Amazon MP3 Is Doing Great. No, Really!

Fortune has an article on Amazon’s MP3 efforts pegged to a possible deal with the long-in-the-works MySpace Music project, in which it would serve as the backend for the social-networking service’s digital download store. Amazon currently holds the title of No. 2 digital-music seller, but its market share remains in the single digits. Fortune posits that the “one-click” access from MySpace might indeed boost those numbers. (Hey, it worked for SnoCap! Oh, wait.) The story also shows that the majors’ willingness to play ball with Amazon on the idea of “dynamic pricing” has resulted in great bargains for the consumer, instead of a world where a single song is almost as expensive as its truncated-to-60-seconds ringtone version:

Here’s another thing that helped. Amazon wouldn’t have attracted many customers if it sold songs for 99 cents just like iTunes. So it cut its prices. Today, Amazon offers one-sixth of the 5.9 million tunes in its library – including the 100 most popular tracks – for 89 cents each. It sells some classic albums – like Miles Davis’ “Kind of Blue” – for as little as $1.98.

It’s tough for a pure-play digital music company like Napster to slash prices like that. But Amazon is betting that some of the people who buy a cheap jazz album will stick around and also purchase a $149 digital camera. “Amazon’s game here is like Target or Best Buy,” says Ted Cohen, managing partner of TAG Strategic, a digital entertainment consulting firm.

See, I thought that this “dynamic pricing” was something that the labels wanted because that way, they could also charge more than Apple’s standard $9.99 for new albums, and more than 99 cents for certain songs. Again, I know it’s Fortune, and thanks to their shriveled word count and Time Inc. pedigree it as a publication tends to paint a happy face on a lot of things, but shouldn’t the way the labels have tried to dicker with Apple–on matters involving both digital-rights management, which the Fortune piece also notes as a reason Amazon is doing as well as it is and pricing–have been noted? And shouldn’t the multiple consequences of the major labels’ willingness to deeply discount their product for Best Buy, including the devaluation of product that pretty much opened the door for consumers to feel like music was nearly free and be pretty much OK with acquiring it via peer-to-peer, be noted as well?

By the way, remember last week, when Paul Westerberg released that one-track, 49-cent solo album on Amazon only, and it shot to the top of the digital-download service’s album chart? Well, however many copies it sold wasn’t enough for it to place on the 50-album Digital Albums chart this week, where the lowest-selling album (Colbie Caillat’s Coco) sold 1,700 copies. (I don’t have SoundScan database access, so I can’t tell you exactly where the album placed, alas.)

Amazon: The Avis of digital music [Fortune]