To the Cloud!

Last week, Amazon launched two rather remarkable new products. The first of these is the Amazon Appstore for Android. The second is two separate but related products: Amazon Cloud Drive and Amazon Cloud Player. I want to talk about both of these products this week, partially because they’re interesting products in and of themselves, but also because I find the implications of these products utterly fascinating.

Let’s start with the Appstore. I will keep this fairly short, since it’s not something I’ve actually used. I do not have an Android device of any sort, so there’s not much point in me buying or downloading Android apps. But I still find this to be an interesting product. First of all, it says a lot about the differences between Android and iOS. With iOS, you can only purchase apps from the iTunes App Store, which is owned and controlled by Apple. There is no way to install apps that are not available in the App Store on an iOS device unless you jailbreak it, which can wreck it if you don’t know what you’re doing. Plus, it voids your warranty.

By contrast, Android lets you get apps from anywhere. There is an official Android Market that is run by Google, but it’s not curated the way the iOS App Store is. Anybody can put an app in the Android Market. And an app doesn’t have to be in the Android Market for you to put it on your Android device. The advantage of this approach is that you don’t have to worry about Google blocking an app because it competes with one of their offerings or something like that. The disadvantage is that Android apps are much more likely to be malware than iOS apps are (although iOS is not 100% immune to malware).

The great thing about the Amazon Appstore is that it kind of bridges the gap between the Apple approach and the Google approach. Unlike the Android Market, the Amazon Appstore IS curated, which means that Amazon approves everything that goes in there. This means you’re much less likely to download an app that’s going to steal all your personal information or something. But, since Amazon doesn’t have any control over Android itself, you can still freely download apps from other places if you want. So if Amazon rejects a certain app, you can still get it if you REALLY want. Best of both worlds.

Now, the real question is, what is Amazon’s ultimate goal with this app store? It could just be that Amazon wants to sell apps the same way that they sell just about everything else. Or maybe this is the start of something bigger. Amazon doesn’t currently make any sort of hardware that runs Android, but they do make an e-book reader called the Kindle that is, by all accounts, very nice. Is it possible that Amazon might start selling a new version of the Kindle that runs Android and is more than just an e-book reader? It’s something to think about, anyway.

Well, I spent more time on that than I intended to.

Anyway, the other two things I wanted to talk about are Amazon Cloud Drive and Amazon Cloud Player. The Cloud Drive lets you upload files to Amazon’s servers and store them in the cloud, and the Cloud Player lets you stream music that you’ve uploaded to the Cloud Drive.

You can upload any kind of file to the Cloud Drive, but the emphasis is definitely on music. This music can then be played on any PC or Mac that’s connected to the internet, and it can also be played on Android devices. Currently, there’s no way to stream this music to an iOS device, but there are rumors that an iOS app is coming.

There have been services like this before, but they’ve always been done by small companies that have either been sued into oblivion by the record industry or acquired by larger companies, who then killed the service. This is the first time that a service like this has been offered by a company with the size and resources of Amazon.

This is significant because the record industry does not like or want services like this. Google and Apple have each been rumored to be working on their own cloud storage/streaming services for a couple of years now, but they’ve been held up by negotiations with the record industry for streaming rights. The record industry claims that the licenses that they’ve granted to music retailers like Apple and Amazon do not cover storing music in the cloud or giving customers the ability to download it more than once.

What Amazon did is significant because they launched this service without negotiating streaming rights from the record industry. They claim that the licenses they have cover this sort of activity. The record industry vehemently disagrees. My take on this is that the record industry needs Amazon more than Amazon needs the record industry. What’s the worst case scenario here for Amazon? Probably that they pay a big fine and lose the right to sell MP3s. That obviously would not be good for Amazon, but they’ve got plenty of money, and they’re going to continue to make plenty of money by selling physical objects, regardless of whether they can sell MP3s or not.

If the record industry revokes Amazon’s licenses to sell music, then they would be cutting off the only real competitor that iTunes has. iTunes is the largest music retailer in the world, and the record industry hates the fact that iTunes has such a stranglehold over the selling of their wares, because Apple’s near-monopoly means that they make more money off of music sales than the record labels do. If Amazon MP3 bites the dust because the record labels are so pissed about Cloud Drive, then they’ll just be killing the only viable competition that iTunes has, and that would be bad for them.

Ultimately, I think Amazon is taking a very calculated risk here. I think the record labels will take Amazon to court, and they’ll probably even win (because frankly, Amazon probably doesn’t have the legal right to do what they’re doing), but I think that Amazon will just pay the labels a big fee and then Cloud Drive will continue on. But we will see.

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