Tuesday, May 3rd 2011
News: Record Industry
Amazon Drops MP3 Price, But Will It Affect iTunes?
Since the birth of iTunes in early 2001, Apple’s digital music service quickly became the leader in the (legal) downloading of mp3s. Other online retail services have tried to compete with iTunes but have been unable to put a dent in Apple’s stranglehold on the market. While Amazon has been selling mp3s for some time now, their new strategy seems to taking aim squarely at iTunes.
Amazon has recently dropped the price of their top selling mp3s from $0.89 to $0.69. Even though $0.89 is much cheaper than Apple’s $1.29 for top selling mp3s, Apple still commands 70% of the digital download business while Amazon only controls 10%, which puts them in second place. When Apple raised the price of most of their mp3s from $0.99 to $1.29 last year, the growth of digital music sales grew by only 1% compared to an 8% in 2009 when the average price of mp3s was $0.99. To be fair, this price increase was not all Apple’s doing as music studios had been pressuring them to raise their prices.
How, or if, this new strategy from Amazon will improve their presence in the marketplace remains to be seen and whether or not Apple will lower their prices in response. It should be noted that even though the Kindle (Amazon’s popular reader) has been slashed in price several times, Apple’s iPad is by and far the leader in that field. Either way, you have to admire the balls on Amazon trying to take down the giant a peg or two.
I love amazon and use it much more frequently than Itunes (aka – only use Itunes if I’m given a gift card). We all have to do this one person at a time to make a big change.
i’m all for cheaper music, but i’m not so sure that Amazon can truly be characterized as an underdog in any battle.
iTunes is available in far more countries than Amazon MP3s. Being Canadian sucks sometimes.