From Briefing.com:
Never one to get left out of a new Internet trend, Amazon jumped on the digital music bandwagon today. The company made 25 songs available for free download in Liquid Audio and MP3 formats. The move shows once again that Amazon can and will respond quickly to changes in the ecommerce business, as its competition in the music area -- CDnow (CDNW) -- rolled out a new website replete with free digital downloads a few weeks ago. Obviously, there is no near term benefit for Amazon, as 25 free songs certainly doesn't do anything for revenues, nor does it make the site significantly more attractive. Longer term, Amazon's quick response to eBay (EBAY) with its auction site rollout and now to CDnow with its downloadable music remind us why this company will remain the leader in the ecommerce space. But ultimately, Amazon's move into downloadable music probably has greater implications for other companies than for Amazon itself. For example, Amazon is offering its selections in Liquid Audio format, which will benefit Liquid Audio the company, which filed for its Lehman-led IPO on May 4 (expected ticker LQID). The explosion in downloadable music could also benefit Real Networks (RNWK), whose new Real Jukebox product will be a leader in the downloadable music arena. Other companies are probably less enthusiastic to see Amazon enter this space, including of course CDNW and other competitors in CD sales. Less clear are the implications for companies specializing in the downloaded music business such as Emusic.com (EMUS) and mp3.com (still private). Our sense is that while Amazon could now be considered a competitor to these companies, they are more likely to benefit than be hurt; there will be many winners in this business, and Amazon's promotion of the concept could ultimately broaden the market and help all of these companies -- the rising tide lifts all boats theory.
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