In a DRM-free world, Amazon fights iTunes in price

Today marked the US release of U2’s new album No Line On The Horizon. You can buy it at all major retailers, of which none is bigger for music than iTunes. Of course, if you buy it from iTunes (link), it’ll set you back $9.99, and why do that when you can buy it in MP3 format from Amazon for $3.99?

For a long time, Amazon held one major trump card over Apple in its digital music store. All of its songs were digital rights management (DRM)-free, while only a minority of iTunes tracks were. But at Macworld in January, Apple finally leveled the playing field by announcing that by the end of the first quarter of 2009, all of the tracks on iTunes would be DRM-free as well. That includes the new U2 album, and so Amazon apparently slashed the price on the album to make sure it sells through its store as well.

It’s not clear if this is some kind of special deal Amazon has with U2 — with such a steep discount, someone has to be eating these costs, though apparently it’s today only. It was Apple that got a special deal earlier in the year when it had the album’s first single “Get On Your Boots” available to download before Amazon.

When it comes to price, Amazon regularly has an advantage over iTunes. It offers daily deals on albums, both new and old, that are well below what they go for on iTunes. For example, while Apple discounted all of U2’s previous albums to $7.99 for the new release, Amazon cut the price to $5.99 for the same albums.

When iTunes switches to its new three-tier pricing structure of $0.69, $0.99 and $1.29 per track, Amazon’s price advantage may be even more apparent. It shouldn’t matter too much for everyday use because people use iTunes more for its ease-of-use with the iPods and iPhones they own. But for a major release purchase such as U2’s new album, the low-price strategy may pay off for Amazon.

Of course, less honest users probably already have the album, as it was accidentally leaked weeks ago despite strong measures to make sure that wouldn’t happen.


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