LET'S DANCE BABY
UNDERDOG AMAZON SET TO CHALLENGE ITUNES — Apple boss Steve Jobs is about to have another new challenger for dominance in the digital music business: Amazon.com's Jeff Bezos. — The online retail giant has tentatively set a mid-September target for the launch …
Context & Ripple Effects
Amazon is moving on digital music just as Apple's grip looks less unassailable than it did a year ago: Universal's public dispute with Apple over iTunes terms this summer showed the biggest label was willing to push back against the store that dominates downloads, and Apple has separately dropped NBC television shows from iTunes over pricing. The Post reports Jeff Bezos has tentatively set a mid-September launch target — days after Apple's own confirmed September 5 press event in San Francisco, where speculation is building that the next-generation iPod will be unveiled.
First-order effects
- Apple's iTunes store faces its first large-scale retail challenger at scale: Amazon's entry gives the four major labels an alternative storefront and immediate negotiating leverage in their contract talks.
Second-order effects
- With two major buyers bidding for catalog, labels can price tracks differently across stores — undercutting iTunes' uniform pricing and forcing Apple to choose between defending margins and defending share.
Third-order effects
- A credible non-Apple download store breaks the assumption that portable players and music stores must be locked together, pushing the industry toward open MP3 formats sold across competing platforms.
The trend: Digital music retail is shifting from a single-gatekeeper model built around the iPod-iTunes pair toward multi-store competition in which the labels' catalogs set the terms.