Amazon #2 Online Retailer Behind iTunes

[BaldiMac]

What doesn't have artificial advantages in the business world?

Do you complain that M&M/Mars has more shelf space at the supermarket checkout than Grandma's Homemade Candies?

What about the fact that Macy's dwarfs the local clothing store down the street?

Do you complain that television studios choose to sell their programs to the major networks and not public access or third tier cable? Isn't it unfair that BET doesn't get first run episodes of "24" to show?

I know why - because it isn't a conspiracy against Apple.

It is an admitted conspiracy against Apple. The major labels are conspiring or cooperating or whatever word you would like to use to offer DRM-free music to anyone except Apple in order help establish a significant competitor to iTunes. I don't have a problem with that.

I don't consider any of the advantages that you outlined to be artificial. Maybe that's the wrong word. I consider the DRM-free music from Amazon to be an "artificial advantage", because it is an advantage that they will lose as soon as they have enough marketshare for the labels to improve their negotiating position with Apple. Or if the labels were to concede to Apple.

If these conspiracy theories are right, why wouldn't the record labels just pull all their tracks from everywhere and start their own online store selling tracks for five cents and once they've driven everyone else out of business, up the prices?

Because it wouldn't work. Where would they get the revenue to continue operating? How would they drive Apple out of business when Apple doesn't make much money from music sales anyway? Plus, they couldn't just start one big store by themselves or they'd be sued for anti competitive business practices. They would still have to compete with each other if they each had their own store.

Do you not believe man landed on the moon, either?

I do believe man landed on the moon.

 

[stompy]

I know why - because it isn't a conspiracy against Apple.

Do you not believe man landed on the moon, either?

It is an admitted conspiracy against Apple. The major labels are conspiring or cooperating or whatever word you would like to use to offer DRM-free music to anyone except Apple in order help establish a significant competitor to iTunes. I don't have a problem with that.
...

I do believe man landed on the moon.

While this article doesn't mention the moon landing, it does support most of what BaldiMac has said.

 

[sleepingworker]

While this article doesn't mention the moon landing, it does support most of what BaldiMac has said.

Great article. Thanks for linking it.

 

[Unspeaked]

Great article. Thanks for linking it.

The main points I got from that article are:

1. The music industry (and Pepsi) is simply shifting their support from Apple to Amazon. The focus of the article - the Pepsi promotion - is the same now as then, only the music provider is different. And this is bad for consumers because -- ?

2. The music industry is simply doing what it needs to (or trying to do what it needs to) to make up for the lost revenue in physical CD sales. It's a business. It's losing a revenue stream and wants a cut of a new revenue stream - selling its own products, mind you. Can you blame them for wanting to make money? Isn't that what they've wanted to do for their entire existence? Isn't that what Apple wants to do?

Apple wants to be the 21st Century equivalent of a record store. That's fine. But have we ever had one record store before? No, there's always been competition. Even in the days that WalMart was forcing labels to release censored albums, they had but a fraction of the market share that Apple enjoys today in the digital arena. It is not in the record labels, nor the consumers, best interest to have one destination for online music sales, whether that destination is Apple, Amazon, eMusic, etc.

 

[sleepingworker]

The main points I got from that article are:

1. The music industry (and Pepsi) is simply shifting their support from Apple to Amazon. The focus of the article - the Pepsi promotion - is the same now as then, only the music provider is different. And this is bad for consumers because -- ?

2. The music industry is simply doing what it needs to (or trying to do what it needs to) to make up for the lost revenue in physical CD sales. It's a business. It's losing a revenue stream and wants a cut of a new revenue stream - selling its own products, mind you. Can you blame them for wanting to make money? Isn't that what they've wanted to do for their entire existence? Isn't that what Apple wants to do?

Apple wants to be the 21st Century equivalent of a record store. That's fine. But have we ever had one record store before? No, there's always been competition. Even in the days that WalMart was forcing labels to release censored albums, they had but a fraction of the market share that Apple enjoys today in the digital arena. It is not in the record labels, nor the consumers, best interest to have one destination for online music sales, whether that destination is Apple, Amazon, eMusic, etc.

uh, I just said it was a great article. I didn't imply that competition was bad for Apple, the consumer, or the music industry. But thank you for the Business 101 lecture!

