Amazon Music Player, Service Coming?
Amazon is in talks with both the major record labels and digital music player manufacturers about creating a music offering to compete with market-dominating iTunes. The plans call for Amazon-branded music players that would be deeply discounted -- or even free -- in connection with a subscription music service.
The program would work much like a post-pay cellular plan, where a customer receives a phone at a discount in exchange for a long-term subscription. A flat monthly fee would be charged, and Amazon is even considering pre-loading the devices with songs suggested by the online retailer using the consumer's music buying habits.
Such a service could come as soon as this summer, pending deals with the necessary companies. Sources told the Wall Street Journal Thursday that deals had not yet been finalized with any of the major labels, which include Universal, Sony BMG, Warner and EMI.
A potential hardware partner for the service could be Samsung, however representatives for the company were not responding to requests for comment.
Moving into digital music would be a logical step for the Seattle-based online retailer, as physical media accounts for 70 percent of Amazon's total sales. With more and more consumers opting to purchase electronic versions of music and films, Amazon risks shrinking revenues if it doesn't migrate to digital delivery.
Another factor that could quickly make Amazon a strong player is its strength in digital music player sales. About 10 percent of all players sold in the US are sold through the site, and Amazon would obviously market its own offering above any other competitor, including Apple.
David Card, vice president and research director at Jupiter Research, said such news is no surprise. "Amazon has a great chance to lower the customer acquisition costs that are so crippling to Napster [and other's] profits right now."
"Problem is, can Amazon learn how to do programming?" Card questioned.