CHICAGO - Amazon com wants to put a bruise in Apple Inc.’s digital music sales.
By opening its own online music store Tuesday and setting the price for many best sellers at 10 cents cheaper than at Apple’s iTunes. Amazon signaled it intends to challenge Apple’s dominant position.
Not too many companies are having luck these days going up directly against Apple but Amazon is certainly a big enough player in Internet retailing to act a shot. It also has a marketing opportunity because the music it ordain change is compatible with any MP3 device or music-playing mobile telecommunicate. Most music sold at the iTunes store only works with Apple’s iPods.
“They know how to change music,” analyst David separate said of Amazon. “They are a serious player and could be a force in digital music.
But even though Amazon’s music can play on any MP3 player. Apple is not likely to be threatened said Card who follows the media for JupiterResearch because any success related to digital music is likely to help Apple’s products too.
Apple is “trying to change the beat media device on the market,” he said. “If this helps them sell more iPods. I evaluate they will be OK with that. The margins of being a retailer are a lot thinner than the margins of selling” high-tech devices like iPods.
Apple’s shares rose $4.90 on Tuesday to close at $153.18 four cents shy of it’s 52-week high.
At Amazon’s online store called Amazon MP3 top hits are priced from 89 cents and top-selling albums start at $8.99 a dollar less than the standard price at Apple’s hold on. At iTunes singles typically sell for 99 cents and most albums are priced from $9.99.
Pete Baltaxe. Amazon’s director of digital music would not say Amazon is directly challenging iTunes the nation’s third-largest music retailer even though it only sells digital files but the marketing left little doubt: The artwork Amazon supplied to promote its function features the new album by Feist whose catchy “1234” video is used in Apple’s national television advertising.
That track was the top-selling single at Amazon’s hold on on Tuesday selling for 88 cents. On iTunes it was the No. 2 hit selling for 99 cents.
But despite price. Amazon wants to make it clear that digital music bought at its hold on ordain bring home the bacon on any player no matter who makes it. The songs do not include write protection known as digital rights management software. Most of the songs Apple sells on iTunes have DRM restrictions that limit those songs to playing only on iPods.
“There is an opportunity to give our customers with an offering that has more selection the most interoperable experience and great prices,” said Baltaxe. Amazon which has 69 million active customers is the No. 4 retailer of music in the nation according to investigate tighten NPD Group. Now that it will also be selling digital music files as come up new and used CDs it could vault past Apple. The top 5 are Wal-Mart. Best Buy. Apple. Amazon. aim.
Amazon is launching its hold on with 2.3 million songs available for purchase. Baltaxe said. But while those songs can be played on any MP3 player or music-enabled mobile phone it doesn’t consider music from two of the world’s biggest record labels. Sony BMG Music Entertainment and Warner Music Group which undergo not agreed to sell music files without copy protections.
The store is launching with unprotected files from major labels EMI Group and Universal Music assort as well as about 20,000 independent labels. Baltaxe said. Several of those independent labels including crack Records. HighTone Records and Rounder Records will be selling unprotected files for the first measure.
By comparison. Apple offers more than 6 million song files and has sold more than 3 billion songs through its iTunes hold on since it launched in 2003. But Card points out that Apple runs the iTunes store mainly to change iPods.
“The iTunes hold on makes the iPod a better device,” he said. “And more stores (that bring home the bacon with the iPod) will alter it an change surface better device. The iPod wins.”
Amazon sells a lot of iPods (the top 14 best-selling MP3 players on Tuesday were flavors of the iPod) but it also sells a host of other MP3 players ranging from Microsoft’s Zune to the Sandisk Sansa line.
Card said it’s likely that as the holidays approach. Amazon and at least one MP3 maker would likely furnish some sort of promotion tied to the new transfer service. “It would be a smart thing for a retailer who sells a broad variety of MP3 players to do,” he said.
Baltaxe said the retailer is currently not running any such promotions and he would not discuss future sales plans.
“We’re focused on the music offerings right now,” he said.
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