59 Pence for a song, £3 for an album – how in the world does Amazon UK plan to make money on selling downloads? I suppose by selling a shitload of songs every day. This service will only be more than a huge loss-leader, if the British MP3 store succeeds in attracting millions of customers who not only snap up the bargains but also spend a quid or two on higher-margin products. Is that going to happen? Who knows.
Some doubt it. The Guardian headlines “The Amazon MP3 store – does anyone care?” and reminds readers that Apple’s iTunes has a share of 70-80 percent of the UK download market.
Screen Digest senior analyst Dan Cryan said the evidence so far from Amazon MP3’s performance in the UK is that it has been “additive to digital music consumption, rather than eating into it”.
The problem with these discounts – 25 percent on some individual songs and 67 percent on some albums compared to iTunes – is that Amazon, unlike Apple, isn’t selling hardware that could subsidize the low-cost software.
Dan Cryan again: ”It’s fine if Apple just about break even, and fine for Tesco to sell at a loss. But Amazon is a content retailer so that’s a problem for them, and they don’t have the same advantages as they do with books and DVDs in warehouses where Amazon doesn’t have to pay the same overheads as its rivals.”
But maybe, somehow Amazon can pull this off because of its strong position as an online retailer in Europe. Hard to tell. The company never released any financial details for the MP3 store in the U.S. The analysis remains anyone’s guess.
Here is what JupiterResearch’s Mark Mulligan thinks: “If anyone can make digital download stores work outside of the iTunes / iPod eco-system, it is Amazon. They have the programming expertise, the packaging expertise, the audience (more European iPod owners buy CDs online than they do downloads).”
Amazon spokesman Damian Peachey told the Telegraph: ”I don’t want to get into the economics of it, but we want to encourage our customers to get into MP3 who have never downloaded music before.”
[...] pricing. Supermarket chain Asda is offering “The Circus” for a mere £5.88 ($8.66) and Amazon MP3 is almost giving it away at £3 [...]
I love the amazon service, the more sites offering cheap mp3s, the less people are going to use illegal services. All the cheap sites will bring each others prices down until we are left with legal, cheap music. Amazon are bringing mp3s to mums and dads and people who just wouldn’t normally download music.