USA Today claims Amazon #2 to iTunes because ‘the four major labels’ said so

“Amazon’s MP3 store — which sells only songs without copy protection — has quietly become No. 2 in digital sales since opening nearly six months ago, say the four major labels. That’s even though Apple dominates digital music with its iTunes Store (the second-largest music retailer in the world, after Wal-Mart) and its hugely popular iPod,” Jefferson Graham reports for USA Today.

MacDailyNews Take: “…Say the four major labels.” No hard numbers from NPD or any other independent firm, just a nebulous “Amazon’s #2” according to “the four major labels” who, by the way, are trying their damnedest to create a strong contender to iTunes in an attempt to weaken Apple’s bargaining power.

In addition, in a very curious edit, the same USA Today story is being carried by Yahoo News and many others via syndication that inexplicably omits the extremely crucial line: “say the four major labels.” So, all syndicated instances of this article are actually running a story claiming that Amazon is #2 without qualification. Pure nonsense. And fishy. What kind of editor would take out the five most important words in the article? Why, it’s almost as if the labels themselves edited the syndicated article! We know, we know: we’re crazy. wink

This would be like MOPAR claiming that Chrysler is #2 in the world on the pages of USA Today and then the syndicated article just happens to drop the five-word mention that it was MOPAR, Chrysler’s vehicle parts supplier, that made the claim. This is wrong.

This article sounds like a plant by the labels to juice Amazon’s store. Whether or not Graham and his editors were duped by the music labels into running an Amazon MP3 Store ad masquerading as a news article in USA Today, we don’t know. Regardless, to protect his reputation, Graham should be publicly demanding to know why his story is being syndicated without the “say the four major labels” qualifier.

Contacts:

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Graham continues, “The push for copy-protection-free music began nearly a year ago, when Apple and major label EMI shocked the industry by announcing a landmark arrangement to sell 150,000 songs without digital rights management (DRM) software. It was the first time a major label had agreed to such terms.”

“Apple, which claims an 80% share of digital music sales, said consumers would be ecstatic about the EMI deal and that digital sales would greatly increase. CEO Steve Jobs predicted his iTunes catalog would be 50% DRM-free by the end of 2007. But that never happened,” Graham reports. “Warner, Sony/BMG and Universal all opted to sell their DRM-free music on Amazon instead. ‘The labels think Apple has too much influence,’ says Phil Leigh, an analyst at Inside Digital Media.”

MacDailyNews Take: Collusion.

Graham continues, “Apple now has 2 million songs from EMI and independent labels available without DRM, out of its 6 million-song catalog. Amazon offers 4.5 million DRM-free songs.”

In a sidebar to the article, Graham reports that Apple is considering “pre-loaded iPods with access to iTunes… Apple is meeting with labels to discuss a new kind of subscription — pre-loaded iPods with access to many songs from iTunes’ catalog, according to persons with knowledge of the meetings who didn’t want to be quoted about discussions that are not yet public. Apple had no comment.”

Full article here.

Our problem with this article is not at all about whether Amazon is #2 to iTunes Store in digital music sales or not. In fact, we agree that Amazon probably is the distant #2; by how much nobody knows, as it seems the “four major labels” have somehow neglected to say. That bit of info probably didn’t favor the overall theme of the article. Furthermore, we have recommended using Amazon’s music store as it is iPod- and Mac-compatible — although we’re now reconsidering that recommendation as the labels’ intent becomes clearer and clearer with each passing day. So, buy from iTunes if you can.

The problems we have with this article concern the Who, What, and Why:
• Who is saying Amazon’s #2?
• What is their agenda for getting a reporter to write it up in USA Today right now?
• Why was the fact that it was “the four major labels” who said Amazon is now #2 omitted from the syndicated copy?

Beyond lacking actual numbers that give some meaningful perspective (how much share does this #2 Amazon have compared to Apple, anyway?), the article is totally meaningless without knowing who is claiming Amazon is #2 to iTunes. But, if you know who’s saying it, it makes all the sense in the world.

