Amazon AutoRip for Vinyl Records

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The world's largest online retailer Amazon.com Inc. (AMZN) recently announced that the AutoRip facility will now be extended to vinyl records, in a bid to expand its cloud music offerings to better compete with rivals like Apple Inc. (AAPL) and Google Inc. (GOOG).

The AutoRip facility was launched in January. It basically enabled the creation of a free digital copy of any eligible CD purchased on Amazon. com since the launch of its Music Store back in 1998. The music files thus created are saved on customer libraries at Amazon’s datacenters and are available for download or play through Amazon’s Cloud Player.

Amazon has now announced that customers purchasing vinyl records on Amazon.com will also receive free MP3 copies of those tracks, which will be automatically added to their Cloud Player library.

Amazon’s Cloud Player is a web storage application, which allows people to listen to music from any computer or Android device with Internet access. It allows streaming on devices such as Kindle Fire, iOS and Android smartphones, and connected TVs.

Despite being the pioneer of online music storage for access on any device, Amazon’s Cloud Player is still far behind Apple’s iTunes. New rivals like Google as well as streaming services such as Spotify, Deezer and Rdio have also entered the market. According to the market research company, NPD Group, in the second quarter, Apple accounted for 64% of U.S. music sales online, followed by Amazon at 16%, Google at 5% and other services making up the rest.

Amazon’s strategy of offering users free digital copies of CDs and vinyl records on its site makes its service more ambitious. We believe AutoRip will expand Amazon's retail market share and increase awareness of its Cloud Player. The extension of AutoRip to vinyl records should bring in more users to Amazon cloud, boosting its digital music sales and driving sales of Amazon’s other digital goods.

Also, Amazon had announced that its Cloud Player can now stream music wirelessly through Roku streaming players. Amazon offers Roku customers free download of the Amazon Cloud Player channel from the Roku Channel Store.

Therefore, while iTunes still leads in the segment, Amazon’s tactics, its ongoing efforts and new ideas could help the company pick up some market share.

Amazon is one of the leading players in the extremely fast-growing retail e-commerce market and its strength lies in its huge scale of offerings, its broad reach and platform approach. While the strong growth prospects are making the market more competitive, Amazon continues to maintain and even grow its share on the back of its consistent and reliable services. In the fourth quarter, Amazon’s revenues of $21.3 billion were up, both on a sequential and year-over-year basis.

Currently Amazon retains a Zacks Rank #3 (Hold). Online travel company, Priceline.com Inc. (PCLN), has a Zacks Rank #2 (Buy) and is worth considering.

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