Amazon.com said Wednesday it plans to launch an online music store that will sell only DRM-free music tracks, a move experts are dismissing as a second-rate effort aimed at shadowing Apple's iTunes service.
Executives for the Internet retailer said the move was influenced by consumers who say they want to be able to listen to their music on any device they choose. But is Amazon's push simply a bid for already conquered ground?
"The announcement is a carbon copy of Apple's deal with EMI," said Gene Munster, an analyst with PiperJaffray. "Amazon will offer the same DRM-free tracks as iTunes, and therefore will have no competitive advantage over Apple."
Given that Amazon will not offer a better selection, Munster attests that there will be no compelling reason for users to switch from iTunes to Amazon. He therefore doesn't expect a material impact on Apple's music business.
"In fact, although Apple's dominance frustrates music studios, the reality is that Apple's market share gives [Apple chief executive] Steve Jobs and iTunes the upper hand," the analyst said. "We believe this upper hand results in Apple's ability to be first to market with new features and more DRM-free music, as evidenced by iTunes being the first store to offer DRM-free music from a major record label."
While Amazon's plan is to offer users of Apple's industry-leading iPod an alternative to iTunes, Munster believes the strategy will add a confusing and unnecessary step to the digital download process, which will only serve to complicate matters for most users.
"We believe that iTunes offers the simplest way for music shoppers to browse the largest music catalog available," he said. "We also believe that Apple will continue to enhance the iTunes Store in order to maintain its lead in the online music space."
The PiperJaffray analyst remains bullish on Apple, holding an Outperform rating and $140 price target on shares of the Cupertino-based company.
19 Comments
Well, it can only be good to have other big players in the DRM free world.
The article seems to show some glee that Amazon will not have any more unprotected music than Apple. I, on the other hand, would not mind if someone was able to break some new ground here helping to get the ball rolling.
I was not one of those people who decried DRM before--I just saw it as the way it was. But now that it is a real possibility I don't want to buy any music that isn't free of DRM.
I would prefer that Apple lead the way, but if Amazon could help, more power to them...
Well, it can only be good to have other big players in the DRM free world.
The article seems to show some glee that Amazon will not have any more unprotected music than Apple. I, on the other hand, would not mind if someone was able to break some new ground here helping to get the ball rolling.
I was not one of those people who decried DRM before--I just saw it as the way it was. But now that it is a real possibility I don't want to buy any music that isn't free of DRM.
I would prefer that Apple lead the way, but if Amazon could help, more power to them...
I like that it takes the air out of the arguments that Apple has a monopoly on
downloading music and that people have no choice but to use iTunes and iPod.
These arguments were always false, but now everyone should be able to see it.
Also, those labels clinging to DRM look even worse now. How long will they hold out?
Amazon is competing with MS and Napster et. al., not so much Apple.
The danger I see here is that Amazon has the ability to target markets who wouldn't necessarily be looking for music. Supermarkets are doing the same thing. Millions of people visit Amazon and if they can get a decent amount of them buying music downloads, especially in a more universally compatible MP3 format, it may lure them away from a music-only store. I guess their interface might have to be as intuitive though.
The danger I see here is that Amazon has the ability to target markets who wouldn't necessarily be looking for music. Supermarkets are doing the same thing. Millions of people visit Amazon and if they can get a decent amount of them buying music downloads, especially in a more universally compatible MP3 format, it may lure them away from a music-only store. I guess their interface might have to be as intuitive though.
Perhaps Amazon will adopt a more Silverlight approach... since their main problem is their clunky, non-Applish interface.