Sunday, March 14, 2010

Apple vs. Amazon

Apparently iTune’s 65-75% share of the download market is not enough. Apple has been aggressively discouraging record labels from participating in Amazon MP3’s Daily Deal and they have backed up those warnings by withdrawing marketing support for releases featured as Daily Deals.

For those not familiar with the Daily Deal, it’s basically a free promotion subsidized by Amazon. Artists and labels are asked to give a one day exclusive before the street date if they are participating in the program. During that 24 hour period, Amazon discounts the album to between $1.99 and $3.99 and the album is featured on its web pages and on the Daily Deal’s Twitter feed which is followed by 1.4 million people. Amazon does not charge labels for these promotions, but it does ask that them to promote the release through their websites, e-mail lists, and social networks. One major label group recently told its labels that its own studies had shown that “as much as 95% of all Daily Deal sales would never have happened without the discount.”

To combat Amazon’s Daily Deal, iTunes staffers used both “threats and actions to make it clear to almost every major and indie record label that participation in Amazon’s Daily Deal would cost them dearly at iTunes.” Since iTunes is threatening indie labels as well, it means that these smaller record labels will have to choose between having their content promoted on iTunes or receiving the boost in sales that can come from the Daily Deal. Neither Apple nor any record labels have commented on this battle, Apple’s power over the music industry is clear - the Daily Deals now feature only a fraction of what was offered a month ago and the albums that are featured are rarely new hit makers.

I’ve always thought Apple was a little evil and more than a little hypocritical but this clash with Amazon might finally show that to people other than PC and Zune lovers. Amazon MP3 was really iTunes first worthy competitor and their most effective tactic was the Daily Deal. Apple could have come up with their own exclusives to compete with the Daily Deal, but instead they threatened the labels. The Daily Deal is a tool that helps smaller labels sell more music and since Apple is trying to crush that, I really don’t see how they can keep claiming to be the saviors of music.


~Emilia Segatti

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