Amazon to sell DRM-free MP3s. Will it make a dent in iTunes sales??

4 09 2007

Amazon LogoYou read that right. Amazon.com – the giant (we’re not just books anymore) web store announced earlier this year that it’s going sell DRM-free MP3s. What that essentially means is that you can I can ‘legally’ burn CDs with the purchased music. We can copy and listen to the music across multiple computers/devices be it Desktops, laptops, iPods etc (provided the devices all belong the same user). Amazon’s music catalog will include music from EMI as well as from 12,000 independent music companies.

What’s not clear is the pricing model as yet. Some industry insiders are speculating that they might have a variable price-point model. Users can vote for the price on a song and then settle on a bid. I’m not sure whether this is the best idea to start with since people have different views on creative content like songs. You and I will have different opinions on whether a particular song is worth a dollar or more or less.

What will work is a flat fee system like iTunes. Maybe even go the Apple route and charge a flat 99c per song. Apple currently charges a flat 99c for all songs in the iTunes store but they’re all DRM bound. Currently, if you want to purchase DRM free music from Apple iTunes, you have to pay a premium of $1.29 per song. Read the official press release. *

If amazon can set a very aggressive pricing system of 99c (or less) across the board for all DRM free music, they might be able to make a dent in iTunes sales within a year. Apple does have the head start however. It recently announced the crossing of the 3 billion song mark on iTunes! Plus, Apple is a brand which is intrinsically connected with digital music thanks to iMacs, iTunes and of course iPods. Make no mistake…. it was digital music which resurrected the mac in the late 90s. The iPod saved the entire computer company as a whole.

And for my money, I feel iTunes certainly offers the slickest way to buy and enjoy digital music today. It’s integrated iTunes software (browsing, shopping, jukebox) keeps getting better and more solid with every version.

Amazon needs to create a cracker of a shopping experience and set “easy on the pocket” prices for it’s DRM-free music. THEN, the battle will truly begin. Whatever happens, we consumers will anyway have more choice so that’s always a good thing!

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