Amazon THREATENS Apple With This New Service

Amazon (NASDAQ:AMZN) plans to start a music service next month that lets users store songs on a remote server and access them online after reaching agreements with the four major U.S. record companies — Universal Music Group, Sony (NYSE:SNE), EMI Group Ltd., and Warner Music Group — according to people familiar with the matter. The service will reportedly launch in the first week of July, with Europe availability shortly thereafter.

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The service will likely mirror Apple’s (NASDAQ:AAPL) iTunes, letting multiple devices access a centrally stored music collection. Amazon, whose Kindle Fire tablet sells for $199, a fraction of the price on the least expensive iPad, is looking to make more money on higher-margin digital content for the device, such as books, music, and movies.

Amazon first offered a cloud music service in March 2011 that circumvented the need for agreements with individual record companies, but that required users to upload tracks to Amazon’s servers. It also had limited playback options.

But now with the new agreements, customers who buy music through Amazon’s music store will be given a certain amount of free storage, and will be given the option to store their entire collections, including tracks purchased everywhere, for an annual fee, according to sources.

The music service will also be available on iPads and iPhones through the Kindle iOS application.

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