Amazon challenges iTunes with MP3 Store for Apple's iOS

Amazon (NASDAQ:AMZN) is ramping up its mobile multimedia rivalry with Apple (NASDAQ:AAPL), challenging iTunes with a version of its MP3 Store optimized for iOS devices.

The HTML5-based Amazon MP3 Store enables iOS device owners to discover and purchase DRM-free digital music via the Safari browser. In addition to a catalog encompassing 22 million songs, the storefront offers signature Amazon features like personalized recommendations, bestseller lists and customer ratings. All purchases can be saved to the consumer's Cloud Player library and can be downloaded or played instantly using the Amazon Cloud Player app, which supports the iPhone, iPod touch and iPad as well as Android smartphones and tablets (including Amazon's own Kindle Fire) and connected home entertainment systems.

iTunes has dominated digital media download sales for roughly a decade, with more than 500 million user accounts worldwide. After crunching numbers released by Apple earlier this month against existing data, Asymco analyst Horace Dediu calculates that the iTunes economy as a whole (including music, video and iOS apps) now generates $12 billion in annual gross revenues. Multimedia sales currently account for about $8 billion of that total.

But Amazon has made significant gains in recent years by porting many of its digital media services to the iOS platform, most recently bringing its Instant Video streaming effort to the iPhone. The online retail giant introduced the Cloud Player music streaming service in early 2011 and extended the app to iOS in mid-2012. Cloud Player Free customers can store all MP3 music purchased at Amazon, plus import up to 250 songs from their PC or Mac at no charge. Cloud Player Premium, priced at $24.99 per year, allows customers to import and store up to 250,000 songs. Amazon-purchased MP3s (including all previous purchases) do not count against either the 250 or 250,000-song limits and are added to both Free and Premium Cloud Player libraries at no charge.

Cloud Player rivals Apple's own iCloud, launched in June 2011 as a replacement for its MobileMe service. iCloud automatically syncs content on Apple servers for access across iOS devices as well as Macs and PCs--each day, the service backs up all of a user's iOS devices over Wi-Fi, storing content including purchased music, movies, apps and books as well as photos, videos, device settings and app data. All iOS 5 and Mac OS X Lion users are given 5 GB of free iCloud storage. Consumers looking to expand their digital lockers are charged $20 per year for 15 GB total, $40 per year for 25 GB or $100 per year for 55 GB total.

The introduction of MP3 Store for iOS further underscores the differences between Apple and Amazon's respective business models. While Apple relies on content from its iTunes storefront and App Store for iOS to boost hardware, Amazon looks to extend its services to all connected platforms to drive digital content revenues and by depending on affordable devices like Kindle tablets and e-readers.

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