Long Island City-based Amie Street.com has an eye-catching proposition — pay from 0 to 98 cents for a song download, based on its popularity. And now the company has an undisclosed amount of funding via a Series A round led by Amazon, announced this morning.
The question is what Amie Street will do next. That’s because selling digital music over the Internet is a low-margin business at best, and everyone who’s doing it at any scale is usually selling something else along with the tunes — Apple, obviously, sells iPods, while Yahoo sells advertising. Amie Street’s team might be able to squeeze out a profit if they were selling songs for more than a dollar, as the major labels would like to do with their most in-demand tracks ($1.49 for Justin Timberlake, anyone?) but so far none of the major labels have signed on with Amie Street. Instead the service has a catalogue “approaching 100,000” songs — iTunes now boasts more than 5 million — from an assortment of indie labels, says founder and CEO Elliott Breece.
Breece, who graduated from Brown a year ago, is well aware of the challenges inherent in digital music sales. “We’re all ex-music pirates,” he says. “It’s hard to sell ones and zeros to people in our demographic.” He’s not prepared to show his hand yet, but it sounds like he’s trying to position Amie Street as an ad-supported destination site, with the chance to capitalise on other opportunities, such as corporate sponsorships.
The other obvious answer is that Amazon, which is entering the online music business itself very soon, may have larger plans, such as applying Amie Street’s variable pricing/voting model to other digital goods. Either way, Jeff Bezos’ vote of confidence must be heartening for Breece and his angel investors, who include Robin Richards, former president of MP3.com, and David Hirsch, a Google vet who helped set up the search giant’s New York outpost.