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Posted by Mark Mulligan on March 29, 2011
Amazon has just beaten Apple and Google to market with a cloud-based music locker service. As with the anticipated Apple and Google services, the Amazon cloud music product enables users to upload and stream their music on multiple devices (in this instance, on PCs, Macs, and Android phones and tablets – though not iPhones nor iPads). All US Amazon customers start with 5GB free and can then upgrade for $20 a year to 20GB, but buying an MP3 album at Amazon will automatically give the extra 20GB for free.
There are, of course, rights controversies around locker services. Digital music stalwart Michael Robertson is currently locked in legal combat with EMI over his cloud locker service MP3Tunes. The important factor with this service is that Amazon requires customers to upload their music file by file and store them rather than matching them against a cloud-based central repository of music, much in the same way that Carphone Warehouse currently does in the UK with its Catch Media-powered cloud locker service. (Which can be a pretty painful process for users. Remember the first time you ripped all of your CD collection? Now imagine doing that over the Internet . . .)
The rights issues, though of course important, aren’t the really interesting points here. What is interesting is why Amazon has done this, and what this means for the wider digital music marketplace.
First, Amazon has done this as part of building a long-term music revenue relationship with its customers. It's lost most of the digital spend of its CD buyers to iTunes, and whilst it's been aggressive and innovative with its download store, it isn’t close to toppling Apple’s iTunes supremacy. Amazon of course lacks the device play in music that it has in books. This lack of a broader music ecosystem has weakened its ability to drive success of its MP3 store. A locker service is effectively an alternative way to build an ecosystem that ties customers in -- hence the strong bundling with the MP3 store: just 1 MP3 album gets you $20 worth of storage. That looks like a pretty good deal to me.
Some time in the future, buying units of music (CDs or downloads) won’t be the main revenue source for music. Amazon needs to establish a strong post-CD role for its music customers (music is, of course, the entry point for higher-consideration, higher-margin purchases). This smartly positioned locker service is an important first step in building that future role.
But let’s not get carried away. As logical a next step in the digital music market as locker services might be, they’re not an innovation in the music product. They’re simply giving people access to the music they have on the devices they own. Consumers simply expect this. In fact, according to Forrester’s surveys, fewer people are willing to pay for a music service that works across all their devices than they are for a standard music service. Sounds crazy right? But it shows just how much consumers expect this sort of utility as standard.
Which is why Amazon’s positioning (some storage space free to all customers and then more free with album purchases) is exactly right.
But still, locker services are not what will "save the music industry." What will is a generation of interactive, high-quality music experiences, such as that launched by EMI last week. Future digital music products need to have SPARC: Social, Participative, Accessible, Relevant, Connected. Amazon just ticked off the C.
Like it or loathe it, seamless multidevice access has just become table stakes, not the next great leap forward.