Amazon just sneaked up on the UK music market with it’s stealthy launch of the UK version of its MP3 store. Why the quiet launch? Amazon promised back in Midem that they’d launch in Europe before year end. It seems to have to taken them longer than expected to make this happen and the quiet, late launch feels like Amazon might not have been able to get all of the pieces in place for launch that they’d wanted.
It is, of course, live in time for the crucial Christmas rush though, and unerringly coincidental with the temporary closure of Zavvi’s online store.
Will Amazon change the UK digital music market? No. Will it become a serious player? Yes.
If anyone can make digital download stores work outside of the iTunes / iPod eco-system, it is Amazon. They have the programming expertise, the packaging expertise, the audience (more European iPod owners buy CDs online than they do downloads). But they need to create a reason for iPod owners to buy from them and not iTunes Music Store. They can’t really differentiate on content. Differentiating on MP3 is not a massive differentiator for iPod owners as they don’t experience any restrictions with their devices with iTMS downloads.
So the key avenue for them is pricing. And this seems to be the core positioning piece with the store currently, with very cheap album and single pricing listed at the top left of the page (songs under 60p and albums under 2 pounds). Either they’re loss leading as an aggressive market entry strategy or they’ve got some good deals from the labels. If it’s the former, they’ll have to revert to standard pricing at some stage. If it’s the former the labels will need to wise up and give similar deals to Apple if they want to avoid cutting their nose to spite their face.
So, assuming pricing will normalize towards iTMS for one reason or another, the differentiation issue will remain. Amazon has the best chance of gaining significant market share form Apple but they won’t unseat Apple from its market leading position. Also, the whole momentum of digital music is shifting away from paid downloads to new offerings like Comes With Music and Datz Music Lounge. Thus Amazon will be competing for distant second place in what will increasingly become a mere subset of the digital music market.