Amazon to launch iTunes rival

Written by Geoff Richards

February 16, 2006 // 7:42 p.m.

Tags: #audio-cd #download #emi #itunes #mp3 #music #sony-bmg #store #universal-music #wall-street-journal #warner

Companies: #amazon #apple #samsung

Mail-order giant Amazon is busy hatching a plan to launch a downloadable music store and tackle established market leader, Apple's iTunes, according to a report in the Wall Street Journal.

Amazon is allegedly in "advanced talks" with the Big Four music rights holders: Sony BMG, Universal Music Group, Warner Music Group and EMI. The company already sells millions of audio CDs and clearly sees digital distribution as a natural extension of this business.

You can hardly blame them. Amazon is arguably the largest player in the online market place for buying audio CDs, yet sales of physical media have dropped noticeably in recent times.

The dip in demand was blamed on illegal downloading of MP3 tracks yet Apple might argue otherwise, with nearly 980 million songs sold through the iTunes Music Store. The company will give away over US$15,000 worth of prizes to the lucky customer who buys the one billionth song - a record inconceivable when the service was first launched and at 99 cents per track, certainly a lucrative achievement.

Amazon will attempt to leverage their established branding to wrestle market share away from Apple. Rumoured plans include Amazon-branded MP3 players manufactured by Samsung, either pre-loaded with music or a subscription-based service similar to Napster's model, designed to run alongside Amazon's DVD rental service.

If a deal is struck with a manufacturer with production hardware already on the market, the Amazon music store could be online as early as this summer, according to reports. With such a tough nut to crack, Amazon's package will definitely need to offer substantial benefits to lure the masses away from their iPod / iTunes addiction.

Shockingly, there is nothing that says that someone has to come along and knock Apple off the top step. Around the world, there are substantial monopolies that have been so long standing that they have become the de facto service providers. Microsoft Windows has been the dominant operating system for two decades. BSkyB provides the majority of subscription TV services in this country. Can you foresee either being toppled?

As depressing as it may sound, it's possible that maybe, just maybe, everyone else will grow tired of pouring millions down the drain trying to compete with the iPod phenomenon and iTunes will become the default method for purchasing digital music.

Some might argue, we are already there.

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