Amazon to Enter Music-Download Business

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Amazon.com launches a much anticipated music-download site. The Internet music store will sell songs for 89 cents to 99 cents. It will be possible to play the music on every available player from the iPod to the Zune.

RENEE MONTAGNE, Host:

Amazon launches a music-download site today. The online music store will sell songs for between 89 and 99 cents. It will be possible to play the music on every available player from the iPod to the Zune.

NPR's Laura Sydell reports that Amazon may be the first digital music site that can really compete with Apple's iTunes store.

LAURA SYDELL: Wal-Mart sells music downloads, so do Microsoft and Yahoo. Real Networks has Rhapsody. There's e-music for independent labels. But none of those companies have come close to challenging the hegemony of iTunes, which has sold more than three billion songs. Apple has created a complete ecosystem with its best-selling music player, the iPod, and a very easy-to-use online retail shop.

People just like it, says Mike McGuire, an analyst at Gartner who follows Apple.

MIKE MCGUIRE: Because it's easy, they can see the content, they can find things they want, and they're able to pay for them very quickly and get out of the store with the stuff they want.

SYDELL: Still, McGuire says, because people already go to Amazon to make other purchases, they can easily slip into using the online music store.

MCGUIRE: For example, they may have an existing retail relationship with Amazon because they buy a lot of books there - right, it's like, oh my gosh, not only do I have iTunes, now I can buy a piece of contact here.

SYDELL: Amazon has made a name for itself by making the online shopping experience simple, and the new music downloads will come up as part of any music search, says Bill Carr, vice president of digital music and video download businesses. So if I go and search for CDs for an artist like KT Tunstall...

(SOUNDBITE OF SONG, "BLACK HORSE AND THE CHERRY TREE")

KT T: (Singing) But I said no, no, no, no, no, no, I said no...

BILL CARR: Included in the listing you'll also see the digital downloads as one of the options, and you can click on one of those options and go to a page that gives you the details of all the tracks available on the record...

SYDELL: Amazon's also got a deal that Apple that does not.

(SOUNDBITE OF SONG, "LOSE YOURSELF")

EMINEM: (Rapping) Look, if you had one shot...

SYDELL: On the Amazon store it will be possible to download Eminem and thousands of other universal music artists without digital rights management or DRM, which means the music can be played on any digital music device. Universal is the largest of all the record companies. On Apple, your DRM-free choices are much more limited. And Amazon is doing something Apple refuses to do. Not every song will be the same price, says Carr.

CARR: Just like our CD store today, where it's not a one-size price fits all proposition, where record companies provide us with lower costs, we pass those savings onto consumers.

SYDELL: Apple CEO Steve Jobs insist that customers like Apple's 99 cents a track because it's less confusing.

Eric Garland is CEO of BigChampagne, which follows online entertainment.

ERIC GARLAND: No one has really proven otherwise; there's not a company out there doing the kind of volume that iTunes does with a variable pricing scheme.

SYDELL: He says Amazon also has a disadvantage because it only has two of the four major record labels and most of the independents. Apple has all four and the independents, so there are some artists fans just won't be able to download from Amazon. Still, Garland thinks that's less of a disadvantage for Amazon than for other online retailers because Amazon sells the artists' DVDs and CDs.

GARLAND: Amazon will always deliver the product. Now, in some cases you'll have an additional format. But it means that it's much less imperative that they get all of those deals in place. They're already selling music from all four major music companies.

SYDELL: Garland and other observers think eventually the other music companies will start selling DRM-free music on Amazon. But Amazon's success is not assured.

GARLAND: The road is littered with the bodies of the many, many companies that have blown it in this space.

SYDELL: However, Garland believes the major music labels would sure like to see Amazon succeed so there is more than one big outlet for digital music, and Steve Jobs can't tell them what to do.

Laura Sydell, NPR News, San Francisco.

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