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Steve Jobs toys with the Bronfman's of the world like a cat with a fat overfed gerbil. That's dead.

I don't get this at all. If memory serves me right, it was iTunes that introduced the world to DRM free music with its limited selection of EMI music. This was done at a price of US $1.29 per individual track. The next thing you know, Universal is pitching a fit about iTunes domination, their indecent contract with Universal, and how Steve Jobs and iTunes have too much control over the nascent music download market. One of Universal's biggest gripes was Apples refusal to bow to differential pricing. Now they (and other labels) have pretty much released all their music in a DRM free format at US$0.89 - $0.99 per track. Is it just me, or did the labels blow a golden opportunity to sell their music at a higher price through iTunes if they had agreed to sell DRM free for US $1.29. By establishing the defacto price of DRM free music at a higher price than the DRM crap, the labels could have still sold all the DRM free music they wanted through any download outlet for more money than they are getting now. Of course, they're likely lowballing Apple to break it's market share. I still think they had no vision, however.

"Watching these fools play right into Jobs' hands is entertaining."

Sure, right into Apple's hands by eliminating Apple as a middleman in music sales, and selling music not locked to Apple's devices.

Getting them to create a world which doesn't need Apple to be involved anywhere in the process is pure brilliance on Steve's behalf.

Absurd, "recognizing lost opportunities"? If your competing service isn't way better than iTMS, why have it? They are actually competing against themselves without benefit! Giving a new startup like Amazon cheaper prices than Apple so Amazon makes the sale then transfers the song back into itunes where you coulda bought it in the first place is . . . pointless. Also, Amazon's interface is a chore. I have found massive amounts of new media simply because iTMS streamlines music, podcasts, movies, TV shows, and movies into one cohesive interface. iTMS helps you find new media, and a growing portion of the public doesn't listen to the radio, or watch TV, yet somehow finds the best new stuff consistently. Amazon is simply doing what they basically could have done in 2003, but in 2007, a dated attempt at digital media sales, no 'A' for effort.

Apple and Amazon should thank us consumers for having money and interest to spend it....

What's going to happen is that they'll realize that these "other" online sellers, including the labels themselves, still can't sell but a mere fraction of what Apple does at the ITMS, even when they are selling with no DRM. So, what happens then? They allow Apple to sell their catalog with no DRM, and everyone wins.

"Recognizing opportunities lost to Apple's dominance,"

Translation, lacking the leverage to bleed consumers dry by forcing ridiculous prices upon them through multiple outlets.

What it should say is, they should be tahnkful they are getting any money at all considering the only alternative before was watching all of the cash go away via file sharing.

"Kravets continues, 'The self-created headache for the industry is that the highly popular iPod and new iPhone only play music protected by Apple's proprietary FairPlay DRM solution or music that isn't protected at all.'"

The wording of that statement is a little snipish, don't you think?

You could say the same thing about zunes. Zunes only play content in the Microsoft's proprietary format or music that isn't protected at all. What a clown!

The down side to all of this is the risk of Amazon.com and others going along with variable pricing and non-DRM. If other non-DRM stores gain significant sales, Steve Jobs loses his leverage, and labels will then feel free to pull music sales from iTunes unless Steve goes along with their variable, charge-you-more, pricing schemes.

In the end, Steve may have no choice but to go along with the ride, but this may take 3-5 years to take place, and by that time, the growth and transition of this industry will be won and done with Redmond having zero strategy and no place to hide with their close Zune xBox DRM system - niching themselves into complete non-existence.

So what's the REAL story? Easy, lowball prices against iTunes, get rid of Apple, then jack everyone with high prices!! NO company exec would ever stand up to the music/movie industry like Steve Jobs has done on behalf of the consumer. Amazon is simply a patsy folks, you can like their downloads all you want, because like crack, the first hit is free, the rest . . .
will cost you the world.

