(
)
Amazon’s plan to launch a cloud storage service for digital music and video collections may be pie in the sky, according to critics.
The plan, which was unveiled yesterday and is drawing fire from some of its content partners, gives Amazon a head start on rivals Google and Apple.
The two Silicon Valley digital giants aren’t expected to detail their own digital media storage services until their separate developer conferences.
Both Apple and Google are also still seeking music licenses. Amazon, however, is streaking ahead, irking the main music labels.
“It sounds like legalized murder to me,” said one senior music veteran, adding that legal action is being considered.
Cloud Drive, coupled with a Cloud Player, would allow consumers to transfer music and videos from Android-enabled mobile devices to their PCs and Macs, for instance — there is no ability to move content from Apple iPads or iPhones, however.
But movement from one device to the next is not the issue. It is all about who’s doing the uploading to the cloud. Amazon says its service acts as an external hard drive, while Apple and Google would automatically scan devices to transport content to the cloud.
The music industry’s objections include the possibility that users might store illegal, or pirated, material and that cloud storage offers easy access to collections of friends.
“Apple is laughing at this. It doesn’t impact their plans one bit. It’s a joke,” said one music industry executive familiar with the service.
Amazon’s music director, Craig Pape, told Billboard yesterday, “We don’t believe we need licenses to store the customers’ files. We look at it the same way as if someone bought an external hard drive and copies files on there for back-up.”
Amazon’s latest digital initiative comes as the firm’s grip on physical entertainment product is declining.
Colin Gillis, an analyst at BGC Partners, which has a “sell” rating on the stock, said: “Amazon is still heavily reliant on delivery of physical goods; books, music and movies. It’s 40 percent of their business. They need to bulk up their digital offerings.”
Media segment sales earned Amazon $5.2 billion in the fourth quarter, up from $4.6 billion in the year-ago period, but the percentage of overall media sales vs. other products slipped to 40.4 percent of sales in the latest quarter, from a high of 55.7 percent in 2009.
Amazon has been launching new products at a frenzied pace. In late February, CEO Jeff Bezos gave customers instant streaming access to 5,000 video titles for free.
One source suggested that the service called Amazon Prime has met with little interest from Hollywood studios because it is only offering a revenue share and can’t compete with Netflix, which is writing big checks for Tinseltown content.
“Amazon has been trying a lot of things,” said digital expert Shelly Palmer. “Not all will be successful, but some of them will.”
More recently, Bezos said the company would launch a new Appstore for Android, which would compete with Google’s own offering. Apple is suing Amazon over use of the name Appstore.
Amazon’s stock closed at $174.62, up 3 percent, or $5.27.