October 30, 2008, 12:00 AM

MySpace and Amazon challenge iTunes in music downloads

Although it still accounts for three out of four music downloads, Apple Inc.’s iTunes.com is facing notable new competition. Social networking leader MySpace.com has teamed up with No. 1 online retailer Amazon.com to sell music online.

Roughly three out of four music downloads are from iTunes.com, but Apple’s hugely successful music site now faces some stiff competition. The leading social network, MySpace Inc., has teamed with the No. 1 online retailer to create MySpace Music, allowing MySpace users to download music through Amazon.com Inc.’s music store.

MySpace Music, located on the web at MySpace.com/music, is designed to play to the online social network’s immense following of younger music lovers. Adjacent to licensed songs within artist profile media players, user-created playlists and certain music editorial pages, MySpace Music features Buy buttons that allow users to download and purchase MP3s playable on all digital music devices, including the iPod. The downloads are free of the digital rights management technology that prevents some digital music, including that from iTunes, from being copied over and over.

“Amazon MP3 makes it easy for customers to discover, buy and play music wherever it’s most convenient for them-whether they are shopping on Amazon.com or on MySpace, where tens of millions of music fans go to discover new music,” says Bill Carr, vice president for digital music and video at Amazon.com. “With MySpace Music we created an integrated way for customers to purchase Amazon MP3 downloads without leaving the MySpace Music discovery experience.”

MySpace Music is a member of the Amazon Associates affiliate marketing program and receives a referral fee on sales.

“This is a good way for MySpace to monetize its massive amount of traffic,” says Maris Daugherty, senior consultant at J.C. Williams Group Ltd., a retail consulting firm. “It will be interesting, though, to see how MySpace differentiates itself from iTunes. For example, unlike iTunes, MySpace has the media platform to hold event-based music launches with a built-in audience of millions. MySpace generates media and excitement for musicians and their music.”

In addition to purchasing downloads of music, visitors to the advertising-supported MySpace Music store can stream songs for free as they browse the music shop’s offerings. Five million bands and solo artists, from garage acts to mega-stars, have a presence on MySpace, the social network says.

A recent study by Ipsos, a market research firm, found that iTunes continues to lead in consumer usage and brand awareness, thanks to its good sound quality and music variety. But the study also found rivals Amazon.com and Rhapsody showing strength in consumer awareness, usage and favorability. In addition, the study found that Amazon matched iTunes in user satisfaction.

katie@verticalwebmedia.com

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