Amazon MP3: Is It Really All That?

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When it comes to Amazon MP3, it seems that the sky couldn’t be more blue.

In a recent discussion with Fortune, Amazon vice president of digital media Bill Carr noted that the service was “going very, very well,” but declined to offer sales specifics.  In the same report, a major label executive pointed to a strong proportion of album-based downloads, unlike the more singles-driven iTunes.  “It’s fantastic,” the anonymous source relayed.

Earlier, major label executives helped to frame a USA Today story that positioned Amazon MP3 as the number two download destination, second only to iTunes.

But where are the numbers to back those claims?  The USA Today story offered none, and Amazon is keeping its data close to the chest.  That raises the question of whether Amazon is performing as strongly as leading news reports, label executives, and the company claim.

Of course, ahead of firm numbers from Amazon, the question is difficult to answer.  And the rosy assessments could be true.  But some executives suspect that performance might be lower than anticipated.  “Labels absolutely want an iTunes competitor, but I’m not so sure this is the iTunes killer,” one major label executive told Digital Music News.

In an attempt to shift the balance, majors have been denying MP3-based licensing to the iTunes Store.  Instead, Amazon enjoys DRM-free content from all four majors, a perceived handicap for Apple.

But is that propelling the newfound rival?  Another source of information suggests a slower start.  According to application-based data recently published by Digital Music News, the Amazon MP3 Downloader application was found on roughly 0.2 percent of all PCs worldwide at the tail end of 2007.  The Downloader is required for album purchases, and highly recommended for all other customers.

The Amazon MP3 Downloader number is dwarfed by iTunes, which enjoyed a strong, 28.1 percent penetration level at the same moment.  Then again, Apple has an incredible head start.  And the data does not cover the most recent quarter, a period of potentially strong gains for Amazon.

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The application data mentioned in this article is part the Digital Media Desktop Report, published periodically by the Digital Music News Research Group, BigChampagne, and PC Pitstop.  The report, which covers P2P, ecommerce, jukebox, and other music-related applications, can be purchased here.