Amazon Digital Music Service Struggles to Catch iTunes

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After launching one year ago, Amazon’s MP3 Download service has become the #2 online destination for individual music purchases. But, despite offering content unencumbered by DRM, making their music compatible with both Apple iPods and any other portable music device, Amazon’s service remains a distant second to Apple’s iTunes Music Store. While analysts predict that Amazon will finish out the year with 130 million songs sold, it’s a far cry from the 2.4 billion songs iTunes is expected to chalk up for 2008. This despite the fact that songs are often ten or even twenty cents cheaper through Amazon.

At this point, the greatest hurdle for Amazon is pulling customers away from iTunes. The massive penetration of the iPod, and now the iPhone, has made the iTunes store the default option for most consumers. Amazon is hoping that deals with MySpace Music, becoming the primary option for monetization of these social networking services, is where they will pick up new customers. Amazon is also developing new programs, such as their deal with the makers of Grand Theft Auto IV, which allowed gamers to tag songs from the soundtrack to later purchase through Amazon.