As of right now, iTunes charges $.99 for every single and roughly $9.99 per album. Amazon has stepped in with a tiered pricing system, making separate songs available for $.89 or $.99, claiming that most mainstream songs will be priced at the $.89 mark. Complete albums are selling for a mere $5.99 to $9.99, again depending on the status of the album. This is a major plus for them, not to mention a boost for everyone in the music industry by already having the trust of labels. Another plus is that they offer all DRM free music, including a pretty nice selection of indie tunes, and allow users the freedom to listen to their songs on any device. Also to their credit, having a consumer base set up that offers excellence service helps them in jump-starting this new venture.
On the downside, a shortcoming to their DRM free stand is that they only offer EMI and Universal artists, while iTunes holds Warner and Sony BMG in their favor. However, since Warner did not renew its contract with the iTunes, it’s unclear as to which will have the better music selection down the road. Also, assuming that iTunes has the upper hand for already being an established digital music store, Amazon will need to offer more than just a lower price to win users. They launched with a 2 million song catalog, which is hardly a threat to iTunes’ 6 million, not to mention their store doesn’t have near the aesthetic appeal that Apple’s does.
Apple was the leader, after all, and with that comes the responsibility of setting the standard for everyone who comes after. They created a new market of digital music and changed the way our generation listened to music. They clearly set the precendent in price, but Amazon has come to challenge it. They could easily topple iTunes if their differentiation tactic included being the first to offer over the air downloads as well (see Apple’s partnership with Starbucks). Unfortunately they did not, so watch these next few weeks closely to see if Amazon can gain an edge.