Amazon

Now that Amazon has opened a beta version of its MP3 store and everybody else has commented on it (see for example Hypebot’s roundup, as well as good takes from Duke Listens! and Digital Audio Insider) I wanted to revisit my earlier Amazon predictions. So without further ado here’s the scorecard: I predicted variable single track pricing from 60-75 cents for back catalog material, $1 for most material, and $2-3 for hot singles. Amazon instead seems to have opted for a standard price of $0.89, slightly undercutting the iTunes Store price for DRM-protected tracks, and significantly less than the iTunes Store price for DRM-free tracks. I predicted use of a single DRM-free format, namely MP3 at some high bit rate. This was an easy prediction, and I don’t deserve any credit for making it. I predicted that Amazon would offer variable pricing on digital albums, with album prices ranging from $2-3 at the low end to $10 at the high end, with the eventual maximum being in the $5-7 range. Amazon in fact is offering a limited form of variable pricing on digital albums, with most albums being $8.99 (again, slightly undercutting the iTunes Store) but some albums priced under $5. Note that these are true albums, not EPs; for example, Joanna Newsom’s Ys (only five songs, but they’re long ones) is sold for $9.99 at the iTunes Store but is only $4.95 at Amazon MP3. A less extreme example is the Decemberists’ The Crane Wife, a 12-song album that’s $9.99 at the iTunes Store but only $7.99 at Amazon MP3. I also predicted that Amazon would offer a discount on the digital album for people buying the corresponding CDs. This is not the case: If you want both the CD and the digital album you have to buy both separately at the standard prices. As I noted in my post offering such discounts on a regular basis would likely require changes to standard music licensing schemes, so their absence is not surprising. I predicted that Amazon would offer a sort-of-subscription plan with discounts (and/or free tracks) to people willing to commit to volume purchases. This is not part of the initial Amazon offering; Amazon has never offered this for books (to my knowledge), so it’s possible it may never be offered for digital music either. (Amazon does offer “club prices” for members of the CDNow Preferred Buyer’s Club. As I understand it, this is a function of Amazon’s having taken over operation of CDNow’s store, not an Amazon-native program.) Finally, I predicted that Amazon would leverage its existing technologies to provide two value-added services: backing up music libraries using Amazon S3, and personalized music recommendations using the Mechanical Turk service. Nothing like this is part of the initial MP3 store; in fact, Duke Listens! points out that Amazon currently doesn’t do a very good job of recommending new or future MP3 releases that might be of interest. Overall I’m a pretty poor predictor, although in my defense I was deliberately trying to be over the top a bit in terms of suggesting things Amazon might do to differentiate itself from existing services. ...

Now that I’ve done a lengthy eMusic-related post I feel less guilty about doing yet another post on Amazon and its rumored plans to enter the digital music market; in particular I wanted to highlight two (relatively) recent articles on the topic. From the “pro” side of the fence (i.e., someone paid to have opinions and publish them) comes an article “Why Amazon is Important” by Mark Mulligan of Jupiter Research. (Incidentally, Mulligan blogs a lot about digital music but has mentioned eMusic only a few times, mostly in passing.) Mulligan refers to Amazon as the “sleeping giant of the digital music market” and notes that ...

It’s unseemly to gloat that “I told you so,” but I’m not being paid for this gig so I’ll take my satisfaction where I can find it: According to a Digital Music News report on Amazon’s plans (free registration required), Amazon will be integrating its much-rumored digital music offering into its existing CD-centric online store: MP3s from participating artists will be blended into the larger, existing Amazon store. “They are not trying to replace iTunes, iPod, Zune, whatever,” one source said. “It’s going to look just like Amazon does today.” That means that a search for an artist will yield a number of results, including CDs, merchandise, DVDs, and MP3s if available. ...

Courtesy of Hypebot’s New Music Business Briefing this week: The mainstream music industry press (in the form of Billboard) talks about the possibility of Amazon entering the digital music market. Some quick points, for those keeping score at home: Hypebot brags that they’ve been out in front on the Amazon story for some time now. Fair play to them, they’ve done a good job of keeping up to date with Amazon-related developments. Billboard revisits the complaints of the major labels that Amazon wasn’t willing to take on Apple with a DRM-based offering. Sorry, folks, I pointed out over a year ago [what a stupid idea that was][what a]"), especially given that Amazon is in business to serve its customers, not the business models of the major labels. As [I predicted][I predi], Amazon has at least been trying to establish price points for a la carte downloads below the prevailing $0.99 per track model (which in turn is based on a wholesale price to labels of $0.70 per track). However Amazon is encountering resistance, and it’s not clear if it will be successful, at least initially. Interesting times. But enough Amazon for now; this is an eMusic blog, so I’ll try to post on eMusic next. ...

Today Hypebot posted the promised article discussing how Amazon can succeed in the digital music business. Also as promised, I will now comment on Hypebot’s advice and how it compares to [my own][] on an Amazon digital music service"): Be the first major US store to sell EMI in the mp3 format. This advice seems overly short-term: Sure, Amazon might get some initial press for being the first major US store (note the qualifiers!) to enter the digital music market with major label MP3 offerings, but this does not a long-term strategy make. I think it needs to be coupled with something else, and I think that that something else is Amazon having a clear and public goal to be the market-leading commercial provider of digital music in the MP3 format—a goal which in essence amounts to supplanting eMusic as the perceived number two player behind the iTunes Store. As [I’ve written previously][Ive wr] I think this is a realistic goal, and achieving it would pay big dividends for Amazon in terms of market credibility, just as [it has for eMusic][it has]. ...