SharkJumping

Starting from an employment posting on last week, the word quickly spread that Amazon was entering the digital music business, with 120+ articles about it now listed in Google News. My initial comment is that is must have been a slow news week, competing solely with yet another Russian sub disaster.  My general view is that, although I have a huge amount of respect for Amazon's online prowess, this is akin to Sneezy joining his fellow dwarves in the digital music forest Why do I think this "news" is not news-worthy?

1. Amazon is about the only signficant retailer without an online music play, so this is not exactly groundbreaking news if they enter the category unless one assumes that this category has now "made it" if they enter.    and Target both have their own services, while Best Buy and Dell have partnered with Napster or Music Match for integrated packages.
2. Outside of a large customer base and a well honed marketing edge, how does anyone think that Amazon is going to differentiate itself when the label licenses are essentially identical, Amazon doesn't directly make music hardware, and when Amazon is starting from scratch in the category?  Neither Walmarts $.88 pricing plan nor the $.49 Top 10 that Real runs appears to be making a difference, and there is no way to provide free shipping...
3. Looking at EMI's and Warner Music's earnings announcements, it looks like overall digital music is probably around 5-6% of their revenue, split between mobile and PC.  Adding Amazon to the PC download and subscription list is certainly not going to matter to those numbers, especially when their primary focus appears to be shifting to mobile music and music videos vs PC downloads - see Universal Music's announced into Amp'd Mobile as an example.

I think Amazon will grow the overall music business with its entry, but not dramatically enough to be worth 120+ articles, just as MTV's long awaited entry will also not be worth the noise it will generate.  It will take a signficant shift in the business, such as a move to mobile phones, to dislodge Apple from its leadership position in any reasonable time frame.  Until that happens, Snow White will be ruling the forest with an iron hand.