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The Amazon (Digital) River

By Dave Davis · October 17th, 2007 · Distribution Revolution
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Oliver Meinerding



Political candidates live in dread of the "October Surprise," a cataclysmic or world-changing (but unpredictable) event that changes our perspective. Not necessarily 9/11, but maybe a ship bombing, a hostage drama or a hurricane.

This October, the music industry is reeling from such unwelcome, earth-shaking changes. Where to start?

Last month we discussed how music subscriptions face a tough slog. Amazon.com has hammered another nail into that coffin with the launch of its new digital music store. Amazon and the porn business largely invented e-commerce, so the only surprise is that it's taken so long. Still, it's the first legitimate contender to take on Apple's iTunes directly.

With this fan-friendly digital option, the major's fondest dreams are smashed on the rocks: goodbye higher per-track prices and large-scale subscription adoption. The killer app here: It works as well on iPods as it does on Zunes, as happily with Windows Media Player as iTunes, and better than either in terms of protecting your investment in music while growing your legal library.

It's not surprising only two major labels feed it with higher-resolution DRM-free content -- the entire industry preferred no income to billions for nearly a decade (and continues to scream about prices set at "only" 99 cents per track). Thus the biggest names, like The Beatles, remain absent to this day.

Amazon's library (about half the size of iTunes) is smaller than its excellent model deserves. But what's there is great. For instance, more and better Pink Floyd stuff than iTunes.

Beyond the music, there are all the features Amazon is best known for: reviews, lists, ratings and links to related products. While Apple built similar tools into iTunes, a decade into the network/data age, Amazon still rules e-commerce.

This shifts the pressure to artists and labels -- join in or miss out on legal sales and a larger, happier fan base. It's an end-run, connecting song-files to a strong base of customers, regardless of which store (or application) the fan prefers. But unlike Apple and Microsoft, Amazon plays nice with others. Amazon's MP3 Downloader application is the key. Like LaLa Player or iLike, it connects directly to your existing iTunes library and configures itself to handle either one. So new tracks show up in your normal iTunes library. Like iTunes, Amazon leaves backups to you after you've completed a successful download: You get it once, but if you lose it, too bad.

With the "store" experience on a level playing field, you quickly discover something: Amazon offers superior value! First and foremost, there's a real edge in quality when comparing apples to Apple -- iTune's 99-cent tracks are 128K AAC vs. 256K MP3 from Amazon (code tricks aside, more is more when it comes to audio quality). Indeed, a lot of stuff I like is priced lower.

Flexibility is as important as sound: Can I easily share it, put it on CDs or my portables (yes, I have more than one iPod and player!)? Amazon has no restrictions; iTunes has FairPlay. In their zeal to dethrone Apple and open frontiers in legal digital downloads, it seems that labels have found a way to lower per-track rates (and thus perceived value) for themselves and artists and kicked off competition that will further pressure their already thin bottom lines!

If the new Amazon MP3 store is a great lesson of "be careful what you wish for," the recent pyrrhic file-sharing court victories have proven to be another. After winning a record $200,000-plus judgment against a single mom scraping by on $36,000 a year, the industry dropped (or planted?) the long-rumored reality of the RIAA's campaign, basically admitting that it costs way more to prosecute and collect than it generates in revenues. In other words, even when they win they lose. While they might drag a few more victims into court, they've conclusively proven what analysts have been saying for years: Their legal strategy is not just bad PR, but unsustainably bad business.

These days it's rare for big events to bypass Starbucks or Apple, so we should at least mention the new physical/digital music packages hanging out by the barista. Starbucks's Hear Music division continues to innovate in both delivery and content. Attractive, hard plastic cards, sized to fit in jewel boxes, contain purchase codes for a downloadable iTunes album. Unfortunately, aside from the shiny plastic, there's not a lot more to it. Some content is exclusive to Starbucks, but the DRM and quality of the files is the same old same old.

But, hey, marketing is good for sales. And this is good marketing. As is the new "Song of the Day" deal, where they give you an iTunes single with your purchase.

All of this pales next to the bomb dropped by Radiohead. The band's new album went on sale to the world digitally, without any label at all or even a suggested retail price. There's no retail channel whatsoever. It's a shocking affront to everything the industry holds dear and a counter-intuitive response to file-trading disasters that have dogged the band.

Previous, similar experiments suggest Radiohead's bet might succeed spectacularly, mostly proving how bad traditional label deals are for artists, but not necessarily providing a recipe lesser bands can follow. This one's so big it's going to have to wait for next month's, though ... way too big to fit in October's already stuffed bag. And I didn't even mention Trent Reznor's announcement that Nine Inch Nails was off-contract and not especially interested in a new one either! Until next month ...



DAVE DAVIS makes records and designs new media at Sound Images.
 
 
 
 

 

 
 
 
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