MacDailyNews Note: This article was originally published at 2:15pm EDT and was updated at 8:20pm EDT with portions of our Takes revised and expanded upon for clarity.

54 Comments

  1. “‘The labels think Apple has too much influence,’ says Phil Leigh, an analyst at Inside Digital Media.””

    Translation, the labels want someone to compete with Apple because you know competition is good to keep prices down… right? Right? After all, 99 cents for a song is just outrageous.

  2. Apple has already done the pre-loaded iPods: the U2 entire catalog on the special edition U2 iPod. So nothing new here.

    If they’re talking about iPods sold with a premium fee to allow access to all of iTunes w/o other fees, don’t hold your breath.

  3. “I’ve got a Chevy MOPAR cam. I’ve got a Chevy MOPAR cam. I’ve got a Chevy……MOPAR cam. I’ll be your Johnny on the spot!”

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

  4. There is nothing “wrong” about it, in fact. The labels are a much better source than anybody else because they are the ones collecting royalties and sales information from all their distributors. So the Chrysler analogy is not correct. A better analogy would be if Chrysler named so-and-so their top dealer.

    There is no doubt that the labels wanted to build Amazon up to rival iTunes store. It is not because Apple refuses to raise their price, since Amazon gets to sell good quality DRM-free songs for less. It must be to reward Amazon for their CD and DVD sales.

    I haven’t bought anything from Amazon yet, although I have checked them out on several occasions. I continue to buy from iTunes. I prefer their iTunes+ and AAC format.

    I think eventually the labels will extend the same terms to Apple as they have to Amazon. And if they don’t, they run the risk of losing a lot of iTunes customers. Digital music sales are very high margin so it’s to their benefit to sell as many as they can.

  5. I switched a few months ago from buying online at iTMS to Amazon. The interface sucks, but you know, who cares. I get DRM-free MP3s at 256k *and* it’s cheaper. The library isn’t as large, but they seem to have a lot of what I’m looking for. The rest I still buy physical because I really can’t stand iTMS’ restrictions.

  6. “The USAToday article says “Apple, which claims an 80% share of digital music sales”.

    The word ‘claim’ is a well chosen word. Why? because it can mean one thing, while inferring another.

    If Apple ‘claims’ 80%, the word ‘claim’ can mean they have ‘ownership of’ 80% or it could mean they ‘say’ they have 80%.

    In this case, the fact is that Apple has ownership of 80% of sales. However, the inference is “those boastful,arrogant people at Apple keep shouting that they have 80% of sales”

  7. Yes, the article was severely lacking in hard numbers, but I like the guy from Amazon. He sounds like Steve Jobs:

    “Amazon’s Baltaxe says the best defense against piracy is a good offense. “Songs sold without DRM, at high quality, with album art, that’s the best way to get people to buy music instead of stealing it. DRM is a way to punish people who are buying,” he says. “Offering a great product at a great price is a way to combat piracy.”

  8. At least the article credits Apple with working with EMI to kick off the DRM-free revolution. The reasons that iTunes hasn’t gone completely DRM-free are…the four major labels. Go figure.

    I am personally not purchasing any new music from the labels. I buy used CD’s, which does not (directly) contribute to their revenue streams, and am content to live a music life that lags by a few years (except for radio, of course).

  9. I have two screen names. one is megame and the other is deepdish. why two, well, one is registered and the other is not.

    Silverhawk, I had to google “Jefferson Graham” to figure out who you were talking about.

    Nope, not that guy. I am me. I am megame.

  10. MDN, you are skeptical, but the other also rans in digital downloads were so far behind iTunes that I expected Amazon to be #2 in digital downloads on Day 1. Note that is in downloads not in music as a whole where Amazon was already surpassed by iTunes.

    C’mon do you really think WMA-hobbled stores like Napster or Zune Marketplace or Rhapsody are actually ahead of Amazon? Or that the majors would promote a site like eMusic whom they don’t support? Puh-leez.

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