Amazon Reportedly Prepping iTunes Rival

Online retailer Amazon.com is in advanced talks to launch its own digital music service as early as this summer, the Wall Street Journal reported today.

Amazon.com is reportedly negotiating with Vivendi Universal Music Group, Sony BMG, Warner Music Group, and EMI Group to license music for a subscription-based music service. The digital music offering would also include Amazon.com-branded music players which would be sold at a discount, subject to signing up for a music subscription, and come pre-loaded with music.

The music industry would likely welcome Amazon.com’s late entry into the digital music market: although MSN, Yahoo, Napster, eMusic, Rhapsody, and other services are already up and running, collectively they have yet to gain substantial traction against Apple Computer’s iPod/iTunes Music Store combination, which is rapidly approaching the sale of its billionth track. Compared to other retailers, Amazon already has a major foothold with the digital music market, already selling an estimated 10 percent of all personal digital music players in the U.S. (including iPods), and boasting a customer base of over 55 million consumers.

Development of an Amazon.com online music store could mark a significant step in a strategy to shift income sources away from dependency on physical goods and media (books, CDs, electronics, etc.) to downloadable digital data. Amazon.com has been selling selected books in electronic form for some time, and recently began producing original video content for the Internet.