"Amazon-tunes" coming soon: But DRM talks must continue

As I reported here on Bloggingstocks nearly a month ago, Amazon.com, Inc. (NASDAQ: AMZN) confirmed rumors and announced yesterday that the company will open a new music downloading service with files free of copyright protection (Digital Rights Management technology) in late 2007.

Billboard reported that Amazon will become the second company to sell new DRM-free tracks from the EMI Group PLC (LSE: EMI), following Apple Inc.'s (NASDAQ: AAPL) lead. Amazon will not offer music from the Warner Music Group Corp. (NYSE: WMG) or the Universal Music Group because both companies are still utilizing DRM technology. According to Amazon founder and CEO Jeff Bezos, DRM technology prohibits the company's strategy since "all the music that customers buy on Amazon is always DRM-free and plays on any device."

The announcement, which like I mentioned was heavily rumored, means that Apple will not have a monopoly on the DRM-free tracks from EMI. One can only hope that the new "Amazon-tunes" (or another better name for the new store) will offer the same user-friendly interface and competitive pricing as iTunes. Such matters may be inconsequential for consumers already possessing an Amazon account. Consumers with both will now have the opportunity and choice to purchase from both with the tracks easily playable on an iPod even when purchased from the Amazon store. Rumors still surround the new prices that may come into effect with the higher quality tracks, but that would be a factor sent down by EMI and not mandated by either store.

If Amazon can successfully create a new service to compete with iTunes, then an "Amazon-tunes" service could revolutionize the still new market. The key will be the utilization of DRM-free tracks. Amazon will need to join Apple in convincing the other labels to drop DRM, which has been an issue since well before EMI decided to stop its use of DRM.

Billboard reports that Warner and Universal are still testing DRM-free tracks, so the technology will remain an issue; don't expect it to disappear because one more store offers the new tracks. Even with EMI's catalog, Amazon will offer far less than iTunes because it will lack the labels that still use DRM: Warner, Universal, and Sony. Independent labels will help, but while they seem to have a larger role in the music industry every year, they cannot make up for the other "big three."