More Music News

The latest NPD Group Annual Music Study is revealing big gains for Amazon's online music unit, with its share of the market up about 50% in the last year, to 22% of the market.  Apple's iTunes store still dominates the market with 63% of sales, but is finding it's share falling in the face of increased competition.  Analysts attribute much of Amazon's gain to the introduction of its Fire tablets (which offers an easy interface for users), and its aggressive pricing strategy (with special limited-time free, or heavily discounted, bargains).  I'd add Amazon's DRM-free approach (which Apple's had to adopt), it's Cloud streaming apps, and it's recent offer of free digital versions of CDs that had been bought through Amazon.  They've been making some smart moves at Amazon.

In other news, Spotify recently announced plans to expand into Asia, Latin America, and Northern Europe - a move that will advance the current global shift to digital music (and licensing for streaming services as a major revenue source for music labels).  Spotify currently operates in 28 countries, and claims 24 million "active" users (those using it in the last 30 days) and 6 million paying subscribers for its upgraded services.

"We're taking our first steps in Latin America with Mexico, and Asia with Hong Kong, Malaysia, and Singapore," the company said on its blog page on Tuesday. "Plus we're thrilled to make new friends in Estonia, Latvia, Lithuania and Iceland."

Spotify is currently trailing Pandora in reach and use.  Pandora currently claims around 70 million users.  Both are taking advantage of the booming smartphone market, and research that indicates that half of smartphone users listen to music on their devices.

Sources -  Amazon gains against Apple's iTunes in music downloads,  CEN-Web
Music streamer Spotify to expand into Asia, Latam, North Europe,  CEN-Web

Scripps - Amazon Licensing Deal

The recent success of audio and video streaming services is opening up a new source of licensing revenues for content producers and owners.  Scripps Networks is testing the waters with its first online-only licensing deal, with Amazon's subscription-based video streaming service.  By the end of this week, shows from Scripps' top channels - HGTV, Travel Channel, and Food Network - will be available through Amazon's Instant Video service.  For now, access will be limited to shows from previous years will be available.

"The risk Scripps wants to be careful about is to make sure that it (online subscription deal) doesn't take away viewers from its current shows. The advertising dollars are from its current programming on pay TV, that's the main source of their revenue," (Morningstar Inc analyst Michael Corty) said.

 Comments in earlier announcements suggest a similar deal with Netflix may be in the works.

Source -  Scripps Networks signs content licensing deal with Amazon,  Broadcast Newsroom

Streaming News: Dish out, Amazon beefs up

Dish, currently engaged in licensing struggles with cable networks and local broadcasters, has abandoned its goal of rebranding Blockbuster as a Netflix competitor.  Dish purchased the bankrupt Blockbuster in April 2011, with a goal of moving the Blockbuster brand into an online movie streaming service, while also using its remaining 1700 stores (at the time) to cell mobile handsets for a satellite-networked mobile service.  However, the FCC didn't approve a petition that would allow Dish to divert some of its satellite capacity from direct broadcast service to a terrestrial data and voice transmission system, and efforts to secure streaming rights for films and TV programming proved too expensive.

  Since first acquiring Blockbuster, Dish has managed to sell off or close almost half of Blockbuster's stores, and said more would be sold or closed as leases run out.  Dish CEO and founder Charlie Ergen explained, "you can't make enough money from just selling DVDs."  Still, the Blockbuster purchase wasn't a total bust - Dish used Blockbuster's inventory to create a DVD rental by mail service branded as "Blockbuster@Home," which also included some streaming services from Dish's On-Demand partners.

In the meantime, details are starting to emerge on Amazon's licensing deal with Epix.  In addition to the standard upfront fee to licenses a movie for streaming, Amazon agreed to pay a premium once the number of subscribers to the Prime Instant Video service reaches a certain level. A Reuters story opined,

"The generous terms of the deal, announced in September, provide the strongest evidence yet that Amazon is willing to pay up to be a player in this market as it faces a dwindling demand for DVDs--once its core entertainment offering--and tough competition for its Kindle Fire tablets."

Some analysts termed the 'pay for performance' aspect made the Amazon-Epix deal an example of 'online video deals 2.0'.  According to Wedbush Securities analyst Michael Pachter, "Hollywood loves it because they can say Amazon is paying us 'X' and we want more from you... It's a club they can use to beat Netflix over the head."

