Anxious to find a business model where free shipping won’t cut into its profits, Amazon is reportedly working on a digital music service that could debut as early as this spring.
Insiders say the online retailer is “in advanced talks” with the four major labels. You will recall that the labels have been unhappy with iTunes standard pricing for some time now. The fact that Steve Jobs frequently calls them “greedy” hasn’t helped much either. As a group, the major labels aren’t much for an honest appraisal of their shortcomings.
The service will apparently be based around a low priced, Amazon branded, mp3 player. Early reports don’t address the issue of DRM, but it’s almost certain that an Amazon music store would likely use Microsoft DRM to protect songs.
In order for Amazon to succeed where others have failed, the new music store will need to offer the following:
- Music that plays on an iPod
- Reasonable pricing
- Seamless end-to-end integration between the music store, the user’s computer, and the portable player
- DRM that is minimally invasive and allows consumers the opportunity to burn CD’s and listen to tracks on a range of devices
Can Amazon pull it off? I think it’s unlikely, and here’s why:
The fact that Amazon is actively talking with all of the major labels is being seen as a major advantage for the company. I beg to differ on this point. It could actually be one of Amazon’s biggest weaknesses in this new venture. Let the record labels start meddling in any new online music venture and it’s likely the resulting service will be anything but what consumers are actually looking for.
I’m also skeptical that Amazon can deliver a user experience to rival iTunes. The Amazon shopping experience is looking more dated by the day and Amazon’s forays into Web 2.0 have only been minimally successful. I doubt that the team of new programmers the company has hired over the last year will have a substantial impact on the underlying cruftyness of almost everything Amazon does.
Then there’s the DRM issue. The Amazon’s hardware will have to be pretty amazing to encourage tens of millions of iPod users to swap their devices for an Amazon player. Not only that, but the major labels will have to be generous enough with their DRM policy that users have the same control over their music collections as they do with iTunes purchased music.
It looks like the only area where Amazon may be able to compete is on pricing, and even then only if they’re willing to give the player away for practically nothing.