If EMI is contributing $0.89-$0.99 songs to Amazon and wants $1.29 for songs on iTMS, doesn't this seem to be:
1- A sure way to get less revenue for themselves, and
2- Undercutting Apple
I'm pretty sure EMI is getting an earful from Apple execs right about now.

Other than that, I think this is good news, and Apple might be able to negotiate similar deals with Universal and, gulp, Warner. Those $1.25 tracks should go down to $0.99, and the funeral of DRM will be broadcast live around the world.

I'm not so "SURE"....

1. Apple can compete with any of these offerings because it is the only one that offers the 3 integrated links: the store, the jukebox software, the device.....

2. Apple really only cares about the "device", the other two it gives away or operates at small or breakeven margins to enhance the experience of owning the deivce.....

do you really think that having non-DRM'ed music content, the consumer is now actually going to chose ZUNE or anything else over the ipod?

not a chance.....

does Apple really care where the content comes from as long as it's device can play it? not so much.....in the device battle and the intergrated value-add battle, Apple is way ahead and probably has already won that game...

By the way, Amazon MP3 store is limited to US customers.

Purchasing a couple of songs from Amazon's new service really makes me appreciate the iTunes interface.

Exactly what I'd been saying... Apple wins either way. Whatever slim iTunes profit they'll lose to Amazon will be re-captured via increased iPod sales. The real loser is Microsoft and the WMA format.

How do the Guinness Beer guys say it?.... "Genius!"

Apple makes very little from iTunes. As has been said many times before, iTunes primarily exists to sell iPods. Regardless of where people download their DRM-free music from, at least 70% of those downloads will wind up on an iPod. Given this, why not just buy from iTunes and get the quick and easy integration as well as the larger music selection?

If the labels try to keep iTunes's music at the lower bitrate, but offer higher resolutions on Amazon--or whatever the site--most people will just put that higher-bit song on the iPod anyway.

A quick story to illustrate what Apple understands so well that the Bronfmans of the world don't: Trojan condoms have about 70% of the American condom market (about the same as iTunes/iPod). At this point, Trojan does not have to advertise its own brand of condoms: all it has to do is air a public-service announcement promoting safe sex. Because it has such a large share of the market, anything advertising safe sex will result in more condoms being bought, 70% of them automatically being Trojan condoms.

Regardless of where people download their DRM-free music from, 70% of the people downloading them will buy iPods on which to play that music. Apple wins either way.

Why did the stock price hit a new high today? The way the markets react to Apple, Steve Jobs can sit on the crapper crooked and the stock tanks. I think the markets see this as a positive for Apple -- Amazon's mp3 sales, not Steve on the crapper.

I just looked at pricing on both stores. It's interesting to note that the pricing is not consistent on the Amazon store per song or even on iTunes. Nor are the prices the same between iTunes and Amazon

Take for example Dirty Vegas - Dirty Vegas

The Album price on Amazon is $8.99

The Album price on iTunes Plus (DRM FREE) is $9.99 and $11.99 non plus. Yes thats correct. DRM costs more.

Individual Song prices on Amazon $0.89 except Days Go By $1.94

Individual Prices on iTunes Plus $1.29 except Days go By which is tagged as Album Only

Individual Prices on iTunes (DRMed) $0.99 except Days go By which is tagged Album Only

What gives? Since Days go By was the only hit, both stores pretty much force you to buy the entire thing to get the discount on the hit or the song at all. Amazon comes in the winner clearly on pricing. But not with out feeling kinda gouged in the process.

@Toasty!:

I'd like to point out that albums tend to be more and more variably priced on iTunes these days. For instance, Pink Floyd's Dark SIde of the Moon is $7.99 on iTunes Plus, even though EMI could charge as much as $9.99 for those nine songs, while Disturbed's Ten Thousand Fists is $11.99 for fourteen DRM'd songs... well, and a Digital Booklet.

My only complaint is that all my independent-label music still isn't on iTunes Plus, although realistically my personal devotion to some of the artists may drive me to re-buy the music on CDs anyway.

