If the rumors are true, Amazon, the giant Internet retailer of books, recordings, videos, and just about everything else, is about to embark upon a music subscription service—complete with Amazon-branded music players at a deep discount, or perhaps even for free.The Wall Street Journal reported that Amazon is in discussions with the major record labels, but that no deals have been negotiated yet. Amazon has not confirmed the details, but reports indicate that the program would resemble "post pay" cellular phone plans, where customers receive phones at deep discount in exchange for a commitment to a long-term service plan. Consumers would pay a monthly access fee and in exchange would be able to download songs from Amazon—in fact, the Journal suggested, the players might come pre-loaded with music suggested by Amazon's collaborative filter programming.Some industry observers, such as The LefsetzLetter, maintain that "subscription service" is a misnomer, since consumers' rights to the music would end when they stopped paying the monthly fee. "Let's call it rental," Bob Lefsetz argues. "And if rental is such a great deal...why is Blockbuster on the verge of disaster?"
Personally, I'm not so sure Blockbuster's in trouble because people would rather own DVDs than rent them, although the low cost of ownership does make DVDs very attractive. Blockbuster's real problem, to my way of thinking, was that it never comprehended that DVDs were about niches rather than, well, blockbusters.Amazon's current business model doesn't suffer from that problem, since it has been about deep catalog from day one, but that doesn't mean Amazon gets it, either. It hasn't even negotiated deals with the major labels yet? That's just four companies. If Amazon can't bring them on board, what's the point?What about all the other musicians and record labels out there? Will Amazon Music really be as diverse as Amazon the store? If not, why would I want to rent access to it?
As several folks have suggested in www.stereophile.com' s vote responses this week, online retailers get the nod primarily because brick-and-mortar stores have given up. In addition, several respondents point out, Amazon already competes against record labels (and publishers) by offering access to used recordings and books at the point of purchase (just click New and Used). Consumers looking to save money can purchase used (or frequently, overstock) merchandise for substantial savings.At the moment, Amazon sells almost 10% of all portable music players, which includes the various permutations of the iPod. Will offering its own players cost it that market? How will it affect Amazon's CD sales, now that the company is the fourth largest CD retailer in America?In fact, what Amazon is offering sounds more like a satellite radio subscription than competition for the iPod and iTunes. The iPod didn't become the best selling electronic device in the past decade because it was cheaper than the competition (it isn't) or because it offered better sound (it's good, but some audiophiles tout several Creative models as better). The iPod has better software and a superior consumer interface—both of which are instantly and intuitively comprehended by anyone who connects with them. Since we haven't seen Amazon's software yet, we can't say for sure that it doesn't compete with Apple's iTunes program, but so far nobody else has come close.
Nor has anyone else come close to Apple's iTunes Music Store, which now sells three million songs per day. Despite the misgivings that many audiophiles have about the sonic compromises built into the iTunes Music Store, it has succeeded because, again, it is easy to use and it offers a huge array of material, including recordings not available anywhere else. Its price structure, at 99¢/song, is also easy to comprehend, if not always a bargain. But even with the success of the iTunes Music Store, there are still musicians and groups you can't purchase there—a little band called the Beatles comes to mind.Someone will undoubtedly eventually come up with a new music distribution model that will eclipse the iTunes Music Store and a new music delivery device that will replace both conventional CD players and the iPod. That's called progress. I'm not sure what you'd call the plan Amazon appears to be offering, except suicidal. The only company it seems likely put out of business is the company it is now trying to be.
