It is Official. Apple is Worried About Amazon's Music Store (or how EMI brought its pricing down)

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Apple is dropping its price on non-DRMed music sold through the iTunes Music store. This is likely because of the threat from Amazon who is selling those same EMI tracks for 89 – 99 cents/pop in the MP3 format. Yes, we know that AAC is a better compression/encryption algorithm and is an open standard. However, not all MP3 players play AAC files (for whatever reason) like they play MP3s. Plus at 256K, the Amazon MP3s sound as good as any you will find out there.

The strange part about this is that Apple has had hundreds of price threats before from WalMart (88 cents/song), Napster (unlimited songs for $9.99/month) and many others but never changed its game plan even a little. It was always a better total experience for Apple customers and you paid a premium for that.

So why is Apple bowing to competition from Amazon now?

(to check out the store click on the icon to the right)

Because they recognize that Amazon is the first real threat to the iTunes dominance. 9to5Mac and many others have made note that Amazon’s store offers a compelling value in that the music is portable and free to move with you forever. Meaning that if you want to buy any other type of device (besides the iPod you already own), you will be screwed with AAC files that only work on a handful of MP3 players. Even moving your DRM’d music from device to device is a pain.

Is this bad news for Apple? Not at all. It means they are cognizant of the marketplace and are willing to admit when they can’t get away with the larger margins that hey were charging. Yes, competition is good for you the consumer.

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