... Pardon me. I just re-read your comparison.

In regards to DRM costing more: that's actually the case? In that case, I'm going to applaud Apple for it, because that's encouraging sales of DRM-free music.

As for the song's price: obviously, the label is trying to gouge you for the hit. This is not an uncommon practice, especially for soundtrack albums, I've noticed. Somewhat sad, but then we can't expect the labels to get it right the first time.

@ Jeremy Avalon

Yes that is the case. Go take a look. I was quite surprised myself. I haven't been able to find another album with the same price inconsistency so it could be mistake on the site.

I usually enjoy MDN biased opinion. On stuff like this, the arrogance is more like a Ballmer fan club. Poor taste MDN. Enjoy DRM free. But it was a big gamble that paid off. Had another music player entered the market with some competitive edge, this story and the Apple stock would have had a sad ending. I enjoy that it worked. Unfortunately, the same can't be said for movies...and that my friends is a problem.

What about the cheaper prices at Amazon?

Is there some conspiracy against Apple? I'd prefer to buy from iTunes, but if the prices at Amazon continue being cheaper, then what chance does iTunes have?

I went to the Amazon online music store, I got the download manager and I downloaded a song. And I am decidedly underwhelmed -- the selection is poor compared to ITMS, the search functions are weak, the download process is clunky and, after the download, I have to convert the mp3 into an AAC file (to save space and processor cycles). For ten cents a song, I think I will stick with ITMS.

One other thing: I think it is hysterically funny to watch Universal cut off its nose to spite its face. It could sell DRM-free music on iTunes (where it would actually sell) for $1.29 a song, but instead opts to sell it (well, at least place it) on Amazon for less than a dollar. These guys are morons. I am glad I don't own stock in their company (and very happy that I do own shares of AAPL).

In the end, this is likely to end as it always has: With another closed music store. But even if it doesn't, Apple will still be the winner.

I believe that this is excellent for Apple. They make at most a small profit on iTunes, if at all. Their interest is in selling iPods with the big fat margins. Apple's own research showed that on average only a few percent of the music on iPods is from iTunes.

Apple's strategy to me seems to be the destruction of the physical media itself. The more there is a shift from physical to on line meda, the better it is for iPods. Much less hassle free to get it on your iPod, and no need to buy the entire CD.

Wether the purchaded music in iTunes comes from the Apple Store itself or from Amazon for example, Apple couldn't care less I believe. They want the iPod universe to expand, and more purchase versatility as well as a stronger shift from physical to on-line media accomplishes this quite nicely.

It's a win-win for Apple with the DRM-free purchase models.

And very bad news - really bad - for M$'s Zune. They hoped to clone the Apple Fairplay model and throw all their resources at it - even at big losses - just to kill of Apple. But they need DRM fot that. On hardware and software itself they have no chance. Therefore to me Jobs plea for DRM-free music was a brilliant stategic move, and primarily aimed at M$.

Amazon is Apple's friend here.

And I also happen to like Amazon, but that's beside the point.

MW Home, as in Apple really hit home here...

The truth of the matter is that this is all happening because of Microsoft. This recent announcement of DRM free music from Amazon and Universal are all results of a reactionary fear because of Microsoft impending announcement.

Yes you heard it first here. I will leak out this announcement here so you'll understand why Amazon is doing this. Microsofts great leaders, Bill Gates and Ballmer, will announce DRM free music using a new internally developed code. The new format "WUSS" will be playable on any "WUSS" player. Better than MP3 and AAC, "WUSS" with the new "AGS" will just wash everyone away like a tidal wave. With "Windows Urinary Sound Stream" format in conjunction with Zune 2.0, Microsoft has taken "Squirting" music to a whole new level to users. Both Amazon and ITMS will surely fail when this new service and systems begin to trickle down to the masses.

You should just join me now and sign up with the MS music store. Paste this on all your signatures.

