Amazon.com lauch – what does it mean for rVibe?

Amazon.comAmazon.com launched it’s MP3 store today…   This is a pretty big deal for a number of reasons and has meaning for rVibe as well. The reason it’s a big deal is:

  1. They only sell MP3 files: That means no DRM, and means total interoperability for all the tracks it sells. With Amazon.com’s clout, that is a HUGE advancement for the on-line music industry. It put tremendous pressure on the rest of the labels out there to allow DRM free tracks, and on the rest of the labels out there to get it together and start offering digital music. They don’t have the 5 million tracks that iTunes, does, but I am sure they will soon.
  2. Fantastic branding and awareness:Amazon is launching into a rapidly expanding market with an already enormous brand presence. That dramatically reduces barrier to adoption for new users. And more specifically, Amazon has a reputation for being easy to use.  Not customer service oriented, but definitely easy to use.
  3. Existing infrastructure: From an operational standpoint, they already have a strong infrastructure to support pure digital delivery. There would be little in the way of operational investment to get this going, sustain it and make it profitable.  That is highly unusual in this industry.

For rVibe, Amazon.com’s launch is both good and bad.

From a bad standpoint:

  1. Competition: Greater competition from a large, well capitalized company that clearly wants to (and can) take on the entrenched major player (Apple).  That means a fierce fight for consumer eyes and that’s tough for us, since we need a lot of those same eyes. 
  2. Noise in the market place:  The launch will generate a lot of noise in the market place which makes it difficult to launch a new product (rVibe).
  3. Some similar features: Their service is MP3 only (as is rVibe), they have recommendations (as does rVibe) and it’s easy to use (as is rVibe).
  4. Capitalization:  They have lots of money and we don’t. See above for why that’s a problem.

From the good standpoint

  1. It’s amazon.com – not something else:  Meaning, when you buy tracks from amazon.com, you expect it to behave like amazon.com, not something different. That means that they really can’t change their basic means of operating, which gives innovative services (like rVibe) a chance to shine when people want something else (like embedded social networking in their music service).
  2. It’ still the centralized model and subject to bandwidth and storage costs:  Despite Amazon’s infrastructure, they still have to pay for things and with much usage comes much cost.  Cost rVibe really doesn’t have.
  3. More visibility for on-line music and MP3 downloads:  The more Amazon presses the MP3 button and builds awareness in the overall market for digital downloads and MP3 only – the less work we have to do to educate the consumer.

I am quite sure there are lots of things I am missing, but it’s a start in thinking about it.  As is always the case, in this nascent but exploding market, the real key is DIFFERENTIATION.  And even with Amazon.com’s launch, we still have that as a strength.

Posted on September 25, 2007 in Competition, Market

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