Is Amazon up a creek?
I'm puzzled.
Digital music is taking off. I've had an MP3 player for several years and ripped my CD collection, about 200 discs, on to my PC ages ago. I scored a 20-gig Rio Karma last summer, and put all my CDs on the bottom shelf of the computer cabinet. They are there only as a hard-copy back up in case I lose everything.
I still really like buying CDs. I like the liner notes, the pictures, the physciality of holding something in my hand, plus the peace of mind from knowing I have a hard copy, as well as the freedom to lend it to friends and basically do as I see fit with the product I purchase.
But this year could very well be the one in which I download more music than I buy. I'm talking legal, paid downloads. (For the most part, I am not a proponent of Kazaa-style file-sharing, not when it comes to commercial CDs and movies. But that's a post for another day).
Anyway, I've quite a good experience with MSN Music. Songs are 99 cents each, but if you buy a whole album, it's just $8.91. I even bought a Bing Crosby Christmas song collection with like 17 songs and it was still less than nine bucks. The files are encoded at about 160 kbps, which is higher than the 128 kbps I use for my own stuff. You have unlimted transfer rights and you can burn an unlimited number of CDs. Since my first purchase last November, I've bought six albums on MSN, and only 1 physical CD.
So here's the puzzle. Why hasn't Amazon.com launched a music download service? In the time since Apple's iTunes broke the space wide open, RealNetworks, Microsoft, and even Wal-Mart have started selling downloads. Yet Amazon, the company that basically proved e-commerce could work, the company that touted the advantages of technology over physical retail space, the company with the biggest, deepest and best product catalog, review and recommendation system, and payment processing technology has so far limited itself to offering a relative handful of free downloads, as a way to whet appetites for buying actual CDs.
They also seemed to have the advantage of being a neutral player in what is still a contentious battle over useage rights and technology. Unlike Microsoft or RealNetworks or Sony, they aren't wedded to one particular codec. Labels should be happy dealing with them because they would simply want to make the music as easy as possible for consumers to buy.
In 1999, I interviewed the then-head of Amazon's music store. Her name eldues me now, but she said at that time she expected Amazon to be selling music downloads the next year. Six years later, why have they still not taken it to the next logical step?
I dont' think it can be because they are afraid it will cannibalize actual CD sales. They sell e-books with apparently no concern that their core business of selling actual paper ones will perish. And I haven't looked at these kind of numbers in a long, long time but I'd think that the margins on downloads would be better than physical books. There'd be an initial sunk cost of adding servers and capacity to hold all the music, but once you had the first half million songs hosted you'd hit a certain scale that would make additional expansion cheaper.
Or did technology and business have nothing to do with it? Was it a rare case of Amazon dropping the ball on a major business decision? Were they frozen, unable to act, amid the RIAA-led legal wrangling over useage rights, over the possibility that if they messed up and songs that originated with Amazon ended up being spread for free all over P2P networks, that they would get in a costly and high-profile fight with the RIAA? It seems unlikely. The RIAA is always the bad guy in these stories. Amazon would have been able to position itself as a champion of consumer choice, of trying to make a viable business model.
My best guess is that, if Amazon never had anything in the works prior to iTunes, they certainly now have something pretty major in the pipeline. I wouldn't be surprised if this year Amazon busts out with what will be the deepest online music store out there. Because they are late to the game, it will have to have the best selection. It will have to offer tunes in at least two formats (MP3 and WMA), maybe more. It will probably have to be seamless plugged into the CD music store. Consumers will want the option of downloading the tracks now, or buying the CD, from the same page. I know I wouldn't want to drill down to find an artist's CD, then decide I want to download it instead and have to repeat the process in a separate page.
I just can't imagine that Amazon is going to miss this boat entirely.
Digital music is taking off. I've had an MP3 player for several years and ripped my CD collection, about 200 discs, on to my PC ages ago. I scored a 20-gig Rio Karma last summer, and put all my CDs on the bottom shelf of the computer cabinet. They are there only as a hard-copy back up in case I lose everything.
I still really like buying CDs. I like the liner notes, the pictures, the physciality of holding something in my hand, plus the peace of mind from knowing I have a hard copy, as well as the freedom to lend it to friends and basically do as I see fit with the product I purchase.
But this year could very well be the one in which I download more music than I buy. I'm talking legal, paid downloads. (For the most part, I am not a proponent of Kazaa-style file-sharing, not when it comes to commercial CDs and movies. But that's a post for another day).
Anyway, I've quite a good experience with MSN Music. Songs are 99 cents each, but if you buy a whole album, it's just $8.91. I even bought a Bing Crosby Christmas song collection with like 17 songs and it was still less than nine bucks. The files are encoded at about 160 kbps, which is higher than the 128 kbps I use for my own stuff. You have unlimted transfer rights and you can burn an unlimited number of CDs. Since my first purchase last November, I've bought six albums on MSN, and only 1 physical CD.
So here's the puzzle. Why hasn't Amazon.com launched a music download service? In the time since Apple's iTunes broke the space wide open, RealNetworks, Microsoft, and even Wal-Mart have started selling downloads. Yet Amazon, the company that basically proved e-commerce could work, the company that touted the advantages of technology over physical retail space, the company with the biggest, deepest and best product catalog, review and recommendation system, and payment processing technology has so far limited itself to offering a relative handful of free downloads, as a way to whet appetites for buying actual CDs.
They also seemed to have the advantage of being a neutral player in what is still a contentious battle over useage rights and technology. Unlike Microsoft or RealNetworks or Sony, they aren't wedded to one particular codec. Labels should be happy dealing with them because they would simply want to make the music as easy as possible for consumers to buy.
In 1999, I interviewed the then-head of Amazon's music store. Her name eldues me now, but she said at that time she expected Amazon to be selling music downloads the next year. Six years later, why have they still not taken it to the next logical step?
I dont' think it can be because they are afraid it will cannibalize actual CD sales. They sell e-books with apparently no concern that their core business of selling actual paper ones will perish. And I haven't looked at these kind of numbers in a long, long time but I'd think that the margins on downloads would be better than physical books. There'd be an initial sunk cost of adding servers and capacity to hold all the music, but once you had the first half million songs hosted you'd hit a certain scale that would make additional expansion cheaper.
Or did technology and business have nothing to do with it? Was it a rare case of Amazon dropping the ball on a major business decision? Were they frozen, unable to act, amid the RIAA-led legal wrangling over useage rights, over the possibility that if they messed up and songs that originated with Amazon ended up being spread for free all over P2P networks, that they would get in a costly and high-profile fight with the RIAA? It seems unlikely. The RIAA is always the bad guy in these stories. Amazon would have been able to position itself as a champion of consumer choice, of trying to make a viable business model.
My best guess is that, if Amazon never had anything in the works prior to iTunes, they certainly now have something pretty major in the pipeline. I wouldn't be surprised if this year Amazon busts out with what will be the deepest online music store out there. Because they are late to the game, it will have to have the best selection. It will have to offer tunes in at least two formats (MP3 and WMA), maybe more. It will probably have to be seamless plugged into the CD music store. Consumers will want the option of downloading the tracks now, or buying the CD, from the same page. I know I wouldn't want to drill down to find an artist's CD, then decide I want to download it instead and have to repeat the process in a separate page.
I just can't imagine that Amazon is going to miss this boat entirely.
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