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Amazon offers free digital versions of purchased CDs

A zoomed illustration image of a man looking at a computer monitor showing the logo of Amazon is seen in Vienna November 26, 2012. REUTERS/L
A zoomed illustration image of a man looking at a computer monitor showing the logo of Amazon is seen in Vienna November 26, 2012. REUTERS/L

By Alistair Barr

SAN FRANCISCO (Reuters) - Amazon.com Inc, taking aim at Apple's dominant iTunes store, on Thursday unveiled a service that it hopes will boost digital music sales and encourage more people to use its Cloud music service.

Amazon launched Amazon AutoRip, which gives customers free digital versions of music CDs they purchase from the world's largest Internet retailer.

The digital music files are automatically stored in customer libraries in remote datacenters run by Amazon, where they are available to play or download immediately through the company's Cloud Player service, the company said.

Amazon customers who have bought AutoRip-eligible CDs at any time since the company started selling discs in 1998 will also get digital versions of that music stored in their Cloud Player libraries for free, the company added.

Amazon's MP3 digital music business has been around since 2007, but its market share is less than 15 percent, according to The NPD Group. Apple Inc's iTunes store is the clear leader, with over 50 percent of the market.

The move sparked speculation that Amazon may be able to do the same for books, making Kindle ebook copies of physical titles.

"It would even be profitable for Amazon.com to pay publishers a subsidy to transition all the books purchased on Amazon.com to Kindle books," said Scott Devitt, an analyst at Morgan Stanley. "Having a digital library that is accessible only on the Kindle platform essentially locks a customer into the Kindle ecosystem forever.

"If executed, it would possibly be the largest coup in company history," he added.

An Amazon spokeswoman did not respond to an e-mail seeking comment on Thursday afternoon about a book version of AutoRip.

More than 50,000 albums are available for AutoRip. Steve Boom, head of digital music at Amazon, said the company focused on music that has been the most popular among its customers during the past 15 years.

Albums include "21" by Adele; "Overexposed" by Maroon 5; "Dark Side of the Moon" by Pink Floyd and "Thriller" by Michael Jackson.

Boom declined to estimate how many CDs Amazon expects to digitize through the new service. However, he noted that the company has sold hundreds of millions of CDs to millions of customers.

"When we picked those 50,000 titles we focused on having a substantial majority of our physical CD sales covered," he added. "People will be exposed to Cloud Player and our digital music offering, which is a good thing," Boom said. "We want to take this global."

Amazon is making a bigger push against iTunes now that the company's Kindle Fire tablets are in more consumers' hands and its Cloud Player music application is available on a range of other mobile devices, including Apple's iPhone, iPad and iPod Touch.

(Reporting by Alistair Barr; Editing by Andrew Hay and Dan Grebler)

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