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AmieStreet: The road to iTunes' ruin

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What will Amazon's upcoming digital music store look like? Here's a hint: The world's most popular e-tailer just threw some cash at AmieStreet, the fledgling music site that prices songs according to their popularity.

Today, AmieStreet announced the completion of its first round of financing, and it looks like Amazon was the biggest contributor. The New York-based startup wouldn't divulge the terms of its deal with Amazon or say exactly how much the Seattle-based company ponied up. But co-founder Elliott Breece told The Reg that Bezos and company had made the first move.

"What we can tell you," he said, "is that Amazon found us and we were interested and we flew out to Seattle, where we met with Jeff Bezos and the Amazon team and talked about the music business."

Founded in the spring of 2006 by Breece and two of his Brown University classmates, Josh Boltuch and Elias Roman, AmieStreet is known as "the first digital music store propelled by social networking." But don't hold that against them. We quite like their pricing philosophy.

When a song is first posted to the site, it's completely free. But as more and more people download it, the price steadily rises, eventually capping off at 98 cents. That's one cent below the price of most songs on iTunes, the Apple music store that's sold over 3bn songs since it launched in 2003. What's more, AmieStreet users receive site credit for recommending songs to others. The more popular a song becomes after you make a recommendation, the more credit you receive.

Anyone can upload songs to the service, and in stark contrast to iTunes, all downloads are DRM-free. "We spent a good amount of time on the peer-to-peer networks growing up, when you could steal music from AOL chat rooms," Boltuch told us. "The site is about getting our demographic to pay for music online and be part of an online retail experience that's actually worth paying for."

With its DRM-free model, the site has yet to sign any of the major record labels, but Breece said that such deals are on the way. "At this point, our content deal spans everyone from do-it-yourself artists uploading it from their garages to large aggregators. But we really believe that DRM has seen its heyday and we will be adding major labels sooner rather than later."

In May, Amazon announced that by the end of the year, it would launch a DRM-free digital music store with songs from over 12,000 record labels, including one major: EMI Music. Apple has a similar DRM-free deal with EMI, offering the label's songs for $1.29 a pop rather than the standard 99-cent iTunes price tag. But, as with all of Apple's music, these EMI tunes aren't compatible with handheld media players other than an iPod or iPhone. Like AmieStreet, Amazon will offer tracks for any mp3 player.

Bootnote

AmieStreet is named for Amy Street, where the site's three co-founders lived during their senior year at Brown. "Being the creative guys that we are," says Roman, "we changed it to Amie." ®

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