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September 26, 2007

Amazon Opens Music Store In Style

Amazon's online music store is launching today and getting quite a bit of press attention.  It's not merely that Amazon has the heft to compete with the iTunes store, but the deal that it's offering.  According to press reports, Amazon will offer 2 million mp3s encoded at 256 KB for 89 to 99 cents each.  Amazon also figured out a way to make sales available to iPod owners using the iTunes software to get Amazon store songs on the iPod.  The move is backed by Universal Music who continues to sell through iTunes on an at will basis.  The most amazing part is that the music will be DRM free, at least through January, 2008 for the Universal downloads.  That company is experimenting to see if DRM free tracks increases sales.

The odd part in all of this is Universal is doing something Apple wants to do (drop DRM from tracks) at a lower price than Apple charges.  That's the even stranger part when you consider that Apple and Universal fought over pricing.  Universal wanted higher prices for newer songs and lower prices for older songs compared to the 99 cent flat fee.  Apple has since gone to a higher price for DRM free music from EMI.  The willingness of Universal to undercut Apple in spite of its own statements is remarkable.  They really do want to create a viable option to the iTunes/iPod structure. 

The big loser in this is probably going to be Microsoft.  Who needs WMA restricted files when unrestricted MP3s are available.  They play for sure on all players.  We'll, maybe not older Sony players.  But even they came around when their new models dumped their proprietary format.  The development is short of amazing given the stance of the music labels on DRM and pricing.

More on this in the Motley Fool, Forbes, and the Chicago Tribune.

September 26, 2007 | Permalink

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