Squircle, the new word for cool!

Bill, the Guinness beer guys' word is actually "BRILLiant!", spoken in that British accent that makes it funny.

A couple of you have it nailed...Apple wins either way in a DRM-free marketplace, because they sewed up the device-the-music-is-played-on battle long ago (it was actually when they finally allowed the Windoze sufferers in on the iPod fun).

They can't succeed in hurting Apple by undercutting their pricing structure because it's well known that that's not where Apple is making their killing.

Right now, Steve Jobs finally has the players in whatever market we're talking about...computers, music, music players, cell phones, whatever, by the short 'n' curlies because they now have to compete on Apple's home court, and Apple's home court advantage is ease-of-use and elegant design.

If you notice, no one can compete. They may try to cheat, but they can't compete.

Peace.
Olmecmystic

I agree that this store will likely do little in the way of harming Apple's hardware sales. The music labels are failing to see that they are commodity peddlers. iTMS started as a way of delivering a new user experience for music buying, but it's never been a huge moneymaker for Apple all by itself. Now that the hardware has been established as the de facto standard, let Amazon undercut the price as much as they want. The commodity only continues to get cheaper, competitors will make nothing on their music sales (including the labels), and hardware sales will continue to rule the day.

This is like Dell partnering with someone to sell even cheaper crap. They're squeezing themselves very hard here. Is it purely political to vanquish iTMS dominance, or do they not see that they're not going to make up lost cash by selling cheaper. Unless they're dumb enough to believe that Amazon's store is going to unleash a tidal wave of buying (which it isn't).

Very fun to watch.

So, If you buy a song from Amazon, it may have your name digitally woven into the code of the song. And if someone else gets a hold of it and it winds up on an upload site, YOU can be held financially responsible.

I'm not putting up my house as collateral just to download a song from Amazon!

Anyone who does should have their head examined!

Where's the outrage about the digital watermarking? Back when some claimed Apple had been putting it in when they had not, they (EFF, etc.) made a huge fuss. Why isn't anyone screaming about this, since Amazon has already admitted that they're doing it? Weird.

@olmecmystic: "Bill, the Guinness beer guys' word is actually "BRILLiant!", spoken in that British accent that makes it funny."

jeez - IRISH accent!

The key for Apple is that the Amazon MP3 store drives another nail into the WMA coffin.

It also puts an end to any "anti-trust" or "monopoly" issue regarding iTunes.

Finally, something competes. And we welcome it.

Now, if only Microsoft would be humbled* enough to have to compete with Apple...

* as in, get humbled by Apple...

For an UNBIASED review of the Amazon Mp3 store, check out Daring Fireball.

Yes, they only have 2mil songs compared to iTunes 6mil, but they are ALL DRM FREE AND 256Kbps. 2mil is a good start.

>>"Steve Jobs created Amazon's Mp3 store?"

Uhh, no, Amazon created Amazon's Mp3 store. Simple logic eludes MDN once again.

As far as the second paragraph of the latter MDN take, they sure know a lot about *exactly* what Steve Jobs thinks, don't they? Some how I don't think so.

The record companies would never have allowed a DRM free Amazon store if Apple hadn't been so successful in:

1. Selling iPods—which only play DRM-free or Fairplay
2. Totally dominating the digital music download market
3. Establishing $.99 as the baseline price for downloadable music tracks.

Record companies wanted to…
1. Sell you a never-ending-lifetime subscriptions to their music
2. Make you pay more every time you wanted to listen to your subscription on a new device.
3. Prevent you from ever making copies of anything you listened to or bought.

The Amazon music store owes its existence to Apple.

Even if Amazon undercuts Apple price-wise, it doesn't mean Amazon will continue this for long. Several factors to consider which we don't know the answers to yet:

1. Are the record labels subsidizing the Amazon store?

2. What is Amazon's cut of the per track price? More or less than Apple's? This is important, because the record labels aren't about to accept less per song than what Apple pays them.

