The rumor mill is running hot and heavy with underground rumblings that Amazon may be entering the digital music marketplace as early as the 2007 first quarter. It is speculated that the company will offer DRM-free mp3 tracks and offer a variable pricing structure for participating record labels.
As most of you probably have figured out by now, I’m not a fan of Digital Rights Management (DRM). In the past two weeks alone, I have theorized about the negative impact that DRM will have on Apple in the long-term, and documented the disdain of the blogosphere (not to mention Microsoft Chairman Bill Gates) regarding the practice.
So, as you can imagine, this juicy little nugget about Amazon opening a DRM-free store caught my attention rather quickly.
I could wax poetic about the unbelievable upside that would stem from a venture of this magnitude, but instead of taking my word for it, I decided to see what the reaction to the rumor is throughout the blogosphere.
Brian Ward at Tech Effect had this to say:
First of all, this is a brilliant idea. DRM-free music is the best way to challenge iTunes’ stranglehold on the market. With the iPod firmly entrenched as the market-leading MP3 player, any new store needs to sell files which will play on the iPod. The problem has always been that the studios view DRM as their only line of defense against rampant piracy. How do you mollify the studios? Give them what they want, the ability to adjust the price of songs.
Bob Caswell at Computers.net shares a similar viewpoint:
Right now it’s not clear which major labels might be included at Amazon’s launch. Indie labels seem to be branded as the likely first movers. The DRM-free approach may not be what some labels want, but variable pricing is a feature other labels have been interested in for some time.
Most people are picking up on the underlying theme pretty quickly, realizing that in order to leverage itself into a position to negotiate for DRM-free content, Amazon will be forced to make concessions to the record labels regarding the pricing structure.
It’s a risky compromise, to be sure. Would consumers be willing to pay a few extra cents for the ability to exert complete control over their music downloads? It would seem that Amazon is banking on a positive reaction here in the development of its online music store.
A poster a HypeBot offers some conjecture about the impact:
Amazon has also given both major and indie labels something they’ve been demanding from iTunes but not getting – variable pricing. How well labels support Amazon could either force Apple’s hand or allow it to remain dominant.
Carl Howe at Blackfriars Marketing ponders the mass migration that could ensue:
The open question is such a move is what Apple’s response might be. After all, if Amazon were to do this, we might see a rapid shift from iTunes to Amazon, since MP3 files would be usable on all players (thereby avoiding perceived lock-ins to iPods that Apple’s Fairplay songs provide) and the fact that such music collections would be “future-proof”.
Of course, this all still nothing more than speculation at the moment. Amazon hasn’t officially released any kind of statement verifying or denying these rumors, so declaring this new services an “iTunes killer” might be a bit premature.
However, like my grandmother used to say…
“Where there’s smoke, there’s usually fire.”
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Joe is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
