Amazon Enhances Cloud Music Service

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The world's largest online retailer, Amazon.com Inc. (AMZN), recently launched a new music service, Amazon AutoRip, in a bid to expand its Cloud music offerings to better compete with rivals like Apple Inc. (AAPL) and Google Inc. (GOOG).

This new service allows anyone who has ever purchased an album on Amazon to download a free digital copy. The music files will automatically get saved on customer libraries at Amazon’s datacenters, available for download or play through Amazon’s Cloud Player.

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, iPhone, iPod Touch, Mac and PCs.

Despite being the pioneer of facilitating music storage on the Internet 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 bought on its site makes its service more ambitious. This new feature will bring in more users to the Amazon cloud, giving a boost to its digital music sales and also drive sales of Amazon’s other digital goods.

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

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 ecommerce 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 third quarter, Amazon’s revenue of $13.81 billion were up, both on a sequential as well as year-over-year basis.

Currently, Amazon retains a Zacks Rank #3 (Hold).

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