Despite performing better than expected, Amazon’s music service failed to put a dent into the behemoth that is iTunes. Amazon, which offers users drm-free mp3’s, garnered somewhere around 8% of the market share in online music sales. iTunes, meanwhile, maintained its position in the number one spot with well over 70% in market share.
The problem for Amazon is that its market share is most likely derived from other iTunes competitors, and not iTunes itself. Either that, or any market share that iTunes loses to Amazon is quickly made up as users begin to leave other and less successful online music stores.
Amazon’s drm-free music store has generally gotten good reviews, but its inability to pose a serious threat to Apple must be driving record executives mad. Ideally, Amazon would have been a worthy foe for iTunes, thereby giving the record labels more bargaining power when it comes to different pricing schemes in iTunes. Currently, the only drm-free tracks available on iTunes come from EMI. Despite rumors that all of iTunes would go drm-free last week, it remains apparent that Apple is still in negotiations with the remaining 3 music labels.
Reuters has more on the story over here.