 

[Unspeaked]

uh, I just said it was a great article. I didn't imply that competition was bad for Apple, the consumer, or the music industry. But thank you for the Business 101 lecture!

Sorry, I wasn't directing my post at you specifically...

 

[igxqrrl]

Name me one thing Amazon has over Apple other than the blessing of the music syndicate to sell DRM-free music. Selection? Nope. Ease of use? Nope. More enjoyable user interface? Nope.

I fail to see any legitimate "competition" here.

In my opinion, and that of others whom I've talked to, the Amazon store has a far superior user interface to iTMS.

 

[pagansoul]

My main source of music is the Pendergrass Flea market. I pay $5 for a used CD and $30 if I buy 10. Only in the last 2 years I have purchased about 10 singles and 2 full CDs from iTunes, from emusic, about 10 cds worth and Amazon about 4 cds. My collection is about 600+ cds which I have been working on since 1977. I always prefer the actual CD if I can find it. I know my main source will always be the reseller market. I think the online stores are great for a quick fix but I tend to eventully get the CD if I can find it at $5 or less.

Sorry, that should be 1987. When you get to be my age the years just melt together.

 

[igxqrrl]

Apple would go completely DRM free in a heartbeat if the labels would let them. They don't need the store to sell iPods--iPods sell themselves. But if they can offer songs to ANYONE with a player that plays AAC, they can bring the store to a much bigger market, and perhaps even make a profit off of it.

If Apple wanted to distribute media without DRM, I think we'd be seeing some Disney content, or at least Pixar content, available without DRM.

And yet we don't.

Apple makes money on its iPods. It's in Apple's vested interest to keep the DRM that locks users into their products.

 

[stompy]

The main points I got from that article are:

1. The music industry (and Pepsi) is simply shifting their support from Apple to Amazon. The focus of the article - the Pepsi promotion - is the same now as then, only the music provider is different. And this is bad for consumers because -- ?

Your use of the word "simply" is misleading. You didn't mention the quotes from two anonymous recording executives who basically say they're using Amazon to wrest control back from Apple? (BTW, I think this is fine, if they want to do that.)

BaldiMac said "The fact that the major labels are propping up Amazon benefits the labels, not necessarily the consumer."

You've inferred "bad for the consumer." I'm sure BandiMac would agree competition will ultimately benefit consumers, I think you're refuting points he hasn't made.

2. The music industry is simply doing what it needs to (or trying to do what it needs to) to make up for the lost revenue in physical CD sales. It's a business. It's losing a revenue stream and wants a cut of a new revenue stream - selling its own products, mind you. Can you blame them for wanting to make money?

They can try to make money any way they see fit. Neither BandiMac nor the linked article said that iTMS should be the only music store around: both made some points about the politics behind Amazon and DRM free music.

 

[sleepingworker]

Sorry, I wasn't directing my post at you specifically...

No problem.

 

[igxqrrl]

It is an admitted conspiracy against Apple. The major labels are conspiring or cooperating or whatever word you would like to use to offer DRM-free music to anyone except Apple in order help establish a significant competitor to iTunes. I don't have a problem with that.

The fact is that nobody on this forums knows why Apple doesn't offer a large catalog of un-DRMed music. We are privy to neither Apple's negotiations with the recording labels, nor Amazon's.

It's quite possible that Amazon is offering the labels a larger cut of the revenue for un-DRMed music. Apple may be playing "hardball", trying to minimize what they pay the labels.

It's also possible, as others have pointed out, that this is a reaction to Apple's earlier behavior. Plenty of companies find Apple undesirable to deal with.

 

[BaldiMac]

The main points I got from that article are:

1. The music industry (and Pepsi) is simply shifting their support from Apple to Amazon. The focus of the article - the Pepsi promotion - is the same now as then, only the music provider is different. And this is bad for consumers because -- ?

It is bad for consumers in the long term because of the reasons behind the shift in support. Short term - it is great for consumers in that we get drm-free music. Long term - the reason the music industry (aka major labels) is supporting Amazon is to improve their negotiating position with Apple. I'd be willing to bet that they don't want to lower prices on average.

2. The music industry is simply doing what it needs to (or trying to do what it needs to) to make up for the lost revenue in physical CD sales. It's a business. It's losing a revenue stream and wants a cut of a new revenue stream - selling its own products, mind you. Can you blame them for wanting to make money? Isn't that what they've wanted to do for their entire existence? Isn't that what Apple wants to do?

