In its second-largest acquisition, Amazon buys the company for $970 million.
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Josh Bernoff, an analyst who follows the digital music market for Forrester Research Inc., says eBay may be too late to the market and without a defined service plan to attract many customers. "You don`t tiptoe into digital music downloads," he says. "You`re either in or you`re not. If you`re going to sell downloads, you need to offer a full service around it."
A music renaissance
For the retailers who play their cards right, digital music may provide enough market rhythm to win back some of robust music sales that have been lacking in recent years. But offering a full range of content and services is crucial, experts say. "I hope we don`t turn what today is a $12 billion to $14 billion business into a $1.5 billion business because we`re selling one song at a time, instead of albums as in the past," says Zullo of Muze.
That scenario recalls the days before the Beatles, who ushered in the widespread use of albums instead of the old 45 rpm vinyl disc, which had one song on each side. Retailers of digital music say they`re confident that won`t happen, because the digital revolution offers too many options to customize one`s music collection.
"We`re experiencing a renaissance of music with the new functionality of digital music," Circuit City`s Dias says. "I`m very bullish on digital music`s future."