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Amazon May Be Gaining Traction In The MP3 Market

It’s not like iTunes is exactly looking over its shoulder — the Apple (NSDQ: AAPL) music store has a dominant position in the MP3 market. But (NSDQ: AMZN) is making a very respectable start in its bid for a piece of that market. Last year, 16 percent of digital-music buyers in the U.S. used Amazon’s MP3 store to purchase tracks, according to NPD, the market-research firm. That may not seem like much until you consider that none of iTunes’ competitors, including Napster (NSDQ: NAPS) and Wal-Mart (NYSE: WMT), has even surpassed 5 percent, NPD analyst Russ Crupnick said in an interview. (A commanding 87 percent of digital-music buyers used iTunes to download music).

“Amazon is in the second tier — but at least there is a second tier,” he said. Amazon’s MP3 store debuted in full-force early last year, when it signed on all four major record labels to sell DRM-free tracks, becoming the first online music store to do so. iTunes said in January that it would follow Amazon’s lead by dropping DRM copy protection. Crupnick said that Amazon’s MP3 store had benefited from the company’s existing strength in the music business. “A lot of people, regardless of whether they do anything digital, buy CDs from Amazon,” he said, and therefore decide to give the MP3 store a try. Amazon has not provided any public details about its store’s market position.

4 Responses to “Amazon May Be Gaining Traction In The MP3 Market”

  1. guitarist4life

    the fact of the matter is that Apple is screwing over the user here! if a song is even halfway popular, even remotely close to being a hit, the song goes up to $1.29. If not, then they leave it at $.99. Even a friend of mines’ band who is very much so an up-and-comer college band, they have probably got a couple thousand fans, their songs are ALL $.99!!

  2. To add to Martin's correct comment, it is widely known that tthe three labels deliberately refused to license their catalogs to Apple in DRM-free formats in order to try to break Apple's dominance on the digital download market by establishing a competitor.

  3. Apple did not "follow Amazon’s lead" when it dropped DRM copy protection.

    Rather it was Apple that led the industry in pushing DRM-free music into the mainstream, with Steve Jobs calling on the Big Four record labels to allow their music to be sold DRM-free way back in January 2007.

    Then in June 2007, Apple released some 2 million tracks from EMI and others as DRM-free iTunes Plus music.

    Amazon didn't officially launch till January 2008.

    It was Sony BMG, Warner and Universal who refused to license their catalogs to Apple in DRM-free formats until January 2009 when they finally relented, but only after getting their pound of flesh out of Apple – variable pricing.