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Amazon Taking Its MP3 Store Global

With the announcement that it will make its online music store available to customers worldwide, Amazon took another important step in its effort to dethrone Apple's iTunes as the premier digital music store.

Launched in September, Amazon MP3 will begin rolling out international versions this year, the company said Sunday.

"We have received thousands of e-mails from Amazon customers around the world asking us when we will make Amazon MP3 available outside of the U.S.," Bill Carr, Amazon's vice president of digital music, said in a statement. "We are excited to tell those customers today that Amazon MP3 is going international this year."

The company did not provide details about the launch schedule.

Apple's iTunes already has an extensive overseas presence, although the majority of its tracks use DRM protections. Amazon MP3, meanwhile, only sells songs without digital rights management (DRM), the usage protections that limit how consumers can access and copy files.

DRM-free music means that songs can play on almost any device, including Apple's iPod, iPhone and Microsoft's Zune. Users are free to burn songs onto CDs as often as they want, and can organize them in any media management application they wish, including iTunes and Windows Media Player.

While Amazon MP3 still lags well behind iTunes in terms of market share, a few aspects of Amazon's service could make its challenge interesting.

The first, simply enough, is Amazon's reach. As the largest retailer on the Web, Amazon may be in a unique position to mount a legitimate threat to the entrenched leader in online music by virtue of its size.

Then, too, Amazon MP3 enjoys the backing of all the major record companies.

Tired of having the pricing and distribution terms of their product dictated by Apple, the four major labels have surveyed the marketplace, and found Amazon to have best chance of loosening iTunes' vice-grip on digital music, according to Michael Goodman, director of Boston-based researcher Yankee Group.

In their agreements with Amazon, the record labels took the noteworthy step of licensing their music free of DRM restrictions. Of the big four, only EMI provides a DRM-free catalog on iTunes.

Pricing for the two services is comparable: Amazon offers most of its songs for 89 cents or 99 cents, while iTunes charges a flat 99 cents. Amazon prices most albums between $5.99 and $8.99. All songs are encoded at 256 Kbps.

Amazon's catalog of DRM-free music includes about 3.3 million songs. iTunes sells its DRM-free music through its iTunes Plus section, which offers up to 2 million titles, according to its Web site.

Amazon may have the numbers and the clout of the record labels going for it, but it still faces a basic problem of addressing what consumers want, Goodman said. He thinks that the iPod will remain the preferred portable music player, which will continue to drive people to Apple's online store.

"In the end, Apple will laugh all the way to the bank," Goodman told InternetNews.com.

With more big-name artists promoting their music directly through the Internet, the Yankee Group has also predicted the record labels will gradually fall by the wayside as the necessary instrument of distribution.

Should other artists follow the example of Trent Reznor and Radiohead by offering music via name-your-own-price downloads, the record labels' collective endorsement of Amazon could become less significant.

In the meantime, DRM-free downloads appear to be emerging as a powerful weapon. Four years ago, Pepsi partnered with iTunes for a co-branded download giveaway rolled out at the 2004 Super Bowl. This year, Pepsi is running a similar promotion, only with Amazon, not Apple.

When asked why it had switched partners, a Pepsi spokesperson told InternetNews.com, "Amazon is the only site that offers 100 percent of their music catalog in the DRM-free MP3 format."