Amazon, eMusic, iTunes, and Other Digital Download Thoughts.

Much has been made of the “news” that Amazon’s MP3 store is now the #2 online retailer in digital music. You can absorb some various thoughts on this in these articles:

And then of course there are the myriad re-hashes of the USA Today article syndicated in papers everywhere, as well as other articles parroting the story as if iTunes is somehow being threatened.

First, there has always been a #2 in online music sales. Always. I mean, unless there’s only one store doing the selling, then someone is #2. Did we ever care about who it was before? Did it ever matter? No.

In fact, iTunes is so far in the lead that even referring to the next one as a ‘distant second’ is still an understatement. Like being the tallest midget, it’s a dubious distinction.

Second, I tend to agree with eMusic on their being #2. The big labels sure as hell don’t want to discuss Indie labels. They never have. So naturally they don’t bother considering eMusic, but who said the labels get to set the agenda (well, except for USA Today, who wrote the article for the labels’ benefit)?

Bottom line for me is that until some hard numbers on the Amazon store are published, eMusic’s claim, backed up with legitimate sales figures, will hold sway. Though, again, who is truly #2 ultimately doesn’t matter.

Third, I’ve written about this before, but the “collusion” the labels are showing against iTunes is pretty clear. I used to be concerned about it, but now I think it’s self-defeating, and will backfire on them.

Consider this:

  • They don’t want Apple to sell DRM-free music.
  • They don’t like Apple’s low prices.
  • They want bundling, which Apple is against.

And yet, in their deals with Amazon:

  • They’re allowing DRM-free music (at high quality, too).
  • The prices are less.
  • There’s no bundling to speak of.

As I stated at the time, I believed the labels’ plan was for Amazon to get a foothold, and then the labels would slowly start to make changes in pricing, etc.

However, given that six months later the labels have resorted to planting stories to make it appear Amazon is becoming a force in the market, it would seem it hasn’t taken off as fast as they’d hoped (it also shows their lack of patience).

So, in another six months, or a year, or whatever, if Amazon is deemed “big enough”, and the labels try to pull the trigger on pricing and bundling changes, I believe they’ll be unable to do it. The minute the (small) price advantage Amazon has over iTunes goes away, so will their customers.

In short, having offered something “better”, the labels will not be able to pull it away as they had hoped.

Finally, I think Amazon’s inability to truly kick ass is because of a fundamental issue I have with most of the online stores: Price.

How many people paid the $18 list price for a CD? Most used Wal-Mart, Target, used CD stores, etc. and paid $13 or less. Since digital music has no packaging, liner notes, physical media, duplication costs, and are lower quality, the idea that an album should cost $10 is ridiculous. In the digital world, $6 ought to be about right. Heck, if Sony/BMG can sell their physical CDs for $5.99, then there’s no excuse for digital versions to not be the same or less.

Radiohead’s “In Rainbows” offering should have made one thing clear. While many took the album for free, the average price was $6. Seems to me this was the consumers’ way of saying what the true price of a popular digital album should be. Too bad the labels paid no attention.

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7 thoughts on “Amazon, eMusic, iTunes, and Other Digital Download Thoughts.

  1. Tom,

    I think the saying goes,

    ” The truth lies somewhere in between and in that cliche lies the word “lies” “

  2. I have found that I am far behind in my music tastes, so I actually save money by buying old CDs from used CD stores for $5 or less. Cheaper and higher-quality than buying them from iTunes. Of course, I often use iTunes for single tracks when I don’t want the rest of the album.

  3. Brett,

    I do “serious listening” (lights out) generally at least an hour a day, in addition to all the background listening I do. For me the conversion to compressed files from CD was a lot easier than to CDs from vinyl. Some of those early CDs were horrid-sounding. It took years for producers I think to mix sound properly for the new medium. I took a number of early CD pressings of favorite albums back for a refund they sounded so bad.

    Still, the CD’s overwhelming ease of use and convenience were irresistible, and eventually the switch was complete (though, yes, I still have some vinyl and a turntable in my stereo).

    With MP3, the key is using good compression (hence my desire for quality). Initially, I ignored iTunes’ MP3 engine and licensed the LAME encoder. I used the “Insane” preset. Now I skip MP3 completely and rip at 320K AAC. When I buy online I find eMusic’s LAME-encoded 192K VBR to be very good quality, and of course iTunes and Amazon offer DRM-free tunes at even better quality. I did a lot of side-by-side comparisons between Apple’s lossless and 320K AAC, and for the majority of music it’s negligible.

    Aside from good quality files, a good quality listening environment is obviously necessary as well. I use the iPod’s line-out jack (NOT the headphone output), plugging it into a dedicated HeadRoom headphone amp, and then feed that signal to a pair of excellent AKG K701 ‘phones (or the Sennhesiser 580s, depending on the music). It sounds GREAT and, like the CD switch years before, the convenience is irresistible.

  4. @ Derek:

    “Does anyone even have CD players any more? Why do we keep making them!?”

    I own several CD players. It’s a quaint notion, but some of us old-timers still occasionally sit down, close our eyes and actually listen to music, and not just blare it in the background while we do other things like socializing, working, exercising, or driving. Compressed (MP3/AAC) music, while admittedly convenient, is just not as satisfying as a well-recorded CD played on a good stereo. Once you know the difference, it is hard to compromise.

    The day I am forced to buy compressed music is the day I stop buying music altogether.

    Furthermore, CDs are artifacts made in limited quantity. My CD collection has resale value. Some rare titles are worth more than I paid. If CDs are ever completely discontinued, their value will skyrocket. Somehow I doubt that downloaded music will hold much (if any) of its value.

  5. Good insight and written well. Personally, I find the big labels actions to be troubling and certainly not in the interest of the consumer. I’ve spent of a chunk of my earnings on media (both physical and digital) and have thought the future is in a virtual distribution of media. Frankly, I’m more inclined to file share, torrent, or alternatively acquire media than to continue to support media billionaires who are as bad as oil execs when it comes to giving the customer a fair shake.
    The road to virtual media success includes ITMS, eMusic, Amazon, and many other players. BUT, it should be up to the marketplace and NOT MEDIA EXECS on which sales portal is a success and which is not. BY THAT MATH, ITMS and Emusic are successes. I’d also point out BEATPORT among others who are succeeding. I do wish Amazon well, but I do believe they ARE BEING PLAYED by the big labels.

  6. Derek,

    I use eMusic as well. Typical album price for me is around $2.50 — 40 downloads a month for $10 (I joined over two years ago).

    Amazon doesn’t even have Indie labels, and iTunes’ inclusion of them is touted as an advantage, but I don’t buy Indie from iTunes when I can get it from eMusic for a fourth of the price!

  7. The price issue is the reason I like eMusic so much. I use the 50 song/month subscription package, which comes out to about $0.30 a song, or $4.50 for a 15 song album. I happily purchase the “booster packs” to supplement my subscription in particularly bountiful months, and even still I’m paying less than $0.40 a song.

    $18 is a ridiculous price to pay for an album, especially when you’re just going to rip it to your iPod right away anyhow. Does anyone even have CD players any more? Why do we keep making them!?

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