Earlier this week Amazon launched a new cloud-based consumer service called the “Cloud Drive” accompanied by media player titled “Cloud Player.” Together they offer consumers an ability to store, upload, listen and download music (which they may pre-own or buy on Amazon) from most devices. Amazon is the first major internet or Media Company to make such a commercial offer as both Apple and Google are rumoured to be working on similar offering in near future.

Amazon promises to enable customers to store music in the cloud and play it on any Android phone, Android tablet, Mac or PC, wherever they are. Customers can upload their music library to Amazon Cloud Drive and can save any new Amazon MP3 purchases directly to their Amazon Cloud Drive for free. It can be argued that this offer should be extendable to other media type such as ebooks, documents etc. though Amazon does not seem to market it specifically.

"We're excited to take this leap forward in the digital experience," said Bill Carr, vice president of Movies and Music at Amazon. "The launch of Cloud Drive, Cloud Player for Web and Cloud Player for Android eliminates the need for constant software updates as well as the use of thumb drives and cables to move and manage music."

"Our customers have told us they don't want to download music to their work computers or phones because they find it hard to move music around to different devices," Carr said. "Now, whether at work, home, or on the go, customers can buy music from Amazon MP3, store it in the cloud and play it anywhere."

As we would expect from Amazon, the consumption model is well-defined and attractive. Customers automatically start with 5 GB of Cloud Drive storage to upload their digital music library, and those who purchase an Amazon MP3 album will be upgraded to 20 GB of Cloud Drive space. New Amazon MP3 purchases saved directly to Cloud Drive are stored for free and do not count against a customer's storage quota.

Please do not discount this as a simplistic cloud storage story. This is a fascinating development which weaves themes of cloud computing, mobile devices, commoditisation of technology, ecommerce, media licensing agreements for the eventual supremacy of the lucrative billions of dollars worth digital media and ecommerce distribution ecosystem. As James Naughton of the Guardian / Observer writes quoting David Bowie who in 2002 had predicted that music would, one day, "become like running water or electricity".

Offering Cloud Computing at commodity level to mass market and developers is nothing new to Amazon. Its Elastic Compute Cloud (Amazon EC2) is a popular web service product that provides resizable compute capacity in the cloud. It is designed to make web-scale computing easier for developers. However this latest offering is the step change in maturity it can be argued as it makes consuming the Cloud based services very easy, affordable, attractive to end-user consumers, in this case music. So is this strategy designed to gain market share in the digital music market for Amazon? David Porter CEO and founder of 8tracks certainly seem to think so. He says,

Since Cloud Drive could well generate less than half the revenues as Amazon Web Services (AWS) for the same offering, it seems Amazon is offering the storage as a loss leader to gain digital music market share. Amazon undoubtedly hopes to wrestle away some market share from Apple’s iTunes, particularly in view of the growing base of Android users not yet served by a Google download store.

On the face of it this seems to be a good development from Google’s perspective. Cloud Player which support’s its Android system is now bundled into the new version of the Amazon MP3 App; it includes the full Amazon MP3 Store and the mobile version of Cloud Player. Customers can use the app to play music stored on their Cloud Drive and music stored locally on their device. However as Porter notes,

Amazon’s bold “first move” without licensing deals from the music labels could complicate and delay negotiations at Apple and Google.  Early adopters of Cloud Drive especially Android users might then consider the switching costs and choose to stick around even once Google and Apple launch their own competing services.

This is still a developing story I think. How the licensing aspects of the music will be addressed is not yet clearly answered. Though early indications are that large studios may not see this as a threat rather a boon to ignite customer interest in Cloud. How the close rivals such as Apple and Goole will respond yet remains to be seen. Though as James Naughton observes, Amazon’s size, reach, dominance in online retailing, cloud computing command, access to large market of Android phones will mean that neither they nor the record companies will find it easy to challenge Amazon’s early charge in the field of Cloud-centric media consumption offering model.