By Richard Menta 10/24/07
If what Amazon is saying is true, we may have a truely legit competitor to Apple's iTunes music service. According to the company, which released its third quarter sales figures yesterday, the company was thrilled with the initial sales of its new music download service it opened last month. Said Amazon CEO Jeff Bezos during the analysts call, "Everybody loves the DRM free format, so selling MP3s is being very successful for us...One of the things with our MP3 store is the way we look at it, the onus is on us to continue to convince music labels that this is a good way to sell their music." Bezos also stated that so far Amazon has not witnessed any cannibalization of physical sales of music, though it is still early to confirm this as a trend.
While the news from Amazon is dramatic, particularly to the major labels who are trying to counter Apple's domination in the paid download market, the company did not offer up any hard sales figures to back up its claims. Having only been open a month, success is relative to the initial goals set by the company. Those goals were most likely very modest, but realistic to the difficulties faced by other music services including MTV's Urge service, Sony Connect and Virgin Digital. All three of those services struggled to gain attract enough market share and folded within the last few months.
All three of those failed services relied on DRM encoded music files, which limited the number of digital portables that could play them. Amazon downloads can play on all players including Apple's market dominating iPod, a portable the other services were shut out of as their DRM schemes were incompatible. The question for Amazon was would selling only tracks without DRM be enough to sustain the service, a service whose prices are slighlty lower than iTunes? According to Amazon their initial sales are encouraging.
Apple, at its own Q3 report yesterday, pointed to recent Nielsen-Soundscan data that shows iTunes with 85% of the market. Where that figure lands after the upcoming holiday season will be interesting to watch.
SanDisk Sansa View 16GB flash player is available on Amazon.
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