The Apple and the Amazon (or the importance of platforms)

News just broke that Amazon will launch a music download service offering tracks without DRM. This announcement has sent shockwaves through the industry because:

• It is expected (or rather hoped) that Amazon's online muscle will allow it to become the first credible competitor to Apple's iTunes store.
• With such an influential player offering DRM free music, it is likely that days of DRM protected music are numbered.

I wholeheartedly agree that Amazon's move drives a nail into the DRM coffin. The industry simply has not been able to pull together to come up with interoperable DRM standards that offer an acceptable user interface with sufficient interoperability to make it viable.

One of the reasons that Apple has been so successful in the music space is that it put in place a DRM that allowed it to reassure the record labels while its control of the hardware, music management software and the IMS has ensured that it could provide a hight quality user experience. This raises a question about Amazon's prospects as a credible challenger to Apple. To the best of my knowledge, Amazon will focus on content sales and not the whole of the music delivery chain. Without control of music management software (the equivalent of iTunes or Windows media player) it will face severe challenges in creating the seamless user experience that put Apple where it is.

My prediction is that unless Amazon makes a number of special deals to integrate seamlessly with media players on PC's and mp3 players, its success as a music retailer will be limited. This underlines the importance of a well thought out and integrated software platform to support any consumer-facing content service. Its the only way to build a coherent value proposition that can seduce the customer. These platforms will continue to grow in visibility and consumer value and over time will be what consumer goods manufacturers will want to tie their brands to.

JMH