It's about time! Amazon.com, which has been selling downloadable movies since September, announced this morning that it plans to sell downloadable music later this year. Though late to the party, Amazon isn't simply following in the footsteps of Apple, Napster, Sony and RealNetworks: it plans to sell songs only in the MP3 format, free from digital rights management restraints. That's moving an important step further than Apple, which plans to offer DRM-free music at a premium price only from EMI and selected independent labels. Going MP3-only is probably the only approach Amazon could take, given that a big part of its business is selling digital music players that don't share a common approach to DRM. If Amazon wants to duplicate the hardware-content synergies that made the iTunes Store the market's Godzilla, it can't afford to have customers confused or frustrated by DRM incompatibilities.
The major record companies would love to weaken Apple's dominance, and Amazon is likely to be willing to do things that Apple has refused to do (for example, sell new releases for higher prices than older titles). But the DRM-free approach has only one adherent so far among the Big Four: EMI, which declared its support for Amazon's new store today. Forbes offers an interesting take on where the other three stand; in short, only Universal seems interested in venturing into the unlocked world. Not having downloadable tracks from at least half of the major record companies would be a big problem for Amazon, but it wouldn't necessarily consign the store to the indie fringes. It all depends on how hard Amazon promotes the downloads it does have to the masses who frequent its site.
Amazon had long been rumored
to be on the verge of jumping into the online music market -- my former
colleague Jeff Leeds and I first wrote about Amazon's potential entry
back in June 2003, less than two months after Apple launched the iTunes
Music Store -- but its hesitation allowed lesser retailers to carve out
a huge lead. Still, Amazon is a formidable force in the CD and MP3
player markets, as Jupiter analyst Mark Mulligan points out, and downloads still represent just a small (albeit growing) portion of music sales. The shift from CDs to downloads is in its relative infancy, and few companies are better positioned than Amazon to goose it along.