Sources -  Dish abandons plan to re-vamp Blockbuster as Netflix competitor,  FierceOnlineVideo
Amazon ratchets it up a notch with Epix streaming movie deal, FierceOnlineVideo

Amazon looks to be video producer?

CNN Money is reporting that one of Amazon's next big moves will be into the production of original video programming.  For the last month or so, Amazon has reportedly been looking for executives to oversee a variety of creative products through development.  In particular, there have been job listings for people to oversee comedy and children's programming, and has reportedly hired Joe Lewis to a position that he first described as being Vice-President of Original Television at Amazon, before he changed it to Vice-President, Production at Amazon Studios.  Lewis' resume includes stints at 20th Century Fox (Director of Production) and Manager of Development at Comedy Central.

Regardless of what flavor of original content Amazon ends up pursuing exactly, analysts expect to see more from the company in this domain in the future. "I think there's a logic to it," says Gartner analyst Ray Valdes. Valdes points to Google, which is spending $100 million on new original content for YouTube. Streaming service Hulu, meanwhile, plans to spend $500 million -- some of which will likely come from investors -- on TV and movie programming this year to round out its offerings of traditional broadcast and cable programming. It is banking on shows like the political comedy Battlefield. And then there's Netflix, which has been spending profusely on original series like Lilyhammer, a show starring Sopranos actor Steven van Zandt.

If Amazon moves into the realm of original programming, it will follow last year's move into book publishing.  A large part of Amazon's dominance in online commerce has been the breadth of its offerings.  But recent moves by Apple and Google to expand their online retail offerings, there is a question of how long Amazon's dominance as a distributor/retailer will remain.  Moving into production not only provides another revenue stream, but also enables Amazon to have unique content that can maintain its competitive advantage over other online outlets.

Source -   Is Amazon getting into original TV?  CNNMoney blog

Fire's Focus on Print

Blog contributed by Krystyna Barnard -

MinOnline, a sister site of Folio, recently posted an article on the much anticipated launch of Amazon's Kindle Fire tablet.  In that article, Steve Smith wrote about the increasing competition between tablets  from Amazon and Barnes & Noble. Smith discusses the Kindle Fire and how it will include a “Newsstand,” similar to that of the Apple iOS 5, in which they will also sell subscriptions and issues of various magazines and newspapers. Major publishers were to include Condé Nast, Hearst, National Geographic, Meredith, Wenner, Reader’s Digest, etc. Amazon is working with many of these publishers to optimize their online offerings for the Kindle.
The recently released Kindle Fire includes a 7-inch screen that’s perfect for browsing full-color pages of magazines with 169 DPI graphics, a dual-core processor to enhance processing speed, and Wi-Fi. The current listing price for the Kindle Fire is $199.

Source - “Kindle Fire to Launch with 400 Magazines and Newspapers.”,  MinOnline

Amazon's Expanding Prime

Post contributed by Nick Spooner -


Amazon is so confident about Prime, that they are willing to lose million of dollars each year. Currently Prime costs $79 a year for the quick shipping program.
   So will Amazon's loyalty to their program payoff? With so many other options of online shopping analysts believe it will not. Not to mention the likelyhood of Amazon users to spend the $79 of shipping each year.   
  But the benefit of using Prime for amazon users can be drastic. You can obtain a digital book-lending service for those Prime customers who also have a Kindle reading device. So basically Amazon is trying to build a product that requires one of their products to base off another and so on. From a business point of view, this is genius. But the odds of this happening are slim.
   Right now their are 10 million Amazon Prime subscribers, and Amazon believes this is going to continue to grow. So the opportunity of success is there. Amazon has gone from an online supplier of books to basically an online mall. Even though they are competing with companies like Apple, the opportunity of success is there for those loyal customers they do have and look to obtain.

Source -  Amazon 'Primes' Pump for Loyalty,  Wall Street Journal

Amazon Establishes Digital Publishing House

  After coming to dominate traditional book sales, Amazon has been a key driver in the growth of eBooks, initially working with publishers to consider digital sales, then producing the Kindle eReader, which undercut the limited competition at the time with a reader that offered better performance and a cheaper price.  Amazon has continued with innovative marketing, creating free eReader apps for most platforms, and making arrangements to offer Project Gutenberg's growing collection of public domain works (including many great works of literature) for free.  All these factors have combined to drive eBook sales to the point where Amazon now sells more eBooks that printed books.

