Amazon Planning To Challenge Apple's iPod/iTunes Dominance

from the here-comes-the-counter-attack dept

It’s no secret that the big record labels have desperately been looking to back a company that can effectively compete against Apple’s iTunes/iPod juggernaut. While they were happy with the original success of iTunes, and its ability to basically create the digital download music marketplace from scratch, Steve Jobs became too powerful for their liking when he wouldn’t agree to let them raise prices or give them a cut of iPod sales (a device they originally hated and wanted stopped). At some point, the record labels recognized that Apple had way too much power — and it was partly their own fault for insisting on a copy protection solution that gave Apple lock-in.

However, it looks like the record labels have found a new horse to back. The Wall Street Journal is reporting that is close to completing deals with the major record labels to offer a competitive offering — both in digital downloads and in hardware. That’s right, Amazon will be offering its own digital music player, branded by Amazon, but built by a third party OEM (possibly Samsung). That may upset other music device makers, who will find themselves competing against Amazon on Amazon’s own site. Still, the idea of digital downloads fits with another recent story about Amazon’s movie download plans — though there are some interesting additional details in the WSJ piece. Apparently, Amazon would heavily subsidize the music player, giving it a leg up on Apple’s pricey iPods. This actually seems a bit strange, since Apple has admitted that it uses the music as a loss leader to sell more iPods. In other words, it’s losing money by selling music, but making it up on the iPod hardware. However, in this case, Amazon would offer subscription pricing, rather than per-download, which many believe is much more profitable. Even more interesting, though, is that Amazon’s subscription offering would allow them to offer the music player pre-loaded with songs. For years, people have said that Apple should be doing the same thing, but other than a few experiments with music acts like U2 and Madonna, most iPods come pretty much empty. There are still plenty of questions (such as how drastic the copy protection will be, how much the subscription fees are and how appealing the music players are). Plenty of companies have tried to take on Apple’s iTunes/iPod dominance in the past — and they’ve all pretty much failed (often miserably). Amazon, at least, is trying something different — but that doesn’t mean it will succeed.

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Comments on “Amazon Planning To Challenge Apple's iPod/iTunes Dominance”

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Jeff says:

Won't work because the RIAA is still clueless

The only way for the RIAA to knock iTMS off its pedestal is to do away with DRM. Apple didn’t want it but now its loving DRM since it forces users to buy iPods. Without DRM, other players can take advantage of sales from iTMS while at the same time other online stores would have a chance to sell music to owners of iPods.

Vienna says:

Another company misses the point

IMHO Apple’s success with the iPod is primarily because of its ease of use. That click wheel makes navigation pretty intuitive. Until rival players offer a compelling alternative I don?t think they will make a dent in Apple?s market lead. Even now there are cheaper players than the iPod that have longer battery life, etc. If Samsung can?t make a dent in Apple?s market with their players now, why will they for Amazon ? This just looks like some executive looking at another companies success and jumping on the band wagon, perhaps they should look at when all the existing competitors aren?t making any inroads into the market before they decide to join them.

ibeetle says:

No Wait... No Wait... ok... ok... This is it... re

The RIAA backs Napsters new legal business model to over throw Apple…
No wait… The RIAA backs Creative to over throw the iPod
No wait… The RIAA backs Real Networks to unseat the iTunes Music Store
Ok… This it it…. Really… The RIAA backs Microsoft… yea thats it… If there is one company that can take down Apple it is Microsoft…
Now it is
Next month it will be somebody else.
And what is the big deal?
Apple maybe the only company making money from downloading music but they are not number one. In retail music sales they are number 7. Why doesn’t the RIAA go after the juggernaut of Wal-Mart or Best Buy?
Why is the RIAA, Microsoft and 150 (yes that is the actual number) legal download music services scared of Apple? Why doesn’t the RIAA deal with Apple and reap the rewards and not fight them and loose.

William says:

No Subject Given

if anything this will promote some more competition. But not over prices I hope…hopefully content and features in the software. Amazon is good at selling music…I used to buy only from amazon until i got an ipod in back in 2002. iTunes has only recently added features like Just For You. That is great but the fact that amazon can do it all back door on their site…ie. without having to update iTunes to 6.03. I am a fan of apple but I think they could do better…

Tim Myles (profile) says:

Innovation vs. Panic

Funny, isn’t it? Google takes this scattergun approach to a business model and everyone applauds them saying it’s innovative. Amazon, on the other hand, goes scattergun with it’s products and it’s seen as a panic approach!

I’m gonna go out on a limb and applaud Amazon. At least they’re trying. Maybe they’ve (finally) realised that CDs are likely to be overtaken by MP3 and are trying to put into place a plan to take that into account. Who knows, you might see them implementing an extension of their recommendations system where they offer discount on the CDs when you buy a certain no. of mp3s etc.

Let’s give them time to show us they really don’t understand the business before assuming it!

WarrenG says:

Nobody's going to topple Apple any time soon

IMHO, Apple is in a pretty sweet spot in that they have the ‘complete package’. They have a slick, easy-to-use device that is offered at a price that most people can afford. It is integrated with iTunes so that it is easy for users to buy and load music. It is cross platform, so that people who use a PC at work and a Mac at home can connect their iPod to either. Plus, they have the sexy factor. So, until another company can duplicate Apples entire ecosystem, they won’t even be able to compete. Even if a company could manage all this, then the best they could hope to do is compete on a level playing field. Good luck, Amazon!!

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