Amazon’s music ambitions pose no threat to Apple’s market-dominating iPod+iTunes

“Amazon.com may be jumping into the online music mosh pit, but don’t expect Apple Computer to give up the stage any time soon,” Troy Wolverton reports for TheStreet.com. “Published reports indicate that Amazon is close to launching its own digital music service that would compete with Apple’s industry-leading iTunes store. In conjunction with the move, Amazon also will apparently offer its own line of Amazon-branded digital music players that would work hand-in-hand with the service, according to the reports.”

“‘I don’t think [Amazon’s prospective store] is a threat [to Apple] at all,’ says Tim Bajarin, principal analyst with Creative Strategies, an industry research and consulting firm. ‘There are a lot of things that Amazon would have to get right for this to work.’ That’s because for the many advantages Amazon may have, its digital music store would start off with some significant obstacles. iTunes has already established itself as the leading online music provider, and Apple brands such as iTunes and the iPod music player have become strongly identified with what is hip and cool in the digital music market,” Wolverton reports. “The iTunes store had 83% of the market for U.S. digital music sales in December, according to Nielsen SoundScan data released by Apple CEO Steve Jobs last month. Apple’s various iPod lines own north of 70% of the digital music player market in the U.S.”

Full article here.

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Related article:
Amazon preps Amazon-branded music players, digital music service to rival Apple iPod+iTunes Store – February 16, 2006

31 Comments

  1. Word on the the street (pun intended) says MDN has been affected by a widespread power outage as a result of Friday’s windstorms in the U.S. northeast. They lost power at approximately 9:30am EST Friday along with approximately 250,000 others. The blackout is still affecting over 120,000 residences and businesses three hours ago. Due to their backups currently being unavailable due to other circumstances, MDN has driven out of the affected area to find the basement of a science building in the podunk in order to resume posts. Their power company curently reports that they expect power to be restored at mom’s house by “Sunday night at the latest.” Thank you for your patience. ” width=”19″ height=”19″ alt=”LOL” style=”border:0;” />

  2. Contrary to popular thought, all these other online music sellers are threats.

    Some first time fool who downloads a bunch of songs will then be locked into something other than a iPod.

    Sure the iPod has the brand recognition, but as time goes on and the other players bring up their products to the level of the iPod….

    Of course that depends upon Apple remaining still and letting the others catch up.

    Like what almost happened with the colored iPod mini’s.

    Apple really pulled a good move there, making their own (and everyone elses) hard drive based music players obsolete overnight.

  3. Anyone who challenges iTunes is a priori a worthy competitor until proven otherwise. Resting on one’s laurels is hardly a formula for success.

    Does USA-USSR hockey (1980), Villanova-Georgetown (1985), France-Senegal (2002), or Lindsey Jacobellis-Tanja Frieden (2006) ring any bells? Still, I would think that Amazon has a steep climb ahead to reach the dizzying heights of iTunes.

  4. Does … France-Senegal (2002), or Lindsey Jacobellis-Tanja Frieden (2006) ring any bells?

    Uh, no actually. ” width=”19″ height=”19″ alt=”blank stare” style=”border:0;” />

    Let me guess, a war and a lesbian wedding?

  5. <i>Apple really pulled a good move there, making their own (and everyone elses) hard drive based music players obsolete overnight.</b>

    Care to explain to me how my 30g iPod with video became obsolete with the demise of the iPod Mini line?

  6. The Amazon store sounds really, really interesting. But the devil is in the details. Amazon is not a software company, nor are they a hardware company. They will need to form partnerships to create both pieces of this puzzle. As someone stated in another topic, how will problem players be serviced?

  7. Brocktoon, he just meant that there was no point in creating competitors to the mini once the nano came out. It threw all the competitors back to the drawing board.

    Apple is moving ahead so fast that it’s hard for competitors to keep pace, much less catch up.

  8. If subscription did prove to be a winner, I don’t think it would take Apple long to also offer a subscription service with a few extra flourishes too.

    But the important word is ‘if’ and I’m not at all convinced that subscription is likely to succeed.

    But there are some interesting ideas floating around. A subsidised player linked to a 12-24 month subscription contract might be very tempting for some users, so I wouldn’t dismiss it out of hand, particularly if they launch it at very low prices and make it really cool. But the iPod has raised the bar very high when it comes to customer’s expectations and it won’t be easy to match the iPod/iTunes/iTMS trio, but all three will have to be matched or exceeded.

    But one snag with low prices is that they don’t make any money while of course Apple continues to be the only company making money out of this business. How long will they be able to continue running at a loss while Apple makes massive profits ?

    The other problem that Amazon will need to overcome is how much to pay the labels & artists. The labels are desperate for a rival to Apple to finally succeed but they are also desperate to line their own pockets. They’re already trying to squeeze more money out of iTunes, I can’t see any way that the labels would do better with a subscription service unless the monthly fee was substantial and they got a high proportion of it. But high fees or passing on too high a proportion to the labels would make the service uneconomic.

    Still, it might be amusing to watch another challenger try and fail. Has anybody counted up just how many tombstones there now are in the graveyard of the iPod killers ?

  9. And Apple is about to repeat the cycle again if a other manufacturer even so much thinks about getting into the market.

    Guess we know how Microsoft feels.

    ” width=”19″ height=”19″ alt=”raspberry” style=”border:0;” />

  10. (I posted this last night to MDN’s earlier store on Amazon, but here it is again since what I wrote below is in response to thestreet.com’s article…)

    Tim Bajarin, said:
    > “There are a lot of things that Amazon
    > would have to get right for this to work.”

    Maybe not a lot, but at least a few:

    * their player should be visually identifiable from a distance. iPods are white and black. Amazon’s should be silver, or earthy-healthy Trader-Joes Whole-Foods green and brown (two different models).

    * since Amazon got its start sellling books, its player should support Audible, whose site lists none of the Creative Vision players or any Sony ones.

    * lastly, Amazon must have great software to manage and transfer the songs to the player. Apple didn’t create iTunes; it bought and rebranded SoundJam. When iPods were first PC-compatible, iTunes wasn’t, so Apple used MusicMatch (now used by Yahoo!). Bad software is Sony’s problem. It cannot be Amazon’s. It has to be easy enough for a grandmother to use, cool enough for a teenager, reliable enough for an audiophile.

    * and one more thing, it would be cool if it could do one thing that no other PC MP3 player does, and that is work w/ Macs. Clearly, it has to do _some_thing that Napster, Virgin, Yahoo, et al, can’t or don’t do, and if Adobe, Microsoft, Intuit, et al, can create Photoshop, Office, Quicken, et al, for both platforms, Amazon can offer _some_ level of compatibility (as Real does, but no player). Maybe Mac-users couldn’t listen to the tracks on their Macs, but they could at least buy the player, plug it into their Macs, buy some tracks and transfer them to the player.

    As a Mac-user myself, I think competition is good. I would love to try other MP3 players and subscription services, but I can’t. I think Microsoft should be shamed into making their DRM work w/ Mac OS X because they are preventing the sale of millions of MP3 players and subscription services because of that, which isn’t hurting or fazing Apple at all.

    ds. =)
    Los Angeles, CA

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