  Amazon hasn't stopped there, however.  Instead of limiting its offerings to works from traditional publishers, Amazon created a system for self-publishing - authors could post their work on the Kindle marketplace, bypassing the traditional middlemen of agents and publishers (and their cuts).  This has caused some disruption, with some very successful authors deciding to publish themselves (see this post).
  Amazon's now taken the next step, and established it's own publishing house, announcing that it will publish more than one hundred titles this fall, in both print and digital versions.  It's already had one success with The Hangman's Daughter.  Originally published in German, Amazon bought the rights, had it translated, and has now sold 250,000 digital copies.  Traditional publishers claim that Amazon is actively recruiting top authors, and offering the full range of services and support that agents, publishers, and critics provide.  As such, Amazon is competing directly with the traditional publishing industry.
  While most publishers approached for a story in the NY Times refused to comment on the record, Dennis Loy Johnson of  independent publisher Melville House quipped “Publishers are terrified and don’t know what to do."  Agent and e-publisher Richard Curtis elaborated - “Everyone’s afraid of Amazon.  If you’re a bookstore, Amazon has been in competition with you for some time. If you’re a publisher, one day you wake up and Amazon is competing with you too. And if you’re an agent, Amazon may be stealing your lunch because it is offering authors the opportunity to publish directly and cut you out."
    Amazon's impact on publishing may not be over, either.  There was talk, surrounding Amazon's launch of it's Kindle Fire tablet, that Amazon was trying to establish what would amount to a book subscription service offering Kindle readers access to a wide range of titles for an annual fee (or as part of Amazon Prime).  If realized, such a service could have significant impacts on reading habits and book purchasing.
  Amazon executive Russell Grandinetti responded this way - “The only really necessary people in the publishing process now are the writer and reader... Everyone who stands between those two has both risk and opportunity..”
  The risk is faced by the traditional gatekeepers (publishers, distributors) who used their position to dictate terms, particularly with non-established authors, and grab a larger share of value.  They've lost their control over access to book publishing and the traditional business model that was based on it.  The opportunity is for anyone who can find a way to add value to the author's work.  And there is a lot of opportunity for that, for Amazon, for publishers, and other entrepreneurs as well.

PS - Amazon launched its science fiction, fantasy, and horror imprint, 47 North, last week.  Among scheduled releases are works (and series) from a number of top genre writers, including Dave Duncan, B V Larson, Greg Bear, Neal Stephenson, and Stephen Leather.  The 47 North imprint will join Amazon Publishing's other imprints - AmazonEncore, AmazonCrossing, Powered by Amazon, Montlake Romance, and Thomas & Mercer..

Sources - Amazon Signs Up Authors, Writing Publishers Out of Deal,  NYTimes, posted at CNBC
Amazon's Announcement of 47 North Sci Fi Imprint, e-reads blog
Amazon Publishing website

Edited to include postscript and added sources (19 Oct. 2011)

Amazon's Kindle Revamp & the Future of Digital Media

As predicted, Amazon announced it's first entry into the tablet market on Wednesday, the Kindle Fire. On the technology front, it's not going to directly challenge Apple's iPad.  The Fire has a color touchscreen, but it's only 7 inches (slightly larger than the Kindle reader at 6") compared to the iPad's stunning 10 inch display.  The Fire has no camera or microphone, does not have the capacity to hook up to a 3G network (it does have WiFi), and is limited to 8 GB of internal storage (the iPad comes with up to 64 Gb).  It's stated battery life of 8 hours is several hours less that the iPad 2's expected  time on a charge.  Running on an Android OS, the Fire pulls from the Android app base that still has a way to go to match the range of apps available for the Apple iOS system (approaching half a million).

