the music labels have been fighting for. What gives?

The Small Wave blogs writes about this and the conclusion is:

So what’s going on, is this all just to spite Apple? That makes no sense because the labels gain nothing from it; all they‘d have done is create another iTunes store, or worse. Have they changed their mind on DRM? Then offer all of Universal’s tracks and, for that matter, the other labels’ as well. Have they decided iTunes pricing isn’t so bad after all? Then offer Apple the same terms. Do they just want to build a popular store with a partner who won’t argue over pricing and DRM restrictions? DING DING DING DING DING!! We have a winner!

I love the smell of spite in the morning.

It’s all about choice
So, can Amazon wrest the title of ultimate music (and maybe video) download service from Apple? Only time can tell.

However, looking at it from the consumer standpoint, it doesn’t really matter. Choice is good and if Amazon will indeed be able to stand toe in toe with Apple in digital music distribution then the consumer stands to gain a lot from it.

It would seem consumers have Steve Jobs to thank for Amazon MP3’s DRM-free download. It was the fear of these big music labels of losing control that drove them to offer DRM-free tracks to iTunes competitors. This perhaps was what Jobs was planning all along: push the dinosaurs to near extinction hoping that they will evolve. It would seem he’s done just that. But doesn’t this mean the end of iTunes. Not necessarily. There will still be some people who would want to use the iTunes Store in getting their music. It’s easy to use and very accessible. Another thing to consider is most do not even know or are aware of DRM. Let’s be honest, did you know what DRM even meant while reading this? There will be some who will clamor for DRM-free music while there will be some who just won’t care whether is has DRM or not.

Amazon MP3 is clearly a shot across Apple’s bow. Even though the iTunes Store for the moment is king of digital media downloads, Apple should not rest on its laurels. I think they are not and if the culture of the company holds true, they are right now looking at ways to bring innovation into this market.

One thing to note is that if you take the time to click on the Amazon MP3 link you will find that their picture shows the iPod in front of a long line of multimedia players. Amazon is no fool in realizing the Apple still is king of the hill when it comes to digital media players.

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