3. How long will Amazon accept a loss/break even?

4. Is Amazon selling at a loss/break even point simply to drive more people to Amazon.com who don't normally shop there?

The key really is how much is Amazon receiving per song. We can be pretty sure that the record labels aren't taking less, otherwise they'd just keep using iTunes or demand equal pricing from Amazon. Makes me think that Amazon is using this store as a "loss leader" simply to get people to visit Amazon.com, and perhaps drive up traffic for advertising rates.

Labels know that DRM is dying and that they have no choice but to go along with the digital model in the long run. They will drag their feet though as long as they can to ring up as much money with this model till it almost all goes digital.

And if they don't have to produce a CD or DVD and it's costs and deliver a lower quality item at the same or near same cost even better they figure.

The real game here is to kill iTunes as the main source for downloads. The second strategy is getting the buyers names on the downloads and setting them up for any possible future litigation. Thats the main idea, that way these court battles that they loose or settle will be stacked against the downloader with "proof".

This is all about reinforcing their positions as the sole content providers and controllers.

I have inside information on this whole thing. Can't tell you why, but here's the secret they're not telling you:

This whole Amazon store is a giant Trojan horse.

1. Universal is selling DRM-free as a trick to get people to buy. In reality, they have secretly watermarked each track, so they can track who is pirating their songs and where they are pirating the songs to. They believe this will give them the upper hand on piracy. Then, legal action.

Yes, if you buy from Amazon and your track ends up on a P2P network, they can sue you.

2. Universal is undercutting iTunes' price on purpose. The agenda here is to destroy iTunes, and to undercut Steve's ability to dictate pricing.

The labels guys are incensed about this, because they want two things - variable pricing and "bundling" product. This is why Universal is pulling their TV shows from iTunes.

This is why the major movie studios (except for Disney and Paramount) are not giving iTunes their movies, even though they gave them to Wal-Mart, Vudu, and others.

They're watching. And waiting.

The Final Plot:
If Universal can break the iTunes monopoly, all labels will be free to do variable pricing and bundling. For example, a new Beyonce album will be 15.99, while an older one will be 9.99.

A good John Lennon single will be bundled with a bad Ringo Starr single - instead of $1, they get $2 - at no additional cost to them.

You guys have to realize that they feel the Internet should be the Holy Grail for them - unlimited sales with ZERO OVERHEAD. Nothing but PURE PROFIT. GRAVY. But there's one slight problem --

They are utterly angry that Steve has ruined their Holy Grail by asking for fair and uniform pricing. Believe me, they will give their stuff away for free before they let him dictate pricing.

Walt has been off the farm for a while but it's good to see an old friend coming home.
In his article, "Apple’s iPod Touch Is a Beauty of a Player Short on Battery Life", he proceeds to tear into the fancy toy! Moss'y has been away from Job's Reality Distortion Field just long enough to start seeing the truth: Apple has less marketshare so it's products are inferior.

http://fakesteveballmer.blogspot.com

The Amazon store prices need to be 40% below iTunes to make it worthwhile switching (unless you buy huge amounts of music).

Thanks entirely to Apple, this looks like the end of Microsoft DRM in the music business.

The world IS a better place today.

"Apple wins either way in a DRM-free marketplace, because they sewed up the device-the-music-is-played-on battle long ago"

"Apple Wins" analysis is just Stupid.

What this does is lower the barrier for people switching to other MP3 players, and/or lets them put together a music collection purchased online which works on iPods and other players concurrently.

Previously, you have a bunch of iTMS DRM's songs and somebody other than Apple introduces a player you like the look of. What do you do? Stay with Apple of course unless the player is radically better, good enough to spend a lot of time removing DRM from your songs, converting them from AAC to mp3 etc.

What do you do now? You plug the player into the your PC, sync and go.

