Will Amazon and Google Music Stores Give iTunes a Run for Its money?

iPod + iTunes has long been the hottest MP3 combo on the market. Two examples of Apple’s music might are: iTunes is about to celebrate its billionth song download, and on February 15, the first iTunes store was launched in Japan, according to http://news.softpedia.com.

Athough the sun never seems to set on the Apple Music empire, major Internet corporations: Google and Amazon.com appear poised to launch their own digital music services. The Wall Street Journal reported that Amazon plans to market an Amazon-branded MP3 player as soon as this summer, when deals with the major music companies are finalized.

“Amazon is in advanced talks with the four global music companies about a digital-music service with a range of features designed to set it apart,” reports the Journal.“ Among them: Amazon-branded portable music players, designed and built for the retailer, and a subscription service that would deeply discount and preload those devices with songs, not unlike mobile phones that are included with subscription plans as part of the deal.”

The question for Amazon.com is whether or not its customer base is large enough to translate its strong position in selling CDs and portable music players into a competitor for digital music. Amazon has been losing money in CD sales because of the popularity of digital music. Apple’s relationship with Amazon (Amazon.com does sell iPods) would become strained, and Apple could pull the iPods from Amazon.com.

Google is not too far behind Amazon in its digital music plans, if the rumors hold true. Bear Sterns analyst Robert Peck wrote, “We believe that Google is in the midst of creating its own iTunes competitor, which we’ve dubbed ‘Google Tunes.’ We think this is a logical step, now that the nascent Google Video product has been introduced.” According to a post on www.FQMB.com, “Though Google has made no announcement of such a plan, Robert Peck says, ‘we do think this fits with Google’s recent moves and its ultimate goal of organizing the world’s information.’”

To date, both Google and Amazon representatives have declined to comment on the status of any developing digital music services and/or players. Although a MacWorld report referenced Amazon’s plan for a subscription music service that would already have songs in a portable player. 

United Press International, Inc., reports that Ted Schadler, an analyst at Forrester Research, said that Google and Amazon “could both match up with Apple in the public eye.Both are huge brands,” he said, “probably bigger brands than Apple. Can they sell music really is the question.”

Apple’s iTunes music store sells about 75 percent of all legally downloaded songs worldwide, according to the United Press International article (http://www.upi.com). Michael Gartenberg, vice president and director of research at Jupiter Research, said that “a company would need an MP3 player on par with the iPod to compete with iTunes.”
“They’d need a device that can capture the hearts and minds of consumers,” Gartenberg continues. “No one’s had a device that’s even close to Apple in the marketplace.”

iTunes charges a one-time fee of 99 cents per song download, but most other music services are subscription-based, in which consumers “own” a song for the term of their subscription.According to Gartenberg, consumers don’t understand how subscription download services work, because they are used to either owning the song (Apple’s model), or hearing it for free on the radio; leasing or renting songs might not catch on easily.

United Press International also reports that MTV is set to debut its store, Urge, at some point in the first half of 2006. But Urge would most likely stay in second place behind Apple. Google could enter into tough competition for the top spot if the company lowered the price for each song; it has the finances to do so. Rhapsody did this in 2004, and experienced a boom in sales.