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Amazon Planning To Challenge Apple's iPod/iTunes Dominance

Rumors, Conspiracies, etc.

from the here-comes-the-counter-attack dept

Thu, Feb 16th 2006 4:19am — Mike Masnick
It's no secret that the big record labels have desperately been looking to back a company that can effectively compete against Apple's iTunes/iPod juggernaut. While they were happy with the original success of iTunes, and its ability to basically create the digital download music marketplace from scratch, Steve Jobs became too powerful for their liking when he wouldn't agree to let them raise prices or give them a cut of iPod sales (a device they originally hated and wanted stopped). At some point, the record labels recognized that Apple had way too much power -- and it was partly their own fault for insisting on a copy protection solution that gave Apple lock-in.

However, it looks like the record labels have found a new horse to back. The Wall Street Journal is reporting that Amazon.com is close to completing deals with the major record labels to offer a competitive offering -- both in digital downloads and in hardware. That's right, Amazon will be offering its own digital music player, branded by Amazon, but built by a third party OEM (possibly Samsung). That may upset other music device makers, who will find themselves competing against Amazon on Amazon's own site. Still, the idea of digital downloads fits with another recent story about Amazon's movie download plans -- though there are some interesting additional details in the WSJ piece. Apparently, Amazon would heavily subsidize the music player, giving it a leg up on Apple's pricey iPods. This actually seems a bit strange, since Apple has admitted that it uses the music as a loss leader to sell more iPods. In other words, it's losing money by selling music, but making it up on the iPod hardware. However, in this case, Amazon would offer subscription pricing, rather than per-download, which many believe is much more profitable. Even more interesting, though, is that Amazon's subscription offering would allow them to offer the music player pre-loaded with songs. For years, people have said that Apple should be doing the same thing, but other than a few experiments with music acts like U2 and Madonna, most iPods come pretty much empty. There are still plenty of questions (such as how drastic the copy protection will be, how much the subscription fees are and how appealing the music players are). Plenty of companies have tried to take on Apple's iTunes/iPod dominance in the past -- and they've all pretty much failed (often miserably). Amazon, at least, is trying something different -- but that doesn't mean it will succeed.

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21 Comments

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  1. identicon
    Gary, 16 Feb 2006 @ 6:36am

    And now for something completely different

    If Amazon wants to try something really different, they need to NOT implement fair use restriction technologies.

    [ link to this | view in thread ]

  2. identicon
    Jeff, 16 Feb 2006 @ 6:43am

    Won't work because the RIAA is still clueless

    The only way for the RIAA to knock iTMS off its pedestal is to do away with DRM. Apple didn't want it but now its loving DRM since it forces users to buy iPods. Without DRM, other players can take advantage of sales from iTMS while at the same time other online stores would have a chance to sell music to owners of iPods.

    [ link to this | view in thread ]

  3. identicon
    Vienna, 16 Feb 2006 @ 6:48am

    Another company misses the point

    IMHO Apple's success with the iPod is primarily because of its ease of use. That click wheel makes navigation pretty intuitive. Until rival players offer a compelling alternative I don’t think they will make a dent in Apple’s market lead. Even now there are cheaper players than the iPod that have longer battery life, etc. If Samsung can’t make a dent in Apple’s market with their players now, why will they for Amazon ? This just looks like some executive looking at another companies success and jumping on the band wagon, perhaps they should look at when all the existing competitors aren’t making any inroads into the market before they decide to join them.

    [ link to this | view in thread ]

  4. identicon
    ibeetle, 16 Feb 2006 @ 6:50am

    No Wait... No Wait... ok... ok... This is it... re

    The RIAA backs Napsters new legal business model to over throw Apple...
    No wait... The RIAA backs Creative to over throw the iPod
    No wait... The RIAA backs Real Networks to unseat the iTunes Music Store
    Ok... This it it.... Really... The RIAA backs Microsoft... yea thats it... If there is one company that can take down Apple it is Microsoft...
    Now it is Amazon.com.
    Next month it will be somebody else.
    And what is the big deal?
    Apple maybe the only company making money from downloading music but they are not number one. In retail music sales they are number 7. Why doesn't the RIAA go after the juggernaut of Wal-Mart or Best Buy?
    Why is the RIAA, Microsoft and 150 (yes that is the actual number) legal download music services scared of Apple? Why doesn't the RIAA deal with Apple and reap the rewards and not fight them and loose.

    [ link to this | view in thread ]

  5. identicon
    William, 16 Feb 2006 @ 7:08am

    No Subject Given

    if anything this will promote some more competition. But not over prices I hope...hopefully content and features in the software. Amazon is good at selling music...I used to buy only from amazon until i got an ipod in back in 2002. iTunes has only recently added features like Just For You. That is great but the fact that amazon can do it all back door on their site...ie. without having to update iTunes to 6.03. I am a fan of apple but I think they could do better...

