Amazon Planning To Challenge Apple's iPod/iTunes Dominance

Rumors, Conspiracies, etc.

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 Amazon.com 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.