Amazon.com's DRM-Free Music Store May Reshape Market

Online retailer Amazon.com announced Wednesday it plans to launch a DRM-free [Digital Rights Management] music store, offering millions of songs from over 12,000 record labels, including EMI's digital catalog. The music, coded with the ubiquitous MP3 standard, can be played on an array of devices, such as PCs and iPods, and burnt to CD for personal use. Amazon said the store will launch 'later this year,' but some analysts say the company plans to go online as soon as possible; June/July is seen as a likely timeframe. Amazon is said to be offering lower pricing, with full-album downloads from $4.99-8.99 and singles from $0.89 to $0.99. Apple's iTunes store uses the DRM-protected AAC format, which many say offers quality and file-size advantages over MP3. Apple announced a similar deal with EMI in April; it plans to sell DRM-protected music for $0.99 a tune and DRM-free music for $1.29. Warner Music has said it sees no reason to drop DRM, but that it is testing the DRM-free model, as is Vivendi's Universal Music. Many analysts say Amazon can compete with Apple's iTunes for a share of the $2 billion/year digital-music market, due to its position as the largest and most active internet retailer, and the fact that it's already one of the largest online CD sellers. Others don't think even Amazon can break Apple's dominance.

Sources: Press release, MarketWatch I II, hypebot, CNET News.com I, II

Commentary: Other Shoe Drops: Amazon to Launch Digital Music Sales • Amazon.com DRM-Free Service Won't Kill Apple • Why Amazon Will Never Really Be Profitable

Stocks/ETFs to watch: Amazon.com Inc. (AMZN), Apple Computer Inc. (AAPL), Warner Music Group Corp. (WMG)

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Comments

[Julian Ivan...:]

This isn't a zro-sum game. All music will ultimately be downloaded, so there's plenty of room for iTunes, Amazon, and whateverelsemicrosoftt...
However, iTunes is simply the best store, with the best jukebox software, which works with the best, most popular music player - the iPod.
Amazon won't change the download market.. they'll just broaden its appeal to the minority of non-iPod users, which can only be a good thing for digital music.

2007 May 16 07:52 PM