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Amazon Digital Music Second Take May 17, 2007

Posted by David Card in Media.
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Make no mistake, Amazon getting into digital music, and doing so without DRM, is a big deal. But let’s be clear:

– Amazon is doing unprotected MP3s because there is no copy-protected standard. And, more important, so it can sell songs to iPod users. This does not “level the playing field” for iPod competitors.

– If I’m a label other than EMI, I wait to see how iTunes does with premium-priced unprotected EMI files compared to 99-cent protected ones. Assuming I can get any data. The premium price is a bigger incentive to go MP3 than any so-called “opening up” of the market.

– I have no doubt Amazon will do a good job selling digital music. Someday. When it has a catalog. Its catalog is likely to be crippled initially.

– That said, Amazon could present an overall music retail experience that lessens the pain of that potential digital hole. Picture this. You search for an artist or record, and get the option to buy a CD, a digital album, and digital singles. The digital option won’t be available for everything. But that’s a way better experience than searching at a digital-only store and coming up zero. I have no idea whether Amazon will implement shopping this way, but it seems plausible.

– And yeah, in the US as well, more iPod owners (45%) have bought a CD online in the last 12 months than the average (28%), and they’re slightly bigger music spenders ($160/year) than the average music buyer ($100). But iPod ownership alone does not characterize the absolute best music buyers, online or otherwise. Music aficionados and CD purists spend the most. Music aficionados are three times more likely than average to have an iPod, but CD purists are below average in iPod ownership.

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