Amazon has been in a headed battle to over take Apple iTunes with music sales. Both companies have 99-cent music downloads, but being the bigger music company iTunes has kept a pretty sizable lead over Amazon with music sales.
This could all change in the coming months, in a last-ditch effort to say on top Amazon introduced their cloud-based storage system that lets users upload 5GB of music to a virtual drive to playback at any time. This service is great and if you buy a whole album from Amazon that space is expanded to 25GB of space. Now with iTunes preparing its cloud service Amazon has gone and done something even more amazing, 69-cent MP3 downloads.
Amazon has upped the ante by lowering prices on top tunes to 69-cents, this is down from 89-cents previously. Many of the songs that sell for $1.29 on iTunes have been slashed to the new lower price on Amazon. All the latest hits are included Katy Perry’s “E.T.”, Jennifer Lopez’s “On the Floor” and Lady Gaga’s “Born This Way.”
Amazon has chipped slowly at Apple’s dominance in the music download market and this could give them that edge. With all of Amazon’s efforts we only see the market share of the company at 10% with Apple staying at 70% of the digital download market.
While Amazon has been on the down, Apple has been on the up, and it not a good way. As the prices keep falling at Amazon, Apple has raised prices on hot releases from 99-cents to a whopping $1.29. While sales did go up the year it was introduced it halted on the number of tracks sold each year, which grew only 1% in 2010 compared to the previous year of 8% growth.
We are unsure how the price cuts will affect Amazon and the music labels, but for now no one is complaining. Also what baffles many is the customers, will this create more loyal customers for Amazon, or will cherry pickers come and go.
Russ Crupnick of NPD Group made a very strong argument of where these companies are going:
The average music consumer spends $46 a year on digital music, which is half of what it was last year,. The question is not whether you can sell a 69-cent track. It’s whether you can get a customer to spend $69.
In the long run we will have to see who the winner is between Amazon and Apple, but of course the real winners is the customers that are saving that much more on music.