Warner Warms to Amazon

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The music industry is submitting to the strip search. Warner Music Group (NYSE: WMG) is the latest major label to cave in to consumer requests for music downloads that are free of digital rights management shackles; it's now ready to sell tunes in the freely portable MP3 format through Amazon.com (Nasdaq: AMZN).

Amazon's store now stocks nearly 3 million MP3 songs for $0.89-$0.99 each. Apple (Nasdaq: AAPL) offers twice the selection, though typically at higher price points and with many of those tracks available only in copy-protected form.

This doesn't mean that Apple is toast. Too many people are smitten -- if not practically tethered -- to the iTunes Music Store. Amazon is certainly going for the jugular by only accepting DRM-free tracks and serving them up at attractive price points. You can get an entire CD's worth of music for as little as $5.99 through Amazon. Its tracks are also encoded at a sweet-sounding 256 kilobits per second.    

However, Apple has sold more than 3 billion songs through its iTunes store. The allure of stepping outside Apple's realm for the pursuit of cheaper -- and, in some cases, sonically superior -- tracks isn't as obvious as it may seem. Apple apostles are a pretty loyal lot. They're not budging -- even with heavies like Amazon and Wal-Mart (NYSE: WMT) selling unshackled tunes.

That perception may change based on a critical piece of data that Steve Jobs may be saving for next month's MacWorld conference. It was during this year's conference that Apple announced that it had surpassed the 2 billion song mark in sales. Six months later, the company had sold another billion iTunes tracks. MacWorld is conveniently scheduled six months after the last milestone revelation. Will Apple's toll be at 4 billion (implying that sales have merely been in line with selling a billion more songs over the same span of time) or closer to 5 billion?

If the smorgasbord streamers like Napster (Nasdaq: NAPS) and RealNetworks' (Nasdaq: RNWK) Rhapsody haven't eaten into Apple's dominance, Amazon doesn't seem to have much of a chance.

Just don't tell Amazon. It knows that it sells enough conventional CDs to have a built-in audience of music fans on its own site. The deal with Warner will also let the two partners create special digital bundles, and that's the kind of exclusive packaging that may help Amazon's nascent digital storefront appeal to artist-specific fans. It's not going to be enough to make Amazon a headliner, but at least it's tuning up to be one heck of an opening act.

For more musical Foolishness:

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