Amazon acquires--then shutters--digital music service Amie Street

Amazon.com has acquired independent music download website Amie Street, the online retail giant's latest move in its ongoing efforts to chip away at Apple's (NASDAQ:AAPL) digital media supremacy. Financial terms of the deal were not disclosed. A letter mailed to Amie Street users confirms the acquisition, stating "As of September 22, 2010, all AmieStreet.com pages will be forwarded to Amazon.com and you will no longer be able to use AmieStreet.com or any of its services." Users will be given a $5 promotional credit at the Amazon MP3 store, and are urged to download all purchased music and spend any remaining credits over the next few weeks.

Amie Street launched in 2006, enabling artists to upload their music for sale to consumers--while all music available from the site is initially free, prices increase over time based on demand, with artists receiving 70 percent of revenues after the site claims the first $5.00 of revenue from each song. Amie Street content partners include Nettwerk Music Group, INgrooves and Daptone Records; Amazon.com was among the investors contributing to the startup's Series A venture round, which closed in mid-2007. All Things Digital reports Amie Street's founders will now shift their attention to Songza, the music streaming service the company purchased in October 2008.

The Amie Street acquisition follows in the wake of news Amazon will introduce its own television and movie subscription platform. Citing people with knowledge of the project, The Wall Street Journal reported last week that Amazon is pitching the web-based service (optimized for browsers as well as connected devices) to media companies including NBC Universal, News Corp., Viacom and Time Warner, outlining a Netflix-like business model emphasizing catalog content--media company execs typically view older content as less of a threat to their existing business. Amazon presently sells individual episodes of TV shows, usually priced at $1.99 each--it also sells and rents feature film downloads. The new service could launch in time for the 2010 holiday season.

Apple's iTunes remains the clear leader in the digital music space, with sales topping $1 billion during the second quarter of 2010. The digital storefront now accounts for 70 percent of all premium music downloads in the U.S. according to NPD Group data released in late May. iTunes' growth is slowing, however--NPD notes its share of the digital download market has remained essentially flat since the first quarter of 2009, increasing just 1 percentage point since that time. AmazonMP3 increased its market share by 4 percentage points, and now represents 12 percent of the U.S. digital music market. Sales of digital tracks and albums accounted for 40 percent of overall U.S. music market share in the first quarter of 2010, a gain of 5 percentage points since Q1 2009, NPD said. Adding physical music purchases to the equation, iTunes still leads with 28 percent of all U.S. sales, a 4 percent year-over-year leap.

For more on the Amazon/Amie Street deal:
- read this All Things Digital article

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