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Just An Online Minute... Apple Faces Challenges To Online Music Reign

Presenting a serious challenge to Apple's iTunes, Amazon has finally launched its music download service.

Unlike Apple, Amazon is selling tracks free of the restrictions that attempt to limit iTunes' users ability to make copies or play on portable devices other than iPods. Currently, Amazon is offering 2.3 million tracks for sale, with most priced at either 99 cents per song (Apple's price) or 89 cents per song.

While Apple has been the clear market leader in the music download space, accounting for an estimated 70% of digital music sales, some analysts think that Amazon can knock Apple off its perch. "Amazon represents the best chance that the music industry has at building a competitor to iTunes," Forrester Research analyst James McQuivey told Bloomberg News.

Amazon's biggest advantage is that its downloads come in MP3 format at no extra charge. That means people can play them on their iPods as well as Zunes. When their iPods break, as seems inevitable, users can put the same tracks on new iPods without worrying about Apple's policy limiting transfers to no more than five devices.

Apple also faces a threat to its video download business from Amazon. NBC recently said it was going to sell its new fall shows via Amazon instead of Apple and that it might pull its older shows from Apple after the current contract expires in December. At the same time, the TV network hasn't completely shut the door on Apple either, NBC chief digital officer George Kliavkoff said this week at the OMMA conference. He told the crowd that NBC had to give Apple notice this summer that it might not re-up, or else the deal would automatically be renewed. But he also said the companies might yet come to terms.

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