Amazon to sell DRM-free music online in the wrong format.

Amazon recently announced they will begin selling DRM-free music later this year. They have hooked up with EMI, who also inked a deal with Apple’s iTunes.

My question for Amazon is: Why MP3? You could give iTunes a run for its money here, but are blowing it by not offering the superior AAC compression. AAC is essentially “MP4”, and has many improvements over MP3.

I think I know the answer. I’m sure the marketing types were all over MP3 because it can be used in every player. But AAC is supported by iPods, Zunes, some Sansas, some Sonys, and even some Palms, Nokia phones and Blackberrys. In other words, it’s very commonly supported. And for the ~15-20% potential additional customers whose players do not yet support AAC, I think they lose a lot of the ~80% of people whose players do. I, for instance, will not buy an MP3 from them when I can get an AAC from iTunes.

Amazon should sell AACs, and then differentiate themselves in other ways:

  • Higher quality (Apple will be 256K, Amazon could go the full 320k).
  • Lower price (I assume EMI will take the same amount no matter what, but maybe Amazon could shave a nickel of profit and try a lower price for a while).

Instead, they will offer an inferior product to most of us. Even if it was a nickel less, no thanks.

This is a shame, because selling the same (or better) product as Apple’s iTunes, Amazon could capitalize on their existing site traffic, especially the traffic for CD sales. It would be a natural.

I really think the decision to use MP3 is short-sighted and will cost them in the end. I think lots of iPod (and other AAC player) users would rather go for the better quality and lower size of AAC tracks.