Amazon playing catchup with Apple's iTunes
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.
In a press release earlier in the day, Amazon said the store, which should launch by year's end, will be authorized to sell the music catalog of EMI Music Group PLC in addition to tunes from 12,000 unnamed labels.
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.
In a press release earlier in the day, Amazon said the store, which should launch by year's end, will be authorized to sell the music catalog of EMI Music Group PLC in addition to tunes from 12,000 unnamed labels.
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.
Comments
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?
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.
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.
In a press release earlier in the day, Amazon said the store, which should launch by year's end, will be authorized to sell the music catalog of EMI Music Group PLC in addition to tunes from 12,000 unnamed labels.
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.
Considering how EMI from the start said that their catalog was available for other online vendors DRM-free, I don't quite follow how this is a second-rate effort. Especially considering EMI's music hasn't shown up on iTunes without DRM as far as I know (I would assume there would be some level of fanfare about its arrival).
And the analyst conveniently seems to have skipped over the part where Amazon said 12,000 other labels (are there really that many record labels?) have also signed on for DRM-free music whereas all iTunes has going is Steve Job's prediction that over 50% of iTunes music would be DRM free by the end of the year. I'll assume that they are fairly minor labels, but it wouldn't be unthinkable that one of the major labels has also signed on to tip the iTunes balance. Perhaps Amazon was willing to give the label variable pricing and this is their way to get variable pricing on iTunes.
Do I think Amazon will have an impact on iTunes? Well, I would say it's hard (impossible) to predict at the moment without any word on the pricing Amazon will offer. Imagine if Amazon offered older tracks for 79 cents, recent tracks for 99 cents, and just released tracks at $1.29, I could see a large shift in people going to Amazon to buy older tracks for 79 cents and sticking around to buy 99 cent tracks as well. Taking a guess, if Amazon duplicates iTunes proposed $1.29 per track price then I'd consider it dead in the water unless it does have another major studio lined up.
It's at times like this that I imagine Amazon kicks itself for degrading their brand trust with all those "independent sellers" that they pass off as part of Amazon without vetting.
I'm not so sure.
I often buy from those stores within Amazon. So far, they have all been reliable.
I just ordered 4 CD's, two from Amazon direct, and two from one of those independent stores.
Guess which two I've already received?
I disagree. It depends a lot on the pricing. Apple are about to offer some DRM-free music, but they're doing so at a higher price. (And increasing the audio quality so that it doesn't look like they're charging more to remove DRM restrictions that are associated with lock-in.)
If Amazon are able to hit a price point below Apple's no-DRM/high-quality offering, then they will have some competitive advantage.
There is also an advantage that comes from only offering DRM-free music. Customers will know what they're getting without having to look, and they won't be faced with a "should I pay more or should I chose DRM?" decision.
Lastly, there could be a timing advantage: Apple seems to be taking a long time to let independent labels offer DRM-free music; Amazon will be DRM-free by design.
I get 65 MP3 songs for USD $15 per month. That's 65 DRM-free songs that I can re-download at no cost, should I somehow lose them.
How does amazon.com expect to get my business with their outrageously high prices (relative to emusic)?
What it didn't mention is that Amazon will be offering tracks in MP3 format, meaning Amazon will have an incredible advantage in compatibility.
If it's the same price as iTunes, and at the same bitrate, I'll be shopping at Amazon. So what if it takes another 2 seconds to add the file to the iTunes Library?
... experts are dismissing [it] as a second-rate effort aimed at shadowing Apple's iTunes service.
Not this expert.
What it didn't mention is that Amazon will be offering tracks in MP3 format, meaning Amazon will have an incredible advantage in compatibility.
If it's the same price as iTunes, and at the same bitrate, I'll be shopping at Amazon. So what if it takes another 2 seconds to add the file to the iTunes Library?
The article also doesn't state that AAC is a better and newer codec than MP3. If it's the same bitrate as AAC then iTunes Store music will have a slight advantage in quality.
Wow, Gene Munster really is a fanboy isn't he?
If someone writes good things about Apple, they're a fanboy. If they write bad things about Apple, they're an Apple hater.
Can't people write what they think is true without being labeled?
Look at where Apple's stock is now. When some analysts said that it would reach this level, they were called fanboys as well.
He isn't the only analyst to say this. In fact, he isn't the only one anywhere who is saying this.
There is little reason why people would switch from iTunes to Amazon, unless the prices are noticeably lower for the same quality. Apple still has, and likely will always have, a much larger selection of music than any other store. That's now over 5 million selections, according to Apple.
If half of them are DRM-free by the end of the year, or most likely earlier, that would mean that Apple has more DRM-free selections than most other sites have selections.
Amazon's store would also have to enable iPod users the same ease of use that iTunes does. If not—bingo, few sales.
If someone writes good things about Apple, they're a fanboy. If they write bad things about Apple, they're an Apple hater.
Can't people write what they think is true without being labeled?
Look at where Apple's stock is now. When some analysts said that it would reach this level, they were called fanboys as well.
He isn't the only analyst to say this. In fact, he isn't the only one anywhere who is saying this.
There is little reason why people would switch from iTunes to Amazon, unless the prices are noticeably lower for the same quality. Apple still has, and likely will always have, a much larger selection of music than any other store. That's now over 5 million selections, according to Apple.
If half of them are DRM-free by the end of the year, or most likely earlier, that would mean that Apple has more DRM-free selections than most other sites have selections.
Amazon's store would also have to enable iPod users the same ease of use that iTunes does. If not?bingo, few sales.
I don't usually label people as fanboys, because I consider myself one. However, saying that a competing music service is just going to make shopping for music online confusing and unnecessary to consumers is stupid.
However, on reading the article again, I can see that munster didn't actually say that. The author, Prince McLean, incorrectly paraphrased him.
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."
So, I withdraw my statement, Gene Munster isn't a fanboy - Prince McLean is.
Wow. That was a biased-ass article.
What it didn't mention is that Amazon will be offering tracks in MP3 format, meaning Amazon will have an incredible advantage in compatibility.
If it's the same price as iTunes, and at the same bitrate, I'll be shopping at Amazon. So what if it takes another 2 seconds to add the file to the iTunes Library?
... experts are dismissing [it] as a second-rate effort aimed at shadowing Apple's iTunes service.
Not this expert.
I never knew that bit-rate = quality... I mean, I hate how most MP3s sound... Hate, hate hate hate hate hate hate. I only bother listening to them on speakers that are blown out.