September 25 2007

Amazon Launches MP3 Store… DRM-Free

Amazon Launches MP3 Store... DRM-FreeAmazon has finally launched their MP3 store (as a beta…) and it is DRM-Free as promised! Meaning their files can be played on any MP3 player, and by either iTunes or Windows Media Player.

Not only that, but is is also encoded at 256kbs, as opposed to iTunes 192kbs, providing for a higher quality file.

Where it got weird was that over 1 million of their 2 million songs are priced at $.89 each. Wait a tick… hasn’t the music industry been whining about $.99 is too cheap? So, how is $.89, higher bitrate, AND DRM-Free, make any sense? Shouldn’t this be like the music industrie’s worst nightmare? Haven’t the said that DRM-Free music would lead to increased piracy?

Something doesn’t add up here…

Are we just seeing a hatred of Apple for some reason? Universal is in this Amazon deal, which has been rather negative towards of Apple as of late. So what is the sudden turnaround on the record labels part?

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  • Roy

    I think the fundamental difference is that Amazon is just a retail store whose main goal is to sell as much merchandise as possible, while the iTunes store “appears” to have another agenda of selling ipods since iTunes only work with ipods. With Amazon, maybe Music companies don’t feel potentially threatened in any way.

  • I think Roy has a point but I also wonder if it may have something to do with how big a cut Apple insists on taking for selling via the Apple storefront. Maybe Amazon takes a small enough chunk of the 89 cents that the labels and studios make more per sale through Amazon than they do through Apple at an increased price.

    It wouldn’t be out of the question for Apple to insist on a fatter profit margin for themselves due to increased cost (which may even be true since Amazon is, as Roy pointed out, a retailer first and foremost and they may not require much in the way of additional expenses to sell MP3s whereas Apple had to build an entire new business around it).

  • Michele

    I go back to the days of $7 audio cassette’s versus $15-$20 CD’s and say something is rotten in the state of Denmark. The record industry it would seem is coming around to the idea that the internet is it’s future friend (just like I would say the tv industry seemed to have bowed too or how else did all the BUZZ worthy new shows of the season end up on Bit Torrent sites). Without the idea that people can WASTE their .99 or .88 cents on a song the recording industry would be laying off huge numbers of people.

    Apple created the model. It’s user friendly. Has the best mode of listening to the music outside of the computer itself. Me thinks you are right and Apple is getting kicked in the teeth for leading the charge.

    The recording and TV Industry (specifically NBC/UNIVERSAL) might also quickly learn that Apple has consumer loyalty whether an 11 cent saving or not.

    And personally the extra sound quality is something I can’t tell from and I would assume just takes up more space on my hard drive/ipod.

    I’ll go use my apple credit I loaded on and be a very happy clam

    Monopolies are bad – so if it helps Apple recreate the wheel great but my loyalty stays with Apple Itunes

  • I think it’s pretty clear what’s going on: the labels are trying to create a viable alternative to the iTS, and so are deliberately creating a disparity in what they offer to Apple and what they offer to Amazon. While EMI tracks are DRM-free on both services, Universal is only stripping DRM on Amazon but insisting it remain on Apple. That shows up the whole deal right there. The lower prices and higher quality are an extension of that.

    Some complain about Apple’s virtual monopoly, but you have to remember that Apple is not using that monopoly to make music prices higher–quite the opposite. Apple’s aim is to keep music prices low so they can sell more iPods, which is why the labels are chafing. Universal knows that if they go off and have the higher pricing they want, it would fail. So they hope to undercut Apple, and if it is successful, later implement the pricing they really want.

    The question you have to ask as a consumer is what will benefit you long-term. So while Amazon’s music deal seems enticing, one must remember that this is what “bait” is all about. You usually don’t see the hook until it’s too late.

  • I’m not sure how this can be seen as “bait” since you can’t be “hooked”. It’s not like once you buy from Amazon, you have to continue to do so forever. If they raise prices later, people have all the freedom in the world to buy the cheaper songs from Amazon or Apple based on pricing.

    The main problem has been Apple’s lack of flexibility in regards to pricing. The labels want to vary based on a song’s potential sales. They may charge $2 for a “hit” and less than 99 cents for a less popular song but Apple wants uniform pricing. Apple is essentially a vendor that is dictating prices to the content providers and the content providers (who like Apple are businesspeople looking to get as much money as they possibly can) don’t like this as it isn’t going to maximize their pricing. Apple doesn’t care about the consumer or prices but they do care about a streamlined system which increases the overall allure of iTunes. Their main concern is a complex pricing system may discourage use of their storefront, not to try and offer low prices for music.