Amazon Was Blitzing Discounted MP3s Over the Holidays. Was That a Good Idea?

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Does the concept of heavily-discounted music downloads make any sense?

We’ve been advocating for deeply-discounted MP3s for years – just to compete with free.  But at Amazon, the strategy doesn’t seem to be cutting into iTunes dominance.  In fact, Apple actually increased its share during the latest period, and iTunes shows no signs of ceding ground.

Worse yet, Amazon in many cases is subsidizing these price-drops or freebies, according to sources.  That means a full wholesale payment to the labels, and an expensive game of market grab.

So maybe competing against free is just a useless game?  Well, apparently Amazon thinks this is a strategy worth pursuing.  The company was blitzing its cut-rate album downloads during the holiday season, and promoting a selection of 1,000 different $5 releases.  That is on top of a very healthy selection of $3.99 stickers for front-line, chart-topping releases, and lots of freebie promotional singles.

Time for a new strategy?