Is Amazon starting a price war with Apple?

By on April 29, 2011, 1:26 PM
Amazon has dropped the price of popular new tracks on its online store to $0.69, compared to its usual $0.89 pricepoint. The change, which could signal a price war, was first pointed out by the Los Angeles Times.

A quick check on Amazon's Bestsellers in MP3 Songs shows that indeed, 52 out of the top 100 songs are now just 69 cents. The rest are priced at $0.99 and $1.29.

Amazon's three prices are not unique. In April 2009, Cupertino dropped DRM from iTunes, and switched to variable pricing as well. Whereas all songs were previously $0.99, Apple began to offer three tiers: $0.69, $0.99, and $1.29.

Apple decided to price popular songs at $1.29 and poorly selling songs at $0.69, which increased profit margins but decreased total volume of songs purchased. Amazon is trying a strikingly different strategy: pricing popular songs at $0.69, where it can.

Amazon is likely making this move because for the last two years it hasn't budged in market share when it comes to selling MP3s. Amazon has around 10 percent of the market, while Apple continues to have about 70 percent of the digital download music market, according to the NPD Group, which no longer publicly releases market share data.

Late last month, Amazon unveiled a new Cloud Drive service for storing music, videos, photos, and documents on the company's servers. Amazon offers its users 5GB of storage for free, which is upgradeable to 20GB with the purchase of any Amazon MP3 album or from 20GB up to 1TB at $1 per gigabyte. Apple is interested in a similar service, possibly named iCloud, but with music labels on board.




User Comments: 13

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captaincranky captaincranky, TechSpot Addict, said:

God, we can only hope.......

mario mario, Ex-TS Developer, said:

This will be great, competition is excellent for us customers. Although I have never bought a single song because neither Amazon nor iTunes Music Store are available in Ecuador.

Leeky Leeky said:

This will be great, competition is excellent for us customers. Although I have never bought a single song because neither Amazon nor iTunes Music Store are available in Ecuador.

So for you its the pleasure of watching two giants bash each other to oblivion then?

captaincranky captaincranky, TechSpot Addict, said:

This will be great, competition is excellent for us customers. Although I have never bought a single song because neither Amazon nor iTunes Music Store are available in Ecuador.
This bring up 2 very obvious questions; how is a price war in the US going to be great for you, (personally). Secondly, if you've never purchased anything from either of these two entities, I don't think you get to rank yourself among the actual customers. I'm just sayin'. Things such as this occur to me, I've tried to prevent them, and yet....... Would you be willing to compromise and substitute, "for consumers", in lieu of, "us customers"?

Scshadow said:

yay price war. I want to see one. I haven't in awhile.

IAMTHESTIG said:

This is good news... I think i'll be buying a lot more mp3s. I still think 30 to 40 cents is about my optimal price point, but 70 is definately moving in the right direction.

I think Amazon needs to do some advertising, I didn't know they sold mp3s until I heard from a friend. No one else I know knew Amazon sold mp3s. Part of the problem is Apple had the mp3 market since they released the iPod. Amazon needs to fight hard to get at least half of the market.

mario mario, Ex-TS Developer, said:

Well I've bought electronics on Amazon and apps on iTunes, so technically I'm their customer.

Guest said:

The whole point is... Amazon want Apple's music customer!!!

Guest said:

YES blow apple and Sony out of the ****in' water and light them on fire! They deserve to be destroyed and sell iPhone to Microsoft for better os and open source! And wipe out terrible 2500$ laptop only worth 300$ then take the ps3 add decent security and make it a GOOD console.

T77 T77 said:

Way to go amazon(and apple)..!

LightHeart said:

I've been buying my MP3's from Amazon for quite some time and found it to be a great experience. Now that some songs will be even cheaper is really nice.

Guest said:

People still BUY music?

Ok.

I didn't know it was still 1998

Torrents..... learn them, live them, love them!

Guest said:

@Guest: Do you work for free or are you paid? Stealing is wrong and karma is a good teacher.

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