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Amazon.com, Inc. (NASDAQ: AMZN) just announced it plans to launch a digital music store later this year featuring songs without copy protection restrictions. Let me repeat that, without copy protection restrictions.
This means that the downloaded music could be played on any digital music player, including computers, Apple Inc.'s (NASDAQ: AAPL) iPods, Microsoft Corp.'s (NASDAQ: MSFT) Zunes and Creative Technology Ltd.'s (NASDAQ: CREAF) Zens. Customers could also burn songs to CDs for personal use. Millions of songs from 12,000 labels will be featured as well as EMI Music's digital catalog.
Amazon didn't disclose a few key issues: when, what and how. Amazon didn't specify a date for the store launch, it didn't say how much the MP3 format downloads would cost the consumer, nor the terms in which music would be provided.
While this move may have been anticipated, the key point here is the DRM-free offer. iTunes, at the moment, despite Jobs claim he wants to change it, puts many limits on the downloaded music -- from the amount of copies that can be made to the type of device it can be played on. Some of the restrictions come from record companies, some from Apple. If the terms of the Amazon stores won't restrict users to buying whole albums while prices would be comparable to that of iTunes', many iPod users could defect. Not to mention owners of other players who would be happy to get a similar experience to iTunes.
Amazon's approach as a provider of music without the vested interest of a digital music device maker (such as Apple), will likely create serious competition to iTunes. While iTunes isn't a major contributor to Apple's earnings, it might prove a good lesson regarding restricting consumers.
Amazon.com launches iTunes killer?
Posted May 16th 2007 11:40AM by Melly Alazraki
Filed under: Press Releases, Products and Services, Consumer Experience, Competitive Strategy, Microsoft (MSFT), Apple Inc (AAPL), Amazon.com (AMZN)
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Reader Comments (Page 1 of 1)
5-16-2007 @ 12:23PM
H said...
NO! It will only increase demand. iTunes supports iPod, not the other way around. If more music stores can sell music DRM free, they will compete with each other, driving down the price of digital music, increasing the market for digital players in general, which only stands to benefit Apple. It will benefit all, however.
5-16-2007 @ 12:27PM
Melly said...
H, if you read carefully, I never suggested it would cause lower sales of iPod, but I was referring to iTunes, Apple's online music store.
5-16-2007 @ 12:59PM
H said...
I understand. i just don't think iTunes is seen by Apple as a significant source of profit, so if traffic on its store slows in the name of increased buying elsewhere, it will be seen in the context of my first comment. I think thats why Steve initiated the move, is because he believes the iPod will out-compete other players in an open marketplace.
5-17-2007 @ 7:53PM
Stu said...
H is right. Apple uses iTunes to sell iPods, not the other way around.
Besides, this is just a me too from Amazon as Apple has already announced doing this! So, no it's REALLY not an itunes/ipod killer.
http://www.apple.com/pr/library/2007/04/02itunes.html
5-16-2007 @ 9:18PM
starwxrwx said...
Just remember - any tracks an iPod user downloads from Amazon will have to be imported into iTunes anyway, to sort/store/organise/use in playlists and most importantly - sync to iPod!
If the Amazon experience of buying music is painless enough that even with the importing process (which no doubt third party tools will aid with) then they have a viable competition, otherwise it may not be worth the extra effort for many.
5-16-2007 @ 9:45PM
gslv said...
If they can get as many songs as itunes from all the labels... But don't hold your breath on DRM-free. You don't have all the major labels on board. Will Amazon ALSO be selling music WITH DRM alongside? If Amazon can get DRM-free so can Apple. If Amazon won't have all the major labels, it's a limited competitor. But even with DRM, if they can match the amount of music, an mp3 service should be attractive. Also if they can expand to Canada etc. When you look at all the music Amazon has for sale, your mouth waters to think of it all becoming downloadable, especially all the old music. But if it's something partial, it's no wxcitement.
5-17-2007 @ 7:36AM
Melly said...
Stu, the point is that Apple has conflicting interests here. It cannot promote DRM-free music with the same zeal Amazon, which doesn't have a device to sell, can. You don't see Marantz selling music just because it makes CD players.
Amazon will have the same restrictions by record companies as Apple does, that's a given. The problem is that because Apple sells a digital device, it adds restrictions of its own, in addition to the ones imposed by music labels. And that's where Amazon could change things.
Now, of course, there are so many unanswered questions with regards to the Amazon future service that it may indeed end up being very disappointing. I hope not.