As you pointed out, it's there prerogative to try and get as much money as possible. I've got no problem with that. But as a consumer, I'm going to root for the company whose plan results in lower prices (all other things equal of course).

Now, if the "music industry" acts as the "music industry" instead of the four separate major labels that comprise it, then there is a problem. Acting together, they have monopoly control of the market. When a monopoly acts to manipulate a market, that can be illegal. It seems pretty fishy that they keep arriving at the same solutions to the same problems independently without collusion.

Apple wants to be the 21st Century equivalent of a record store. That's fine. But have we ever had one record store before? No, there's always been competition. Even in the days that WalMart was forcing labels to release censored albums, they had but a fraction of the market share that Apple enjoys today in the digital arena. It is not in the record labels, nor the consumers, best interest to have one destination for online music sales, whether that destination is Apple, Amazon, eMusic, etc.

I don't want Apple to be the sole source of music either. I've used all three destinations that you mentioned. Keeping DRM music in iTunes will only hurt my ability to switch from iTunes to another provider.

I hope another significant competitor comes along by offering a better combination of price and service. If the major labels don't continue to act in unison, it probably will.

 

[BaldiMac]

The fact is that nobody on this forums knows why Apple doesn't offer a large catalog of un-DRMed music. We are privy to neither Apple's negotiations with the recording labels, nor Amazon's.

It's quite possible that Amazon is offering the labels a larger cut of the revenue for un-DRMed music. Apple may be playing "hardball", trying to minimize what they pay the labels.

It's also possible, as others have pointed out, that this is a reaction to Apple's earlier behavior. Plenty of companies find Apple undesirable to deal with.

It has been widely reported that the labels are withholding drm free music from iTunes as part of a push to reduce Apple's negotiating position. Of course, you are correct that there may be other issues.

 

[Unspeaked]

They can try to make money any way they see fit. Neither BandiMac nor the linked article said that iTMS should be the only music store around: both made some points about the politics behind Amazon and DRM free music.

Not every point I've made is directed at BaldiMac. There's posts scattered all over this thread making absurd comments about buying from Apple, avoiding other stores "just because" and the like. The only reason I've been replying to BaliMac directly is because they were one of the last to question the labels giving Amazon preferential treatment.

I don't want Apple to be the sole source of music either. I've used all three destinations that you mentioned. Keeping DRM music in iTunes will only hurt my ability to switch from iTunes to another provider.

I hope another significant competitor comes along by offering a better combination of price and service. If the major labels don't continue to act in unison, it probably will.

The labels throwing their backing behind Amazon is helping to facilitate competition. It was pretty obvious Apple had a stranglehold on online music sales (and still does, really) so I don't see a problem with the artificial advantage as long as it goes away at some point (which by your own definition, it ought to). The fact of the matter is there were no viable alternatives to Apple before Amazon came along (eMusic markets a different type of product and the rest were mostly subscription based) so it's premature to say what effect this will have, and I think as the months (or even years) go by, we'll get a better look at how the music market is changing and if these moves were good or bad for the consumers and companies involved.

Still, I can't help but go back to the posters who've mentioned the possibility of lower prices and think of the parallels with retail stores and CDs. For a long while, CD prices were extremely inflated and shops had little to no leverage. But what started happening in the 90s - well before Napster - is a fairer pricing of back catalog items (new CDs as low as $5.99 and $6.99) and even major discounts on release week for hot or up and coming artists ($8.99 and $9.99 price points). I'd be surprised if this same pricing structure doesn't work its way into the current sales model...

 

[stompy]

Not every point I've made is directed at BaldiMac. There's posts scattered all over this thread making absurd comments about buying from Apple, avoiding other stores "just because" and the like. The only reason I've been replying to BaliMac directly is because they were one of the last to question the labels giving Amazon preferential treatment.

Ok, gotcha; I guess I have just been ignoring the most outlandish ones.

 

[LagunaSol]

Then you're deluding yourself.

If you think that the record companies' selectively throttling the end-user rights of purchased products among retail competitors with the goal of manipulating the competitive landscape is ultimately good for the consumer, I think you might want to have a close look at that whole "self-delusion" thing yourself.

