AOL: Amazon Who?

theodp writes "America Online said that it is now selling DVDs and CDs directly as part of its push into digital music, ending a temporary link it had with Amazon.com until it was able to do so itself. The step to sell physical CDs and DVDs is part of AOL's efforts to get a bigger share of the digital music pie to offset shrinkage in its dial-up Internet service and the slump in ad spending. AOL plans to build on its music offerings, which now include online music subscription service MusicNet, with a digital music store that will let users burn as many songs to CDs as they want."

Comments

The end for the middle men?

[Realistic_Dragon]

With the labels and the studios getting more and more involved in distributing directly to the customer, is this signalling the end for the middle men?

People like Amazon will have a hard time selling music if everything from AOL Time Warner and Sony (for example) is only available direct. After all in the online space AOL TW has absolutley no need of Amazon - they are a big enough brand that people will be happy enough to buy things from them, and location is not an issue.

Unfortunatly I can't see the removal of the cut that the middle man gets going to the consumer or even the artist.

It'll be a good things for us geeks on a digital boycott of DRM enabled media however - you won't have to go looking to find out which ones are AOL TW productions, you can just avoid shopping at their e-store :o)

Re:The end for the middle men?

[John3]

It could be the end for "middle men" like Amazon, but it might be a boon to local retail stores. Two of the primary reasons for retailers were distribution and returns. Manufacturers could not profitably sell one or two pieces of a product at a reasonable price.

The manufacturer's plants are built to package and distribute cases and pallets of materials via truck freight, not individual sales units via UPS. They rely on retailers to break down the product to individual selling units and present the product for sale. Online retail has evolved to bring the costs down (expansion of UPS and other carriers, centralized distribution, computerized inventory control) so a manufacturer can effectively become a retailer.

However, there are still kinks to be worked out with returns. We offer UPS shipping services at our hardware store, and unhappy consumers are constantly returning stuff to Amazon, QVC, etc., griping about what a hassle it is. It's much more convenient to return a product to a local retail store...quick exchange, no return shipping fees, and potentially the opportunity for the retailer to sell additional product while the customer is back in the store. Local retail stores still have a big advantage by offering convenient returns, so there is still hope for the middle man.

John
Cornell's True Value

Uhh huh. I see it coming

[dnoyeb]

The first step is to sell CDs directly without Amazon.

The second step will be when Amazon's name mysteriously disappears from AOLs DNS servers.

Third? The lengthy court battle...

Will AOL become the Microsoft of the internet ?

[Krapangor]

It seems that AOL aquires more and more customers and expands itself to more and more services.
It story seems to me very similar to the history of Mircosoft:a single company with a proprietary, incompatible products steadily increased their market share by aggressive advertisement until they became the dominant monopolist.
Don't be fooled by the fact that AOL is just a service provider. If they control over 70 percent of the internet access of private customers all players in the network business would have to follow their word and do their bidding. They could dominate standards bodies and in fact enforce proprietary standards locked by IP and patents on the whole internet.

This makes me wonder if it's now time for a GPL service provider. By following the principles of the free software movement, they could set up free WIFI access to the internet. This would have the nice side effect that the US goverment won't be able to censor the internet any longer. Furthermore we might get all free broadband access without paying huge fees to greedy companies which do nothing for the community.

it'd be so smart

[TomSawyer]

It'd be so smart of them to leverage their Time Warner division by giving buyers of their own stuff the right to download the MP3s on the spot so they can listen to the music while their CD is in the mail.

Or maybe just set up a playlist they can stream off the order status page of whatever they ordered. Once the order is fulfilled the playlist can go away along with the order page.