On the other hand, the Fire isn't being marketed as an iPad-killer high end tablet.  It seems to be envisioned more as an extension of the Kindle branding approach - a device for accessing and using digital media content - only this time accommodating audio and video content (especially content acquired through Amazon).  As the lead feature on the Amazon Kindle Fire product page states, "Movies, apps, games, music, reading and more," with "18 million movies, TV shows, songs, magazines, and books" available through Amazon.  Screen size and battery life is sufficient for regular personal use, and the Fire offers stereo speakers (for stereo on iPads you need to use headphones), and the limited onboard storage is offset by the included free Cloud-based storage for all content acquired through Amazon.  Further, the Fire comes with a one-month trial of its Prime membership, and Prime members get free streaming access to more than 10,000 movies and TV shows.  Amazon's MP3 store regularly offers free songs and samplers, and Kindle bookstore continually offers free promotional titles, access to hundreds of thousands of older public domain titles, and connection with a growing network of public libraries offering eBook loan services.  The Fire is aimed at heavy media consumers rather than Internet and computer users.  But it's not limited to just media.  The Fire includes a customized web browser, and the Android OS means it can run games and other Android apps.  And its priced at $199, while the iPad 2 starts at $499.

John Gruber, blogging at Daring Fireball, gives a good summary of the contrast between Apple and Amazon in the tablet market -

"The iPad takes it on from the high end. It's the best possible device in that price range from the world's best maker of devices. The Kindle Fire takes it on from the low end. The iPad is a credible laptop replacement for many people—and with iCloud and another year or two of hardware improvements that's going to be true for more and more people. The Kindle Fire is a laptop replacement for almost no one. It's a peripheral, not a second computer—and it's priced accordingly."

Analysts expect Amazon to sell 2.5 million Kindle Fires in the first two months (expected to start shipping Nov. 15), and 13-15 million in 2012 (in the U.S. only, for now).  On the other hand, projections are for Apple to sell more than 50 million iPads worldwide in 2012.

While most of the hype has been centered on the Fire as Amazon's first tablet, Wednesday's product launch went well beyond that - introducing a range of new models and price cuts.  Analysts were anticipating a $249 tablet offering, and perhaps the first sub-$100 basic Kindle.  Amazon's biggest surprise was not only pricing the tablet at $199, but three different models breaking the hundred dollar price point, if you're willing to go with the "Special Offers" service, which lets Amazon put ads or offers as the device's screen saver (without is $30-$40 higher).  There's a basic reader at $79, a touchscreen e-Ink version at $99, and a version with Amazon's traditional keypad feature also at $99.  Both the Touch ($149) and Keyboard ($139) models also have 3G models that allow free downloads outside of WiFi areas.  The larger screen DX model remains available as well.

The new price points could well prompt another huge extension of the eBook market this Holiday season - rapidly expanding the ownership base.  A Pew Internet report in June indicated that eBook ownership doubled between November 2010 and May 2011, rising from 6% to 12% of U.S. adults.  A Harris Interactive report released last month suggests ownership and usage will double again in the next six months, and that was prior to Amazon's new models and price points.  With the new prices and models, I anticipate greater adoption and use among younger readers and media consumers, expanding the eBook market.  If Amazon can also follow up with a subscription model for ebooks, this could well push up interest in reading and demand for books. 
In a similar vein, the Fire price point is also likely to significantly expand adoption of tablets and their use for media content.  This should further hasten the shift to digital media and on-demand usage.  It will be interesting to watch the coming transformation.

Sources - Amazon Kindle Fire No True iPad Rival: Munster,  eWeek.com
E-reader ownership doubles in six months, Pew Internet  (full report available at this site)
One in Ten Americans Use an eReader; One in Ten Likely to Get One in Next Six Months, harrisinteractive

Amazon works on adding eBook subscription to Prime

According to stories on SlashGear and the Wall Street Journal, Amazon is in the process of negotiating with major publishers for the right to offer a subscription-based ebook service, possibly as part of their current Prime membership benefits.  Similar to the free streaming access to a subset of their digital movies and TV show store that Amazon extended to Prime members, the planned service would give members the right to download and read (or perhaps access and read through the Kindle Cloud app) selections from a selected library of content.  The move from Amazon can be seen as both a way of adding value to its Kindle brand, and competing with emerging "loaner" programs being launched by public libraries and Barnes & Noble (whose plan allows full streaming access to its digital offerings, but only from its stores WiFi feeds.

Reactions from publishers has reportedly been mixed.  Publishers fear that blanket access to titles might limit the value of books.  The huge boom in eReader and eBook sales this year already seems to have the publishing industry in panic mode, and now concerns about libraries loaning newly published ebooks and the potential addition of an Amazon "loaning" pool is fanning the flames.  On the other hand, unlike the library loan programs, Amazon seems willing to pay what's quoted as "substantial" fees for their planned service, and that's something publishers should consider.  Along with the promotional potential, as readers may develop interests in authors or series that could create added demand for related titles.