As far as "supply and demand" goes, you're not even comparing equivalent products (DRM vs. non-DRM, lower bit rate vs. higher bit rate), so the "economic balance" argument you're making is nonsensical when Apple isn't even allowed to offer an equivalent product by the suppliers.

If you support a real American-style free market system, and the innovation and consumer benefits such a system provides, the only answer is to be able to go to any online retailer and buy music sans DRM. DRM is a nasty weapon first used by the media companies against their own customers, and now it's a weapon being used against successful and innovative retailers (in this case, Apple).

Arguing that the media companies' playing favorites between Amazon and Apple (or anyone else) is good for consumers is laughable in the long term.

And unfortunately, buying MP3s from Amazon only prolongs the wicked little game.

 

[LagunaSol]

I don't see a problem with the artificial advantage as long as it goes away at some point

And this magical day happens when exactly?

 

[BongoBanger]

If you think that the record companies' selectively throttling the end-user rights of purchased products among retail competitors with the goal of manipulating the competitive landscape is ultimately good for the consumer, I think you might want to have a close look at that whole "self-delusion" thing yourself.

Oh please, get a grip. You we're quite happy when Apple were in a position to make the major labels dance to their own exclusive tune and now you're having a whine because the labels, tired of being bent over and rogered by Apple's business model, have elected to switch to a competitor?

What goes around comes around.

Oh, and, as I said, once Amazon have proved the concept that iTunes can be taken on then other outlets will spring up because, you know, the labels wont want to swap one master for another.

Clear?

As far as "supply and demand" goes, you're not even comparing equivalent products (DRM vs. non-DRM, lower bit rate vs. higher bit rate), so the "economic balance" argument you're making is nonsensical when Apple isn't even allowed to offer an equivalent product by the suppliers.

Really? So you're telling me that Apple can't up the bit rate of their tracks? Or match Amazon's prices? Are you really, really saying that? It's the same product only one provider is now stuck with with DRM on about two thirds of its catalogue because of its own greed.

Not sure how much clearer I can be here.

If you support a real American-style free market system, and the innovation and consumer benefits such a system provides, the only answer is to be able to go to any online retailer and buy music sans DRM.

Which iTunes lets you do. Oh wait.

DRM is a nasty weapon first used by the media companies against their own customers, and now it's a weapon being used against successful and innovative retailers (in this case, Apple).

LOL! Are you actually being serious here? Because you really, really need to look at the evolution of the online music market and how Apple constructed its business model if you are.

Arguing that the media companies' playing favorites between Amazon and Apple (or anyone else) is good for consumers is laughable in the long term.

History would like a word with you.

And unfortunately, buying MP3s from Amazon only prolongs the wicked little game.

Whereas buying them exclusively form iTunes doesn't. Obviously.

Honestly, take a step back and actually think about what you're typing here which is essentially "omg! Poor Apple - who had their own way for years - are now being picked on! The scandal!"

 

[Unspeaked]

Ok, gotcha; I guess I have just been ignoring the most outlandish ones.

That's probably for the best - I wish I could!

And this magical day happens when exactly?

I'm not the one you should be asking...

I didn't say this day would come, but the comment I was replying to was saying that the labels were giving preferential treatment to Amazon only until they've hurt Apple enough at which point they'd pull their support (thus calling it an artificial advantage).

 

[LagunaSol]

For all those making the silly argument (BongoBanger) that somehow Hollywood's manipulation of the competitive playing field is in some abstract way good for consumers, why stop there? We should take the fight for the little guy across all realms!

Take the NCAA basketball tournament. I mean, it's hardly fair that the #16 seed has to play the #1 seed. Come on, the #1 seed is way better! Bigger program. More money. The ability to draw better players. There is injustice there!

So why don't we, say, raise the hoop for the #1 seed to 11 feet. Levels the playing field for #16, right? It would definitely make the tournament more exciting. Hey, everyone wins! Well, not the #1 seed, of course, but it's their own fault that they got to be so good anyway. Hey, as BongoBanger says, "what goes around comes around."

Back to media. What if Hollywood decided that Wal-Mart has way too much leverage with CD and DVD sales (which they do). What if they suddenly only allowed Wal-Mart to sell CDs and DVDs with degraded sound and video quality? That, by the way, only played on the player in your home and maybe the one in your car, but nothing else? Yet continued to offer the higher-quality, less restrictive products through Wal-Mart competitors? Hey, totally fair! Consumers win!

