SAN FRANCISCO (Business 2.0 Magazine) -- Amazon.com is spending heavily to build a digital-download business - and that has investors worried, as it prepares to take on Apple, the undefeated champion of online music, in a fight over online movies.
Amazon has long been rumored to be developing both a digital music and video service to compete with Apple's iTunes. Now, a report in Advertising Age suggests that Amazon is having second thoughts about competing in music but is ready to launch a movie and TV download service in mid-August.
A head-to-head contest between Amazon and Apple for supremacy over digital movies could be the biggest thriller of the summer. No one's yet made a very big business from selling movie downloads over the Internet, but both Amazon and Apple have a good shot at it, and for very different reasons.
Apple's advantage is obvious: Through iTunes, it already dominates the legal music download market. It would be relatively straightforward for the company to add movies to the TV shows and other videos it already hawks online.
One of the main reasons iTunes is so successful is because Apple devotes most of its sizeable marketing budget to it and the iPod. Expect more of the same with any movie download service: Apple can tie in marketing of its video iPod to any new movie offerings.
On the marketing front, Amazon can direct its considerable Web traffic to its digital video service the day it launches. With millions of people going through its online store every day, it could easily start promoting digital downloads of movies to that captive audience.
Apple may seem to have an advantage with the video iPod, which it can make sure works well with any movie download service it launches. But Steve Jobs himself has dismissed the notion of watching two-hour-long videos on a small screen that you have to hold in your hand. People prefer to watch movies on big screens. As long as Amazon can get the movie to your PC, or better yet, the flat-screen TV in your living room, it should do all right. 1e1e36bf2d