Amazon Shows Their Muscles


Amazon has dominated books, music and videos; they have become one of the largest retailers of CDs and downloads.  Now they want to add streaming to the Prime service.  The catch is that Amazon wants to pay a low price tag to labels, which will keep down its Prime service subscription fee.  Amazon has offered to pay independent labels 5 million a year and offered the majors an undisclosed amount.

One major-label executive is worried that Amazon’s service, if successful, could cannibalize revenue from streaming services with direct deals that pay much more than the Seattle-based merchant’s initial offer terms.  I would ask the same executive, is streaming helping the over all sales of music?  I think not, but now your trapped with no where to move.

The music industry is funny, always repeating the mistakes of the past and living with the same mistakes in the future.The music industry’s biggest mistake was giving the power to distribute its own music to someone else.  We have seen the same problems when labels were negotiating download rates with iTunes.  The negotiations were more like demands, because iTunes had the power of distribution and Amazon is no different.  They have mastered the art of online distribution and harness the power of distribution.

We as an industry must take back distribution and embrace the power that comes from doing so.  We must stop meeting the demands of outside companies to retain higher revenue and see profits higher than in years past.