These arguments are ludicrous. And BongoBanger, you can't even be honest about the situation as it currently exists. If every label said to Apple right now "go ahead and sell our stuff without DRM" that they wouldn't do it? Or that the bit rate that Apple offers isn't actually specified in their contracts with the music providers? You imply that Apple is clinging to it's so-called "lock in" model by choosing to remain a DRM peddler. And I wager that your implication is completely wrong.

Ignorance at its finest.

Did I somehow wander into some Soviet-era throwback discussion forum? Or is this still America, where everyone gets to compete on their own merits without being hobbled by some artificial restraint?

Digital music should be just like CD sales where I can walk into any store I want and get the exact same product. Period.

I'm not making a pro-Apple argument here. I'm making a pro-capitalism argument here. And not offering DRM-free music through Apple (by no choice of Apple's) while offering DRM-free music through a competitor to manipulate the market is not only un-American, but should be illegal.

And if Apple and Amazon's roles were reversed, I'd still be making the exact same argument.

 

[LagunaSol]

Oh please, get a grip. You we're quite happy when Apple were in a position to make the major labels dance to their own exclusive tune and now you're having a whine because the labels, tired of being bent over and rogered by Apple's business model, have elected to switch to a competitor?

Um, I was? Link, please?

I've been against DRM-shackled music from Day One. And I'm definitely not a fan of 128 kbps music. Hence I buy very little music through Apple - I prefer the freedom I have with CDs. Though the whole DRM thing has soured my desire to feed my money to these musical mobsters at all.

That said, I think the selective offering of non-DRM music to selective vendors to consciously manipulate the market is repulsive and wrong and smacks of cronyism.

Your straw man argument fails.

 

[BongoBanger]

For all those making the silly argument (BongoBanger) that somehow Hollywood's manipulation of the competitive playing field is in some abstract way good for consumers, why stop there? We should take the fight for the little guy across all realms!

Hollywood produces films. Just so you know.

Take the NCAA basketball tournament. I mean, it's hardly fair that the #16 seed has to play the #1 seed. Come on, the #1 seed is way better! Bigger program. More money. The ability to draw better players. There is injustice there!

What on earth are you going on about now?

So why don't we, say, raise the hoop for the #1 seed to 11 feet. Levels the playing field for #16, right? It would definitely make the tournament more exciting. Hey, everyone wins! Well, not the #1 seed, of course, but it's their own fault that they got to be so good anyway. Hey, as BongoBanger says, "what goes around comes around."

Piss poor analogy that you've given, I'll relate that to the introduction of the Catalan Dragons franchise in Super League. They were protected from relegation for two seasons in order to develop a competitive franchise. Market manipulation in a capitalist economy is extremely common place when introducing a new competitor.

Back to media. What if Hollywood decided that Wal-Mart has way too much leverage with CD and DVD sales (which they do). What if they suddenly only allowed Wal-Mart to sell CDs and DVDs with degraded sound and video quality?

WHAT IF JESUS CAME BACK AS A TIN OF BEANS!

Any more red herrings to share or are you done? I should at this point mention that 'Hollywood' is not a homogeneous entity, it's comprised of these things called 'studios'. Sort of like 'the record industry' is composed of 'labels' all of whom bargain 'independently' with their 'sales channels'.

Just so you know.

That, by the way, only played on the player in your home and maybe the one in your car, but nothing else?

Which Apple has been doing for years. I take it you're happy for that to continue since, you know, the establishment of competition is a bad thing?

Yet continued to offer the higher-quality, less restrictive products through Wal-Mart competitors? Hey, totally fair! Consumers win!

Except Amazon is a new competitor. This isn't about giving advantage to an exisiting competitor, its about the creation of an open market.

These arguments are ludicrous.

Wait... are you saying that short term market manipulation to build competitors in order to break a monopoly is bad for the consumer? What would you rather we do? Keep forking out $0.99 for tracks that can only be played on certain devices forever?

And BongoBanger, you can't even be honest about the situation as it currently exists.

Oh I am being. My point is that the labels are tired of being dictated to by Apple and are now doing a bit of dictating themselves.