    [ link to this | view in thread ]

  6. identicon
    Robert, 16 Feb 2006 @ 7:13am

    umm hello?

    Umm hello this is nothing new... sounds like napster to me.

    [ link to this | view in thread ]

  7. identicon
    Ash Shetty, 16 Feb 2006 @ 7:49am

    No Subject Given

    History Repeats itself Lets see how Amazon can break the Ipod Dominance

    [ link to this | view in thread ]

  8. identicon
    dan wendell, 16 Feb 2006 @ 7:51am

    Re: No Wait... No Wait... ok... ok... This is it..

    Great comment. I was totally into it right up until the last word of your post.

    Please get it straight people loose is the opposite of tight, lose is the opposite of win.

    [ link to this | view in thread ]

  9. identicon
    Taylor, 16 Feb 2006 @ 7:56am

    How is this different?

    You say atleast Amazon is trying something different... I'm sorry what are they doing different than say Napster? Doesn't Napster even sub out their players for Samsung to make?

    Good luck with this Amazon your going to need it.

    [ link to this | view in thread ]

  10. identicon
    Wolfger, 16 Feb 2006 @ 8:38am

    How about...

    ...a store that sells music in MP3 (or better yet, Ogg) format, that can play on any digital music player?

    [ link to this | view in thread ]

  11. identicon
    Tim Myles, 16 Feb 2006 @ 8:44am

    Innovation vs. Panic

    Funny, isn't it? Google takes this scattergun approach to a business model and everyone applauds them saying it's innovative. Amazon, on the other hand, goes scattergun with it's products and it's seen as a panic approach!

    I'm gonna go out on a limb and applaud Amazon. At least they're trying. Maybe they've (finally) realised that CDs are likely to be overtaken by MP3 and are trying to put into place a plan to take that into account. Who knows, you might see them implementing an extension of their recommendations system where they offer discount on the CDs when you buy a certain no. of mp3s etc.

    Let's give them time to show us they really don't understand the business before assuming it!

    [ link to this | view in thread ]

  12. identicon
    Adam, 16 Feb 2006 @ 9:13am

    Re: How about...

    You mean like emusic.com ?
    No DRM, high-bitrate mp3s. It's a subscription service, but works out to be cheaper than itunes.

    [ link to this | view in thread ]

  13. identicon
    Anonymous Coward, 16 Feb 2006 @ 9:38am

    Re: And now for something completely different

    the problem is the RIAA is run by incompetent idiots, that don't understand technology, and on top of that, are idiots

    [ link to this | view in thread ]

  14. identicon
    WarrenG, 16 Feb 2006 @ 10:20am

    Nobody's going to topple Apple any time soon

    IMHO, Apple is in a pretty sweet spot in that they have the 'complete package'. They have a slick, easy-to-use device that is offered at a price that most people can afford. It is integrated with iTunes so that it is easy for users to buy and load music. It is cross platform, so that people who use a PC at work and a Mac at home can connect their iPod to either. Plus, they have the sexy factor. So, until another company can duplicate Apples entire ecosystem, they won't even be able to compete. Even if a company could manage all this, then the best they could hope to do is compete on a level playing field. Good luck, Amazon!!

    [ link to this | view in thread ]

  15. identicon
    WarrenG, 16 Feb 2006 @ 10:23am

    Re: Nobody's going to topple Apple any time soon

    Not to mention the ecosystem that they are developing with third party accessory manufacturers. Somehow I don't see BMW teaming up with Amazon to install their media player docks in their cars.

    [ link to this | view in thread ]

  16. identicon
    Prometheus, 16 Feb 2006 @ 11:08am

    Re: Nobody's going to topple Apple any time soon

    IPods are an ecosystem...

    When you've got major auto manufacturers putting in ipod interfaces into their cars, you know you're top dog...

    [ link to this | view in thread ]

  17. identicon
    Sim, 16 Feb 2006 @ 11:24am

    Fight RIAA

    Use Limewire, don't feed RIAA , If you buy music, it goes to RIAA, which is EVIL.

    [ link to this | view in thread ]

  18. identicon
    Fred, 16 Feb 2006 @ 11:31am

    No Subject Given

    It's bound to fail, because subscription services are stupid. People like to own stuff, and don't like the idea that when they stop paying, all their music goes poof.

    [ link to this | view in thread ]

  19. identicon
    dan wendell, 16 Feb 2006 @ 12:44pm

    Re: No Subject Given

    then why is netflix doing so well?

    [ link to this | view in thread ]

  20. identicon
    Squegie, 16 Feb 2006 @ 1:04pm

    Re: How about...

    http://www.mp3search.ru/

    [ link to this | view in thread ]

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