Amazon (AMZN) aggressively moved ahead of Apple (AAPL), Google (GOOG), and others with a music locker service that lets consumers store music on a cloud system and then play it from different devices. Amazon hopes that a significant jump on its competitors, which are both working on similar systems, can establish leadership and lock in many customers.
BNET writer Damon Brown discussed Apple's expected MobileMe service revamp. Google, Microsoft (MSFT), and RIM all have been interested in taking music market share from Apple. In moving out ahead of other players, Amazon appears to have a multi-prong strategy:
- portray itself as the music market leader by coming out with a media locker service first
- gain customers that might otherwise do business with Apple or Google
- increase digital music sales market share
Those who buy at least one MP3 album from Amazon get 20 gigabytes of cloud storage, or enough storage for almost 6,700 songs, for a year. Even though most people won't have anywhere near that many tracks to store, the prospect of more space might get many to buy at least one album, creating some significant incremental media sales revenue.
More importantly, Amazon might convert a good number of them to annual subscriptions, although there are no details on storage plans other than an entry-level $20 a year price. Consumers can also store any other type of digital file as well, including documents, photographs, and videos, which would only increase the need of storage.
It's clear why Amazon wants to claim that the music labels have no control over this sort of storage. Negotiations with the labels initially slowed Apple iTunes, and both Google and Spotify have delayed services while negotiating.
But there is a problem. When people obtain music online, they have definitely licensed it but may not actually own the copies. For example, courts have determined that, if forbidden by a license, users may not be able to resell software. Amazon has a similar restriction on digital content it delivers to customers. We'll see if there are potential restrictions on how many copies of music that consumers can maintain.
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