If every label said to Apple right now "go ahead and sell our stuff without DRM" that they wouldn't do it? Or that the bit rate that Apple offers isn't actually specified in their contracts with the music providers? You imply that Apple is clinging to it's so-called "lock in" model by choosing to remain a DRM peddler. And I wager that your implication is completely wrong.

You'll wager or you actually know? You see iTunes plus actually offers DRM free tracks from EMI at higher bit rates so it can change its model, it just chose not to until it had to. I'm sure Apple can come to an agreement with the other major labels although there will be a bit more partnership and a bit less dictation involved.

Ignorance at its finest.

Quite.

Did I somehow wander into some Soviet-era throwback discussion forum? Or is this still America, where everyone gets to compete on their own merits without being hobbled by some artificial restraint?

What. The. Hell?

Digital music should be just like CD sales where I can walk into any store I want and get the exact same product. Period.

Yes. It's quite nice to be able to choose which store you want to walk into though, isn't it?

I'm not making a pro-Apple argument here. I'm making a pro-capitalism argument here.

You're actually not making an argument at all.

And not offering DRM-free music through Apple (by no choice of Apple's) while offering DRM-free music through a competitor to manipulate the market is not only un-American, but should be illegal.

Senator McCarthy's been dead for a long time, mate. As for illegal, do you think it's fair for one company to utterly dominate a market and be able to dictate terms to its suppliers - and to its customers in terms of what software they must use and what hardware they can use it on - and, if so, do you think the end customer gets maximum benefit and choice out of this?

And if Apple and Amazon's roles were reversed, I'd still be making the exact same argument.

And I suspect you'd still be spouting a load of hot air and rhetoric whilst making absolutely no sense at all.

 

[BongoBanger]

Um, I was? Link, please?

Of course, you're right. You have championed the need for competition from day one as this post of yours shows:

One thing Samsung is doing that Apple should take a cue from; including 20 free song downloads from Napster with the purchase of the player. Apple should do the same. Draw people into the iTunes Music Store, let them download their 20 free songs, and subsequently get hooked on the service.

Other than that, this thing sux compared to the iPod. Who wants to record fuzzy FM radio anyway? And is it really a huge draw to be able to patch in your old 8-track deck and record all your Bay City Rollers tapes to MP3?

iPod + iTrip + iTunes Music Store puts Samsung + Napster to shame.

You claim to be against DRM and yet suggest people get 'hooked' on a DRM service.

Hypocrisy much?

I've been against DRM-shackled music from Day One.

Whilst quite happy to suggest that people should get hooked on iTunes.

And I'm definitely not a fan of 128 kbps music. Hence I buy very little music through Apple - I prefer the freedom I have with CDs. Though the whole DRM thing has soured my desire to feed my money to these musical mobsters at all.

And with Amazon you don't have to.

That said, I think the selective offering of non-DRM music to selective vendors to consciously manipulate the market is repulsive and wrong and smacks of cronyism.

And, as mentioned again and again, EMI and Apple have a DRM free deal because Apple are now having to give a little. If they give a bit more then the others will follow suit.

Which brings us back to the original point: This situation is of Apple's own making.

Was there anything else?

 

[LagunaSol]

Hollywood produces films. Just so you know.

Apparently someone doesn't know where many of the music companies also have their headquarters. Is the Hollywood/Los Angeles connection too abstract for you to comprehend or do I actually need to say "the greater Los Angeles area" for your brain to compute what I'm saying? Or perhaps you need an actual street address?

What would you rather we do? Keep forking out $0.99 for tracks that can only be played on certain devices forever?

Ah, more straw man nonsense. Did I ever say "iTunes 128 kbps w/DRM = GOOD!" Why, no I did not! Reading, you see, is fundamental.

You see iTunes plus actually offers DRM free tracks from EMI at higher bit rates so it can change its model, it just chose not to until it had to.

And as I clearly said, if Universal Music (and the others) came to Apple today and said "OK, DRM-free and 256 kbps are fine with us!" that we'd see Apple announce it immediately.

You pretend that 1) Apple is perfectly content with the DRM model, and 2) that I'm perfectly content buying DRM'ed music through iTunes. Unfortunately, you have absolutely no basis to argue either.

But please, enjoy this argument you're having with this imaginary, unseen proponent of iTunes DRM and 128 kbps music that apparently I'm representing by proxy.