Amazon and SpiralFrog Looking to Cut Into iTunes' Market Share
Spurred by the monolithic popularity of iTunes and the decline of CD sales, veteran online retailers like Amazon.com, start-ups like SpiralFrog and other companies are clamoring to get into the fray of digital music on demand.
With so much competition, consumers can get great deals and music options, depending on what they’re looking for.
Amazon Betting on Flexibility to Lure Consumers
Amazon’s venture into MP3 sales launched last week with an inventory of nearly 2.3 million songs from the catalogs of major music labels Universal Music Group and EMI Music, as well as thousands of independent labels—and none of these songs are copy-protected with digital rights management technology.
DRM technologies, which have been implemented by the music industry both on CDs and digital files, aim to restrict how consumers can use or distribute their music purchases. In the world of downloadable music, these DRM controls will typically restrict, for example, what kind of hardware (iPod, Zune, etc.) a music file will play on, or how many times a digital file can be burned to a CD.
While the Universal and EMI songs available from Amazon aren’t subject to DRM, they represent only a portion of the labels’ vast music libraries. Nevertheless, Amazon is setting the stage to compete directly with Apple’s iTunes, which has so far dominated the digital music market.
Amazon MP3, as Amazon’s digital-music virtual aisle is called, offers songs for 89 to 99 cents a pop and albums for $5.99 to $9.99 each, a slightly lower price point than iTunes, which sells individual copy-protected songs at a flat rate of 99 cents each and DRM-free songs from EMI for $1.29 apiece. Full album downloads from iTunes typically sell for $9.99.
iTunes uses AAC (Advanced Audio Coding) format with proprietary DRM to encode its downloads, which means, unless you spring for the slightly pricier DRM-free songs or if you want something not on the EMI label (which is the only label currently offering DRM-free songs through Apple), your iTunes downloads will only play on an iTunes platform.
So if you have any portable digital player other than an iPod or an operating system that doesn’t support iTunes (Linux, for example), you won’t be able to listen or watch your iTunes downloads. And your iPod won’t play any DRM-enabled files that you purchased outside of iTunes.
Amazon MP3, on the other hand, by providing all DRM-free content, gives you the freedom to play your purchases on most types of portable devices (including the iPod) and through various desktop media players like iTunes or Windows Media Player.
Realizing that flexibility is the convenience factor most music lovers are looking for in their online purchases, Wal-Mart is following in Amazon’s footsteps. The low-cost retailer offers its DRM-free tunes from EMI and Universal Music for 94 cents each and albums for $9.22, which is roughly 27 percent cheaper than iTunes.
Free Songs: Too Good to Be True?
SpiralFrog is taking a different approach, offering its non-DRM downloads free instead of engaging in a price war with online retailers. But the free music comes with a catch: Visitors can download songs at no charge but “have to wait 90 seconds for each track to download, and they must answer questions each month about their buying habits,” explains Joseph Menn in the Los Angeles Times (“SpiralFrog Offers Free Songs—With a Catch,” Sept. 17, 2007).
Songs can be stored on your computer but can’t be burned onto a CD. And if you don’t visit the SpiralFrog website at least once a month to watch more ads, your SpiralFrog music library gets digitally locked, and you won’t be able to access your music. You do have the ability to transfer your music files onto two Windows-compatible portable players or mobile phones at a time—but of course, this excludes the Apple iPod, the most popular digital music player out there.
The SpiralFrog website opened with a selection of 770,000 songs and 3,500 music videos from numerous independent labels and Universal Music. According to eFluxMedia, SpiralFrog has also recently signed a deal with digital label/publisher INgrooves to make INgrooves’ full catalog of audio and video files available, which adds close to 100,000 songs and 2,000 videos to SpiralFrog’s library, including 4,000 Brazilian albums from INgrooves’ iMúsica division (“SpiralFrog Opens for Business,” Sept. 17, 2007).
SpiralFrog makes its money from displaying online advertising. The ad revenue, Menn explains, will be split between SpiralFrog and the labels and music publishers, with the music industry getting more than half.
By offering free media downloads, SpiralFrog wants to appeal to customers tired of paying for their entertainment at iTunes or other pay sites.
“This is a very viable alternative to selling music because clearly that mode is broken,” says Scott Stagg, a SpiralFrog investor, in a quote in Menn’s article. “This is very similar to TV: You get it for free and the advertisers pay the money.”
The record labels, for their part, hope that free sites like SpiralFrog will help keep users away from illegal downloading and unauthorized peer-to-peer share services like LimeWire.
Whether you decide to get your music free, by dealing with a few restrictions, or at the best deal you can find by shopping around, SpiralFrog, Amazon and Wal-Mart are just a handful of the companies competing for you. Rumor has it Google may also get into the melee of online music sales.
Let the games begin.