Over the last 18 months, how often have you heard rumors that an online music service from Amazon was imminent? Plenty, no doubt, so much so that it seems Amazon has redefined the term “imminent” in much the same way that Google redefined the term “beta.”
Nevertheless, the rumor has arisen again, reportedly because a major barrier to the launch — copy protection of music files — will be removed.
Amazon has cut a deal with the Universal Music Group to sell that distributor’s classical music collection in unprotected MP3 format, according to published reports.
Amazon will launch its music store next month, the reports predict, which is in the same time frame as Apple is scheduled to start selling unprotected music — music without DRM, or Digital Rights Management, protection — under a pact it inked with record label EMI.
What Are the Odds?
“It is our policy not to comment on speculation and rumor,” Amazon spokesperson Drew Herdner told the E-Commerce Times. Others, though, were less reticent about the prospects of Amazon selling digital downloads.
“I’d give it a six out of 10 on likelihood that it’s going to happen,” Michael Goodman, digital entertainment director for the Yankee Group in Boston told the E-Commerce Times.
“The reason that I’m somewhat skeptical is that Amazon has been pretty adamant about not rolling out a music service unless they can go DRM-free,” he explained.
“Right now, there’s only one major music label that’s willing to go DRM-free,” he continued. “The question would have to be, is that a sufficient mass for Amazon to decide to get into the music business?”
Maybe one major label would be insufficient to pull Amazon into head-to-head competition with market leader Apple’s iTunes store, but what about two? That’s what makes the rumored deal with Universal so important and adds more credibility to the latest music store rumors than past ones.
If a label like Universal were to join EMI in the unprotected fold, experimenting with a genre like classical is a safe way to go, asserted Goodman.
“It’s a way to protect yourself,” he said. “You will see lower levels of piracy with classical than with rock or hip-hop.
“Classical tends to have an older audience that is less likely to pirate,” he added.
The entertainment industry will be closely watching the results of early experiments with unprotected downloads, experiments that could lead to a DRM-free world, Goodman noted.
“It’s a house of cards,” he remarked. “If EMI and Apple are successful in showing that you can make more money without DRM than with it, DRM loses legitimacy.”
Entertainment companies wouldn’t be the only beneficiaries of a DRM-free world. “The big winner here is ultimately the consumer because unprotected music incents other music services to develop better services than iTunes,” Goodman maintained.
“iTunes is a good storefront, but it’s not a great storefront,” he contended. “There are a lot of things that other music services offer that iTunes doesn’t, such as a recommendation engine.”
King of Cross-Selling
That opportunity may be especially important for Amazon, which has written the book on cross-selling techniques.
“They are known for their recommendations, customer reviews and all sorts of other nifty things in order to help hook their customers up with their content,” Paul Lamere, a principal investigator for Sun Microsystems’ Search Inside the Music Project, wrote in his “Duke Listens!” blog last December.
“If Amazon opens an MP3-only store and they offer a strong catalog, they could give iTunes a run for their money,” he added.
Long Live DRM
Despite signs that DRM’s hold on music may be slipping, there are those who believe copy protection is here to stay.
“DRM isn’t going to go away in my lifetime and the the way medical science is going, I expect to live another 50 or 60 years,” Mukul Krishna, global manager for digital media at Frost & Sullivan, told the E-Commerce Times.
He sees a music world where protected and unprotected content will coexist.
“A premium will always be charged for unprotected content,” he asserted, “and people willing to pay a premium will always be in the minority.”