More on the Amazon-MySpace Deal

Amazon_MP3_Store.jpgAs Fortune writes, Jeff Bezos has done it again—after creating an online MP3 music store that quickly became the only serious rival to Apple’s iTunes Store, the Amazon CEO has now struck a deal with MySpace for its new music service that will only strengthen the company’s position.

Amazon still has a very long way to go, however. Gene Munster, senior research analyst at Piper Jaffrey, projected in the article that Apple will sell 2.4 billion songs this year, which translates to an 85% market share. In comparison, Amazon will sell just 130 million downloads, which corresponds to just a 5% share. Munster said that the new MySpace arrangement could set up Amazon for a 60% increase next year to 208 million songs; still far behind, but a significant step ahead of Napster, Rhapsody, and the others.

The report said that right now, most of the people buying from Amazon’s MP3 Store are the ones who would have bought CDs from Amazon. The new MySpace linkup could give Amazon a chance to actually steal customers from Apple—not an unrealistic prospect, given that the MP3 Store sells tracks for 89 cents (10 cents cheaper than Apple), and sells them DRM-free from all four major labels at a higher (and therefore better-sounding) bit rate than what Apple uses.

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