February 22, 2006

BusWeek Columnist Sees An MP3.Com-Redux Strategy [8:23 am]

Of course, the courts might have something to say about it (see UMG v. MP3.com): Another Take on Amazon Music: High-Stakes Chess?

But one source in digital music suggests a way that Amazon might actually provide something different than Apple while making the digital music business more profitable: What if Amazon believes that the fair use doctrine allows it to load music that people already own–CDs they bought from Amazon, that is–onto a music player for free? People can do that themselves now, right? Load a very cheap or free music player–even if it’s not an iPod–with essentially free music could be a compelling, no-hassle proposition for a whole lot of music lovers.

I suspect the labels would contend it wouldn’t be legal for Amazon to do it, but it’s not crystal-clear to me that such a practice would indeed be illegal. But even if Amazon didn’t actually try to assert this right without the labels’ blessing, could it use that potential as a club to get price concessions on digital songs from the labels? Lower prices might help Amazon’s digital music business actually make money.

If Amazon has waved this club in front of the labels–a big if, of course, since Amazon isn’t even talking about its nusic plans, let alone its negotiations–it may explain why the labels leaked Amazon’s plans so early. It doesn’t seem accidental that the labels put Amazon in a spot by mentioning a time frame for the music store–this summer–while noting that negotiations aren’t done yet. Checkmate, Amazon?

Yeah, it’s all sheer speculation [....]

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