Amazon.com launches music download service Amazon MP3

Online retailer Amazon.com has released details of its long-awaited music download service.

This is expected to be a challenge to the dominant position of Apple’s iTunes store. The songs will be sold through a store called Amazon MP3.

Over 2 million songs – including those by Amy Winehouse, U2, and 50 Cent – will be made available for download from Amazon’s US website.

The store claims to offer the world’s biggest selection of digital rights management (DRM)-free MP3 music downloads in the form of over 2 million songs from over 180,000 artistes represented by over 20,000 major and independent labels.

With the entire collection available exclusively in MP3 format without software, customers can enjoy music downloads using devices such as PCs, Macs, iPods, Zunes, Zens, iPhones, RAZRs, and BlackBerry as well as organise their music using applications such as iTunes or Windows Media Player.

Besides, Amazon MP3 users can burn the downloaded content onto CDs. Most of the songs are priced between 89 cents and 99 cents, while albums are priced at anything between $5.99 and $9.99.

Customers can buy downloads using Amazon 1-Click shopping, and seamlessly add them to iTunes or Windows Media Player libraries using the Amazon MP3 Downloader.

The songs in Amazon MP3 are encoded in the universally compatible MP3 format, allowing them to be played on any handheld music player. By contrast, the vast majority of music sold by Apple’s iTunes Store can only be played on the iPod.

Analysts are of the opinion that Amazon’s service would present a threat to iTunes, which has a 70% share of digital music sales, because iPod owners keen to buy songs without copy protection would be tempted to go to Amazon rather than pay $1.29 for them at the Apple store.

Deals with 20,000 labels, including two majors – Universal Music Group and EMI – also mean that the Amazon MP3 would offer a significant range of music, an issue which has troubled other providers of digital downloads.

Amazon’s new service adds yet another dimension to the increasingly complex market for digital music, where at least three separate models have emerged.

Along with the traditional ‘pay-per-song’ model favored by iTunes, there is the subscription – or ‘all you can eat’ – model offered by Napster, where users pay a monthly fee to download as much music as they like, and the advertising-supported model adopted by Spiralfrog, a new service, where music is free provided the user watches advertisements.

According to analysts, Amazon’s announcement would put pressure on Apple to cut its prices, but both services would struggle to convince customers that they should pay for digital music, especially when songs could so easily be downloaded for free.

According to NPD Group, Amazon was the fourth-largest music retailer in the United States (including physical and digital sales) during the three months ended March 31, 2007, with a 6.7% market share in terms of unit sales. That placed it behind Wal-Mart, Best Buy, and iTunes, which was in the third place with a 9.8% market share.

The digital music market nearly doubled in value in 2006, from $1.1 billion to $2 billion (£542 million to £985 million), but the growth has so far failed to offset the decline in CD sales, which fell by 23% globally since 2000.