Why Amazon could succeed where others have failed

The name "AmazonMP3" says it all: the e-commerce giant is the first to launch an MP3-based commercial store that includes major label titles.

Amazon.com launched its long-awaited music download store last week, and while plenty of "me too" download stores have tried to take on Apple's iTunes over the last four years, I think Amazon has a chance. Here's why:

1. Just MP3s. Amazon's the first store to launch with a significant catalog (2 million songs) of totally portable songs. That is, all tracks are in the MP3 format and unencumbered by DRM, meaning they're playable on any music software, any platform, and any portable device. While eMusic has made a run at selling MP3s, they lack most major label titles: run a search for Pink Floyd at both sites and see what comes up. Sony and Warner are still holding out, but at least Amazon's got the other two majors (EMI and Universal).

2. Customer base. You're probably already an Amazon customer, meaning they already have all the information they need for you to start shopping--go to the site, and if you haven't cleared your cookies recently, they know who you are, and have your credit card number already on file. They even have recommendations based on your past purchases and any lists (like wish lists) you've made. You can download an add-on application that loads the MP3s directly into iTunes or Windows Media Player, but that's optional. Contrast that with the sign-up process you have to go through at most any other online music store.

3. Pricing. Amazon features variable pricing--something that Apple's iTunes has not yet embraced--meaning that the top 100 single songs cost only $0.89 apiece, and many albums are less than $10 (and often less than the physical CD sold on Amazon).

4. Platform. Even as Microsoft is finally building out a viable online services platform, Amazon's been leading the way for over a year now, with Amazon Web Services, a set of hosted services for developers. For instance, Amazon Flexible Payment Services allows Web developers to do some fairly complicated e-commerce activities, like accept micropayments, as well as accept money from the millions of existing Amazon customers, without building an e-commerce system from the ground up. Now imagine if Amazon takes its music store and opens it up to third-party Web sites, so that anybody can sell individual tracks using Amazon's platform. Independent musicians would be able to sell MP3s directly from their Web sites and keep the full transaction amount. It could also evolve into the kind of fan-based promotion and sales network that BurnLounge is trying to build, but with a trusted, well-known brand behind it.

 

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