The stories also suggest that Amazon hopes to have some kind of Prime access plan in place for the coming launch of a Kindle tablet.  The new tablet is expected to run the Android OS, optimized to allow users to benefit from the added value of Amazon's digital content offerings (video, music, text), all obtained through Amazon and stored on the Amazon Cloud service for access anywhere, anytime.

Sources - Amazon Prime ebook subscription in talks for Kindle tablet,  SlashGear
Amazon in Talks to Launch Digital-Book Library, Wall Street Journal - Technology
See the ebooks tag for other posts in this area

Can I have ads with my Kindle?

Amazon's announced it will offer a new variation of its ebook reader, the Kindle.  Called "Kindle with Special Offers," it offers a $25 price reduction (to $114) for a reader that will offer "sponsor messages and special offers" as the device's screen savers (currently those rotate several book-related images).  And it will let Kindle users vote between different offerings, and also allow Kindle owners to set some user preferences in terms of what kinds of offers they are interested in.
It's an interesting concept, and can bring the Kindle to a new price-point, potentially opening up a new market for the Kindle, and a new revenue stream to offset all of us Kindle owners who mostly download free stuff.

Source: "'Kindle with Special Offers' Hits Rhetorical Target, But Is The Price Right?" Mobile Insider

E-Reader Race leaders: Kindle, Nook

Which came first - the E-book or the E-Reader?  If the question is serious, it's the e-Book, which has been around for decades in various forms.  But from a diffusion of innovations perspective, it's a serious "critical mass" question - when will there be enough content available to convince consumers to buy readers - or conversely, when will there be enough people with the technology to read Ebooks to convince content owners to make their books available in online formats.  According to some recent data, there was a huge spike in Ebook sales around last Christmas, suggesting that critical mass has been reached.
Certainly, a range of new E-readers launched during the last year has helped.  With the Kindle 3, Amazon remains the undisputed leader, accounting for 59% of devices shipped.  With the Nook, Barnes & Noble follows with 11%, with Sony's share shrinking to 5%, and newcomers BenQ and Hanvon at 4% each.  Sales of E-readers boomed in the last quarter of 2010, with over 5 million sold worldwide (up 90% from the previous quarter). And that's not counting the non-dedicated apps turning computers, tablets, and smartphones into E-Readers.

Source: "Kindle, Nook Gain in E-Reader Race," Online Media Daily

Amazon's Cloud vs. the RIAA

Last week's "Next Big Thing" was Amazon's Cloud, and it's offer to freely host not only 5 GB of anything, but also all of the music you buy from Amazon (which doesn't count towards the 5 GB).  The idea is that you can access the "Cloud" from anywhere, on anything (that provides basic Internet access).  Sounds great, and something that can help foster the transition from a focus on owning physical copies of content, to a concern with being able to access your legally-acquired content when and where you prefer.  It also reflects an alternative approach to copyright for music that's been floating around - again from an emphasis on rights being only associated with owning a physical copy, to owning rights to access and use content (with or without DRM).
If you're familiar with US Copyright law, and Court decisions on "fair use," there's nothing wrong with Amazon's offer (which is similar to the permanent hosting Amazon provides for books you buy from its Kindle bookstore).  You've paid your licensing fee when you buy the music, and you're exercising your "fair use" rights to time-shift, place-shift, and device-shift your use of the content you own.
The recording industry, instead of embracing a technology that would encourage sales (Amazon's making its music sales more valuable by providing an added-value service), is reacting predictably - threatening to sue Amazon, and presumably its customers as well (after all, if Amazon is making music available in a way they don't have a specific license for, then you're also violating your license by making an "illegal" copy when streaming from the Cloud to your device).  The record industry claims to be concerned with the potential of these "cloud lockers" for online piracy (i.e., you "sharing" your content with others), and arguing that you only have those rights to content that they're willing to give you.  But it's more likely they think that a "cloud license" could generate millions, if not billions, of dollars well into the future that might help to prop up an old-line music industry that's seeing revenues decline from recent poor sales..
I guess that what happens when you don't do a good job creating content that people want to buy at prices they're willing to pay - you try to create new "rights" you can force others to pay so you can keep your industry afloat and unchanged.

Source: "Music Industry Will Force Licenses on Amazon Cloud Player - Or Else," Wired