Amazon's Classical Blowout

When companies like Tower Records fail, rivals invariably smell opportunity. Motley Fool Stock Advisor pick Amazon.com (NASDAQ:AMZN) is seizing the initiative with its recent launch of a virtual store dedicated to discounted classical music selections.

Amazon said that its Classical Music Blowout Store will offer shoppers a "hand-picked selection" of 2,000-plus titles in the genre at discount prices. All told, Amazon offers more than 100,000 classical titles on its site. The company said classical music was the second-fastest growing music category on Amazon last year.

In the press announcement, the company mentioned "the disappearance of prominent brick and mortar stores," along with many retailers' pared-back classical selections. The Classical Music Blowout Store will also provide education for people who are just dipping their toes into the classical genre.

Amazon's Blowout bonanza makes sense. Wal-Mart (NYSE:WMT), Best Buy (NYSE:BBY), and Apple's (NASDAQ:AAPL) iTunes Store offer plenty of competing outlets for cheap hit music. Amazon may be catering to an underserved niche that finds itself increasingly neglected by specialty music retailers suffering from hard times. Classical music lovers are more likely to prefer physical CDs to digital downloads, and a New York Times article recently noted that classical music fans are less likely to engage in illegal copying of music, too.

Amazon won't be alone in wooing classical fans, though. The Times said that Barnes & Noble (NYSE:BKS), Borders (NYSE:BGP), and Virgin have already upped their stock of classical music to try to capitalize on the loss of retailers like Tower.

Many Amazon investors already complain about the company's rock-bottom prices and free shipping, and the notion of another "blowout" won't change their tune. Still, those cheap prices are a big part of its competitive advantage, and Amazon's wider selection offers the company another edge over its bricks-and-mortar counterparts.

Luring shoppers with low prices can convince them to buy other items, and the vast array of goods Amazon can offer online shores up its ability to suit divergent tastes. That's how Amazon keeps its customers coming back and its volumes strong, despite its low prices. Shareholders worried about its "blowouts" may only be sweating the short term.

Stay tuned for further Foolishness:

• Rick Munarriz had many opinions on the state of music when Tower made its last gasp.
• Is Amazon suitable for marriage?
• In August, Tower's death throes were evident.

Amazon.com and Best Buy are Motley Fool Stock Advisor recommendations. Wal-Mart and Borders are Motley Fool Inside Value picks.

Alyce Lomax does not own shares of any of the companies mentioned.