No Deal: Amazon & eMusic

After months of rumors and speculation, a deal for Amazon to purchase eMusic is apparently dead. Amazon has been exploring ways to enter the digital music space for some time, but nothing has materialized. Some sources cite the massive start-up costs as a deterent for the mega online retailer, but others feel Amazon has been looking for an acquisition all along.

eMusic’s parent Dimensional Associates has let it be known that the talks with Amazon were not initiated due to a need for cash, but instead just wanted to see the cards the retailer was holding. The result raises more questions about the Amazon digital music strategy, if there actually is one.

From the information we received and gathered, Amazon apparently is not interested in launching an online music store that sells downloads with Digital Rights Management (DRM), an anti-piracy technology. In its talks with the major labels, the online retailer wanted to sell MP3s, but none of the labels were interested. So nothing came of it. Now that EMI has decided to enter the MP3 market with Apple, things could change.

A purchase of eMusic by Amazon would solve the DRM issue in the short term since the company already has a MP3 download ecosystem of independent content. eMusic is in an excellent position to become a great launching point when the majors finally decided to release their catalogs as high bit rate MP3s. Dimensional knows this only too well and this gave them solid leverage during this discussions with Amazon.

The Future: Amazon’s muddled online music strategy over the years has now left them holding the proverbial bag. They may have a nice dress, but they’re way too late for the Ball, especially if they want the numbers to work in their favor.

Author: FutureMusic

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