Amazon announced today that it plans to launch an online music service that will sell only DRM-free music tracks. EMI Music Group--which has already announced a similar arrangement with Apple iTunes--is a major label under this arrangement. In addition, there are supposedly 12,000 unnamed labels.
Amazon indicated that its DRM-free MP3s will free customers to play their music on any device-- such as Apple ipod, Microsoft Zune and others (in addition to burning CDs). EMI is clearly seeking to broaden their channel to consumers beyond Apple itunes store with this arrangement.
Does this pose a major competitive threat to Apple iTunes? Only if certain labels decide to distribute their music through Amazon (and not Apple). Otherwise, it is competitively neutral between Apple and Amazon while allowing the music labels to have multiple channels.
The question then is: Will Wal-Mart be far behind?
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