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Will Amazon's Cloud Music Service Fly?


The company's music streaming service is cumbersome, say critics

Here's how effortless it is to move your digital music collection from Apple's (AAPL) iTunes software to Amazon's new "Cloud Drive" music service, unveiled on Mar. 29:

1. Visit Amazon.com (AMZN), enter your user name and password, and find the link that says "upload files."

2. Agree to the terms of service and solve a Captcha, one of those tricky image-recognition puzzles that prove you're an actual human being.

3. Download Amazon's "MP3 uploader" software, which scans the music on your hard drive.

4. Select about 1,000 of the gazillion songs you own and mark them for upload.

5. Wait around six hours for the upload to finish.

6. Download Amazon's separate Cloud Player app for Android to stream that music to your phone, or use a Web browser to listen to it from any PC.

Sounds easy, right?

Welcome to the awkward stage of the digital music revolution. Online song sales have stagnated, depriving the endangered music industry of one of its last remaining lifelines. Yet digital music continues to be a vital battleground for Google (GOOG), Apple, and Amazon to try to lure users to their other devices and online offerings. Now, Jeff Bezos & Co. have boldly tried to leapfrog Google and Apple in the quest to liberate consumers from the decade-old practice of buying and downloading digital songs to a computer and then manually transferring them between devices.

The idea behind "cloud music" is to let people stream their music collections from the Web to any computer or device. Analysts believe such services are inevitable—even if Amazon stumbles. "Having access to your music on all your devices has to be the starting point of any next-generation music service and product," says Mark Mulligan, an analyst at Forrester Research.

That's the vision, at least. Right now, the convoluted uploading process is the result of key tradeoffs Amazon made to get to the cloud music market before its rivals. First, major labels want new licensing arrangements for cloud services and a bigger cut of the online music pie. Their demands have slowed down the introduction of cloud music features, and Amazon designed its service without their permission, instigating a wave of complaints from Sony Music Entertainment (SNE) and Warner Music Group (WMG). "We're disappointed by their decision to launch without a license," says Brian Garrity, a spokesman for Sony. Bill Carr, Amazon's vice-president for music and movies, claims Amazon "highly values" its relationship with the labels, but compares uploading songs to the legally harmless practice of attaching a hard drive to your PC and transferring music files to it.

Amazon primarily designed a service to comply with copyright laws—not to make shifting music to the cloud seamless. Amazon requires users to upload their own copies of songs that it could more easily supply from its digital store. Services like MyPlay and Mp3tunes have tried the same basic approach over the years. None gained much traction.

Amazon, which still controls only about 13 percent of the digital music market despite four years of battling iTunes, apparently believes it has unique advantages in the coming cloud music battle. Thanks to the massive server capacity backing its successful cloud computing business, in which it rents computing infrastructure to other companies, Amazon can offer its streaming music users 5 gigabytes of music storage for free, or 20 gigs if they buy just one album from Amazon. The company is also prominently advertising the service on its popular home page. "We observed from our other digital media businesses that buy-once, play-anywhere really resonates with consumers," says Carr.

Amazon's cloud music rollout has taken some jabs for its difficult user experience and the inability of users to play their music on Apple iPads and iPhones. "There's nothing social about it. How can you launch anything on the Web today that doesn't integrate social?" says David Pakman, the former chief executive of eMusic and a partner at the venture capital firm Venrock. David Hyman, founder of the music subscription service Mog, says of Amazon's cloud offering: "It's a stepping stone. This is Amazon putting its feet in and testing the waters."

So what does the future of cloud music look like? Google, Apple, or Amazon might finally get the major-label licenses that will allow them to make the experience of storing music collections in the cloud seamless for users. (Instead of uploading each song, the service could simply scan the names of songs in a collection and reproduce them in the cloud.) Or subscription music services such as Mog, Rdio, and Rhapsody that offer unlimited access to a broad catalog of Web-based music for a monthly fee may find the mainstream success that has long eluded them.

Such an all-you-can-eat cloud music offering may be Amazon's ultimate goal; Carr doesn't rule out Amazon's rolling out a music subscription service and offering it for free to members of its Amazon Prime shopping club. "This is an exciting Day One," he says of Cloud Drive. "We always have an open mind."

The bottom line: Amazon's play-anywhere, music streaming service risks putting off consumers with its complicated uploading process.

Stone is a senior writer for Bloomberg Businessweek.

Steve Ballmer, Power Forward
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