Amazon: A True Competitor for Apple iTunes Store

For years, several renowned companies have tried to compete with Apple iTunes Store without much success, and the close down of SONY Connect and Virgin Digital are there to prove that having a well established name is not synonym of success. Amazon will enter the market as a new online music store, with the advantage of being able to offer a DRM-free catalog thanks to Apple pressure on music majors. But does it mean Amazon collect the fruits from the trees seeded by Apple? Nothing is sure.
Amazon will offer music tracks at similar price than the iTunes Store US$0.99, but also lower at US$0.89. Albums will be available with price ranging from US$5.99 to US$9.99. Beside the price, the main strength of Amazon will be to offer DRM-free MP3 music files encoded at 256Kbits/s, and it will include part of Vivendi Universal Music catalog, whereas the company was recently complaining that receiving over 75% of US$0.99/track was not enough...
Today, it seems some Music Majors are ready to cut their prices to support a strong competitor to Apple iTunes Store, in order to regain control over digital music distribution channels. This could end in the future with price increased when Majors will drive again this business. Apple does not come without strength too, and the recent launch of the iPod touch, iPhone and its partnership with Starbucks might well be its main weapons for the future battle with Amazon to take place in 2008. Vivendi should also not forget that Apple might launch a legal action against the Major if beyond the test period its DRM-free catalog is only available from Amazon.