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Amazon exec slams some in music sector

In a farewell e-mail, an Amazon manager calls some in the music industry a "total pain in the ass." On Apple, he said he was proud of riling the "Cupertino beast."

An executive who helped oversee Amazon's music division the past three years is jumping to the company's Kindle unit, but he has a parting message for some in the music sector.

"A few of you have been a total pain in the ass," Scott Ambrose Reilly wrote in a farewell e-mail he sent to colleagues and business associates on Friday, a copy of which was obtained by CNET. "(You) should think about trying to make this business a better place once in awhile. Maybe listen to Elvis' 'If I Can Dream' on your way into the office. The music business and the world could use more positive energy."

Amazon exec Scott Ambrose Reilly (left), is apparently frustrated with the music industry Screenshot by Greg Sandoval

As Amazon's senior manager of digital music, Reilly oversaw content deals, operations and helped maintain the relationships with the labels. On Monday, he starts work running business development for Kindle periodicals.

Neither Amazon nor Reilly were immediately available for comment.

Reilly, a former executive at Web music-subscription service eMusic, wrote in the e-mail that among Amazon's accomplishments he is most proud was getting under the skin of rival iTunes' on the issue of song prices.

Reilly wrote that "11.5 million tracks (are) available in six countries. All DRM-free which they said couldn't be done just three years ago. How can I not be proud of the Daily Deal that has been so successful it riled the Cupertino beast?"

The "beast" Reilly is obviously referring to is Cupertino, Calif.-based Apple. Last month, Billboard magazine reported that Apple was pressuring recording companies to drop support for Amazon's practice of slashing prices on specific titles and promoting them heavily the day they were released. Amazon called this the Daily Deal.

The labels and their artists would often support the Daily Deal by promoting them on their Web sites. According to music industry sources, Amazon's Daily Deal ended after Apple managers told the labels that any music included in the Daily Deal would receive no promotion at iTunes. In one case, Apple complained to Sony Music Entertainment after seeing material from Alicia Keys on the Daily Deal, according to one industry source.

Apple can throw its weight around like that because it is the largest music retailer in the land, online or off. Is the decision by the labels to abandon the Daily Deal the source of Reilly's frustration?

Maybe, but ever since Amazon launched its MP3 music store in September 2007, the labels have acted as if they appeared to favor the service. In January 2008, Amazon became the first music store to sell tunes from the major labels free of digital rights management software. Then there was the issue of price. Amazon was ahead of iTunes in introducing variable pricing and, at least initially, often sold songs for less than the standard iTunes' price of 99 cents.

Music industry sources have said that Amazon decided on its own to cut prices. The labels don't set minimum prices and as long as a retailer pays the agreed upon wholesale price, they can sell songs at a loss as much as they want. Whether or not Amazon's price cutting was done with the labels' blessing, what is certain is that the record industry wanted another strong player in digital music to help counter Apple's enormous power.

As for Reilly, he won't have to worry about jumping into a segment dominated by Apple. When it comes to e-books, Amazon is the heavyweight and Apple is the novice. Still, with the launch of Apple's iPad, the video-playing, Web-surfing, and e-book reading device, Reilly and Amazon may be looking at a whole new Apple threat.

Below is a copy of Reilly's e-mail

From: Reilly, Scott Ambrose [mailto:e-mail redacted]
Sent: Friday, April 09, 2010 3:02 PM
Subject: Sad Eyes

Dear friends and music business colleagues,

On Monday I start a new position running business development for Periodicals for the Amazon Kindle team. It is an exciting opportunity to be on the ground floor of another exciting opportunity. The many years of experience in digital music provides a great insight into some of the challenges and opportunities ahead for the digital periodical space.

Monday will be the first day in nearly 20 years I won't spend the entire day thinking, working and plotting how to get more music in front of more people. Monday will be the first day in a long time where growing the digital music space will not occupy 100% of my awake time. Monday also means I get to listen to music just for pleasure. Just because I want to and just because it moves me. It will be lots of Tom Jones, Tom Waits, Dolly Parton, The Yayhoos and Ryan Bingham on Monday.

I am very proud of my 20 years in music. I still remember selling tickets online via the Sonicnet bulletin board for a God Street Wine show at Irving Plaza in 1993. I distinctly remember a conversation with Jim Griffin in the Geffen offices about how to use the Internet to promote the next God Street Wine album and he said "have you heard of the World Wide Web?". Had band websites up in 1994, MP3 downloads in 1996. Got a small piece of the late 90s new media bubble in the way of advances for Mojo Nixon for digital rights to his catalog. Between the years at Digital Club Network, eMusic and Amazon I have been responsible for more than 10,000 digital licensing deals.

I am particularly proud of the last 3½ years at Amazon. 11.5 million tracks available in six countries. All DRM-free which they said couldn't be done just three years ago. How can I not be proud of the Daily Deal that has been so successful it riled the Cupertino beast? Having the opportunity to lead the content acquisition, vendor management and operations teams for this brand new digital music category at Amazon has been a privilege and responsibility I have not taken lightly. Being the co-chair of the NARM Digital Think Tank Operations Work group has been a good way to give back to an industry that has given so much to me.

I appreciate all that Pete Baltaxe and Bill Carr have taught me and have allowed me to accomplish in 3 1/2 years. I have had an amazing team of people working with me and working hard everyday to make this the best customer experience possible for digital downloads. Most of you have made this journey memorable, introduced me to some great music, allowed me to try some cockamamie schemes, made a few bold bets and I will miss the characters that make up the music business. A few of you have been a total pain in the ass and really should think about trying to make this business a better place once in awhile. Maybe listen to Elvis' "If I Can Dream" on your way into the office. The music business and the world could use more positive energy.

Jill Chapman will continue to run the operations team and will report directly to Pete Baltaxe. Jill knows more about digital operations than I ever could but she is much shyer about it.

The indefatigable Griff Morris will take over all the content acquisition and vendor management responsibilities also reporting to Pete Baltaxe. I am honored to have had Griff handling all content acquisition for the last 3 years and have utmost confidence he will bring a grace and compassion to the role where I have many times faltered. Remember, always bet on bald if you want to get the job done.

I have a few things to still wrap up over the coming weeks so some of you will continue to hear from me. Some of you will continue to hear from me just cause I like you or want to talk about music. But if you want to argue Sinatra vs Dino or talk about the new Band Of Horses it will just be as a fan so don't bring up units or demographics.

Thanks to all my team over the last 3½ years and my extended family in the MP3 and CD teams here at Amazon. Thanks to every nutjob in the business that can't stop trying to spread the music and still find themselves in the midnight hours in loud clubs, feet tapping, hips swaying trying to keep the madness locked behind their glowing eyes (at least until the boss and the bloggers leave). I'll probably shed a few tears over the weekend.

But then on Monday it is time to start the adventure of Kindle Periodicals. I am thrilled Amazon is giving me another great opportunity like this to help develop and grow a burgeoning digital media space. And now I get to listen to music just for PLEASURE!!!

Scott Ambrose Reilly
Sr. Manager, Digital Music
(phone numbers and e-mail redacted)