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Amazon.com is setting its sites on iTunes with the release of its new DRM-free music download service

Amazon.com is expanding its digital offerings with a new music store, Amazon MP3.  The store is considered highly anticipated, due to Amazon's high profile, despite the cluttered nature of the online music market.

The early version of the store launched this week, with an initial catalog of over 2 million songs.  The store is expected to directly compete with iTunes for online music dominance.

Singles on the new service are cheaper than iTunes -- sometimes.  Songs run from 89 cents to 99 cents, an Amazon claims in a statement that more than half of the 2 million songs priced at 89 cents.  The company guarantees that its top 100 best sellers will remain at 89 cents.

Amazon signed deals with Vivendi owned Universal Music Group, the largest record company in the world, and EMI, another major record label.  Altogether, Amazon claims it secured more than 20,000 record labels.

Users can download tracks from the new service in 256 kilobit per second VBR MP3 format without any copy protection: all music can be readily played on just about any MP3 player, including Apple's iPod family.  This move marks a departure from DRM-protected iTunes and recently launched ad-supported download service SpiralFrog. 

Universal Music Group is not happy in its relationship with Apple and voice its anger today in the headlines.  With its new deals with Amazon and SpiralFrog, UMG appears ready to jump ship from iTunes.  There may be no time like the present; NBC Universal pulled all of its iTunes offerings earlier this month specifically to move to Amazon.

Apple recently announced its three-billionth download since its debut four years ago; Amazon is the fifth largest audio CD vendor even without digital music downloads.

However, Amazon might not be the only DRM-free service in town for long.  Earlier this year Steve Jobs pledged to reduce DRM on its high-quality audio tracks.  These tracks cost more than Amazon's offerings ($1.29 versus $0.89), but if Apple is any indicator, eventual winner of this arms-race will be the merchant with the best labels, not the one with the least DRM.


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Fixed vs Variable Pricing
By jeromekwok on 9/26/2007 12:52:05 PM , Rating: 2
I have some views on fixed pricing (Apple) and variable pricing (Amazon).

There are some reasons Apple to stay on fixed pricing. If the music world is fixed priced, customers don't have to go bargain hunting to see which store offers the best bundles. Customers don't have to worry that the price of the songs they buy today may drop tomorrow; or wait for the price to drop before buying. Save time to listen to more previews and buy more good songs.

Fixed pricing would push music producers to make better songs. There is no pricing advantage for craps.

Variable pricing in my opinion benefits the labels more than customers. Customers have to pay more for popular tracks. Also, customers may buy more songs due to bundles or offers, which some songs may turn out they don't like that much. Labels can sell craps at lower price, so bad singers can survive.

I would like to see labels to sell songs from both kinds of retailers. There is no problem to sell $1.29 on iTunes while selling <=$1.29 at Amazon.

I am not sure how good is the mp3 encoding, I guess 256k vbr mp3 is comparable to 128k cbr AAC. DRM-free is definitely good for all people.




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