There's no way this store will increase iPod market share. Moves which reduce barriers to entry for competitors never help the dominant player.

re-tune the "ANALYSIS"

...remember, of the 3 links in Apples chain, (the device, the jukebox software, and the store), the store came LAST.

All a couple of years after the ipod device and itunes software was introduced. (itunes software in Jan. 2001, Mac ipod in Oct 2001, windows ipod in 2002, and itunes music store in Summer 2003).

the ipod/itunes wave was already building by the time the itunes store was introduced and in 6 years no one has come close to building another device/software "integration" that has been as well received in the market place.

Also recall the context in which itunes store was introduced....nothing else existed, the record companies were declaring all mp3 player owners were thieves and Napster/P2P was in its hey-day. The record companies didn't even want folks to rip CDs of bought music. Apple stepped up and called their bluff -- OK, here is an alternative, what do we need to do to make it happen? DRM was a condition of the record industries not Apple. Even with that they came in only begrudgingly.

this latest competition is about the only commodity item (at least from the retail point of view) in the chain -- the content. Dumping DRM only means that "If all content can play on everything and can be bought anywhere, then the best device/jukebox wins".

I think Apple has shown for 6+ years its been the best in that area.

this whole DRM issue is a bit of a strawman/BS argument anyway. I have over 2400 songs in my purchased itunes music list, over 6000 in my library -- all legal. I can play my music anywhere I *want* to play it. I carry it with me, I listen to it in my car, I listen to it on my computers, stream it in my house, play it on my stereo, I can burn it to a CD, put it in my slide shows, put it in my videos....just how many more frigging ways do I need? None that I can think of....and btw, I have swapped/reauthorized computers three times in that period

emusic.com - the world's second largest online music store - has had legal, DRM-free MP3 tracks available for years. Long before Apple thought it a good idea. DRM-free music happened, and was going to happen, with Steve Job's open letter. It's clear that DRM as a model was doomed from the start.

Oops - I meant "without Steve Job's open letter"

The strength of the iPod ecosystem is NOT the iTunes Music Store. The availability to purchase music is just a benefit. The true strength is the linking between the iPod and the iTunes Cataloging and Synching Software.

"Where's the outrage about the digital watermarking? Back when some claimed Apple had been putting it in when they had not, they (EFF, etc.) made a huge fuss. Why isn't anyone screaming about this, since Amazon has already admitted that they're doing it? Weird."

and we have a winner!

despite all the bullsh!t about reality distortion fields, the simple truth is that a large portion of the media see all Apple news as bad news.

"Apple watermarks songs! Apple is evil!" and then we find out it was only hot air....

but amazon watermarks songs, and that is just fine....

i predict that if we do see ANY stories about how amazons watermarks are bad, a sudden flood of articles defending watermarking as reasonable show up. they may even come out without prompting.

...personally, i don't mind the watermarking idea, and think it could be reasonable. but not in the hands of people (the music groups, MS) who have shown, repeatedly, that they can't be trusted to be good citizens and play nice with others. taking granny to court for music sharing when she doesn't even own a computer is NOT the act of a good company.

ideally, music could be offered direct from Apple, Amazon, whomever, after only a cut for operating expenses and very minimal profit. The artists would make more, good songs would sell well since they wouldn't need bundling with a full album of junk, and good albums could rake in money. and despite the distributor AND the artist making more, the songs could still be cheaper. everyone benefits. well, except for the music groups who aren't actually doing any work. and their lawyers i guess.

at that point, if they want to watermark songs, i say more power to them.

until then, as long as people like the networks, music groups, and movie industry are unreasonable, thank the goddess for pirates who are willing to offer the "other" options to us!

if doing the right thing is criminal, then good people must be outlaws.....

Don't forget that Amazon is selling .mp3 which has a worse quality than the .AAC which apple sells. Escpecially the Plus Music on iTunes which is at 256Kbps compared to the 128Kbps and lower that you'll get from Amazon. The price diffence is in the quality... not the DMR.