“Amazon’s DRM-free prices are in line or even less than iTunes’ DRM prices. Think about that for a minute. The labels hate iTunes pricing — it’s what they constantly bitch about — yet here is Amazon with those same iTunes prices (or less!) for tracks having a distinct advantage,” Tom writes for The Small Wave.
“EMI wanted more money from Apple for singles with no DRM, but seem perfectly satisfied with Amazon’s 99 cent price for the same thing. Why? Further, Universal has repeatedly said they’d never remove DRM, yet they tossed a few hundred thousand DRM-less tracks to Amazon at only 99 cents. What gives? Why the special treatment?” Tom asks.
“In my opinion this is just a push for Amazon to get customers while the labels hope to break iTunes’ grip on the digital music world. If the store gets popular, expect the labels to raise prices and, unlike Apple, expect Amazon to have little issue with this. The labels might also rollout more tracks, but with DRM. We know Amazon’s video site is in bed with content providers (most recently NBC); they clearly have no issue with DRM. I think if Amazon were seen as a threat to balk at any of this they wouldn’t be getting this preferential treatment to begin with,” Tom writes. The music labels “just want to build a popular store with a partner who won’t argue over pricing and DRM restrictions.”
More in the full article here.
Pretty obvious, but it’s a welcome sight to have a well- and clearly-stated explanation jutting out of a sea of obtuse “Amazon’s an iTunes Killer!!!” screamers.
[Thanks to MacDailyNews Reader “Jon” for the heads up.]
What I noticed about the Amazon MP3 beta is that, contrary to Amazon’s claim that “more than half” the tracks are priced at $.89, most tracks by well-known artists are $.99 and up. Longer tracks are priced higher ($1.94-3.87).
Some articles have also incorrectly claimed that Amazon MP3 encodes all tracks at 256kbps. Amazon’s own FAQ states that most tracks use VBR encoding. Actual users have yet to tell us how VBR compares with Apple’s 256kbps AAC in A-B listening tests.
The answer to this is quite simple: (1) The labels didn’t want higher pricing, they wanted variable pricing. Apple insists that there be only two prices for songs: $0.99 and free. The labels want a variety of different prices. See they have two ideas that they are stuck on (a) that a track by a very popular artist (The Beatles, say), is more important to them than NoName from Podunk. Therefore they want to have the ability to price songs at LESS than $.99 so they’ll sell more, and they want to charge more than $.99 only for product that is in such high demand that it isn’t price sensitive. Now all that might mean pricing your more valuable acts higher, but it could also mean pricing it lower, to stimulate even greater demand. That’s why, for instance, the top 100 tracks on Amazon are the cheapest. (2) The labels have artists (Radiohead, AC/DC, and, probably, The Beatles) who insist that they are “album artists” and want their songs sold only in bundles. iTunes won’t permit that, while Amazon will. (3) This one should be obvious: iTunes takes a higher percentage of the selling price than Amazon does, because Amazon is a low-margin/high-volume retailer, while Apple is a high-margin/low-volume retailer. Different philosophies, equally valid (except when you get a high volume product like the iPhone where you rake in so much money that it makes sense to lower your price to increase volume even more and your old high-price/low-volume customers start squawking.
$3.84 for one track? And here I thought that Amazon would be a decent competitor. Instead they’re just another green soldier pushed to the frontlines by the corrupt music oligarchy. The backlash begins now.
I’m not up on US law, but I suspect the labels had better tread carefully here. Provided Apple pays its bills on time, it may well be illegal to give them different, inferior (DRMed) product compared to other sources such as Amazon.
Collusion in the music industry? Ridiculous .
The bottom line is that the labels only care about what their cut of the sales price is – if Amazon takes less for itself, so be it. If the labels are getting $.80 per track from Amazon, and only $.70 from iTunes, then of course they’ll back Amazon.
This also gives them a potential heavy hitter against iTunes, although we’ve heard that line before. It remains to be seen just how committed Amazon is to its music download service over the long haul, and how long it will put up with (likely) small cuts of songs.
Simple, the labels are punishing Apple for showing them how to survive in the digital age. They ridiculous dinotards.
BTW, I love those glossy screens, fantastic!!
@effwerd
I agree. Totally ridiculous!
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Of course, Sir Bernard Ingham said:
“Many journalists have fallen for the conspiracy theory of government. I do assure you that they would produce more accurate work if they adhered to the cock-up theory.”
In other words, “Never assume malice when stupidity will suffice.”
I had an associate once who used to say: “I think you are crediting these folks with rather more intelligence than they can actually muster.”
Anyway, I have been watching Steve play the iPod/iTunes/iTS chess game since the start. Every move at the Master level. To mix metaphors, he is already skating to where the puck will be, so the response should be interesting (and not necessarily obvious).
I think Jobs response will be to do nothing. He won’t have to. Consumers will do it for him…by not using Amazon as much as the music labels want them to.
The iTunes Store is remarkably customer friendly, Amazon’s is… well… primative by comparison. It’s like the difference between a Ferrari and a Gremlin.
And what’s with this special downloader app? WTH!! I’ve bought and downloaded all kinds of digital goods online over the years and not once, not one time, has any kind of special downloader application been needed. Not Apple, not Adobe, not even Quark.
Yeah…Tom’s right…somethin’ smells.
@Mac Fan
I concur – great analysis. It will be interesting to see what the music companies do in six months. Will they try to close up shop within a new, DRM’d Amazon store? If so we can expect a consumer backlash that will greatly accelerate the old labels’ obsolescence.
As for SJ’s competitive response – if it passes muster with the regulators – please hire a small A&R;staff, launch your own music label, and compensate your artists much more fairly than the old record companies did. Then we can expect a rapid talent drain from Universal et al as contracts expire. Welcome to the new metaphor.
I just went the the AmazonMP3 site and it is great!! I even downloaded Kanye West’s song “Stronger.” Looks like the AmazonMP3 site will soon be “Stronger” than iTunes after all the Mac is whack. : ) F -> Apple F -> Jobs
I installed the downloader last night so I could get the free song. I ended up buying a single song and an album also. It was fairly quick and easy and sounds good. But, they need to work on their site to make it easier to find stuff. It should at least be as usable as eMusic.
Oh, and Nickster is an ignorant jerkwad.
Sounds like the music industry is cutting off their face to spite their nose. I do like the writer’s conclusion (start cheap, raise prices later). The problem with that is that you cannot raise the prices until you destroy/overcome the competition.
I doubt that will happen, as many have pointed out, be it from Amazon or iTMS it’s all pod music anyway.
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