Amazon MP3 has little or no effect on iTunes

I don't think you're seeing this from the right perspective.
Amazon is #4 in overall sales because they have something very successful: the highest-selling CD store online. Apple is now #1 overall because it has been around for five years and has led the growing music downloads model.
But despite their position, digital downloads are still far behind physical CDs in terms of units sold. That will change over time, yes, but Amazon's MP3 unit is so young that it is far too early to rule it out as a threat to iTunes.
Apple has a five year headstart, and a commanding lead in mind share of iPod owners. Amazon MP3 has successfully created a product that requires minimal skill to get downloads onto an iPod, and if they can position themselves properly, they will be able to open up the DRM-Free downloads landscape to their advantage (and to that of consumers because of the competition)

It'd sure help Amazon's MP3 service if it were available to people outside the USA like me!

(And no, circumventing their ordering procedure with a fake US address sorta defeats the purpose of buying MP3's legally, if you do that you might as well just download them off the web!)

I love Amazon's site. I think it's intuitive, easy to use, cheaper, and best of all, DRM-free. Most consumers don't even know what DRM is, so they're content to be chained to Apple's store. Regardless of what Amazon's future place in the market is, one thing is certain: there is a definite necessity for competition in the digital music industry.

I know that I've already bought more downloads from Amazon in the short time it's been around than in all the time iTunes store has. And the experience is only marginally more time-consuming or difficult than iTunes', for a better quality and DRM-free file.

But the average music download consumer doesn't really know much about file quality or DRM — Apple's DRM is fairly transparent to most PC/Mac+iPod owners.

Still, I think that it's gained so much ground so far, Amazon is only going to grow.

Funny-y-y. CDs archaic. And I'm still one who says that digital is inferior to analog.
Sure it's too early to judge. Word has to get around. The other comments make good points.

It's not necessarily a bad thing that they're not taking from iTunes. They may merely be handling the blue ocean strategy where they're bringing in the very people who weren't using iTunes before, which is arguably a bigger market. I know I've never remotely considered buying iTunes music, but I've now purchased three songs and one album from Amazon MP3, and I plan to buy more.

I guess I'm a statistical anomaly because every time Im going to buy a song on iTunes and it isn't 256kbps and DRM free (which is more often than not) I end up buying it on Amazon instead since they only have DRM free music.

If CD sales keep decreasing it's only a matter of time before digital downloads sweep past CD sales. I stopped buying CDs years ago. I don't mind staying within Apple's ecosystem because it's the best around. No other company has the portable player, PC and Mac music apps and music store under 1 roof. When you buy an iPod or iPhone you know you can download music from the iTunes Store to iTunes on your PC, then sync. Amazon doesn't make it's own players nor offer its own music apps. If the music industry didn't give preferential treatment to Amazon, Amazon would be even further behind Apple.

It very simple really. iTunes is convenient. Extremely easy to use. Apple understood from the beginning that they had to create a service that was easier than illegal downloading if it was going to be a success. And it worked. When I think about it, I always think of Starbucks. Sure, you could spend a little more time and less money brewing your own pot of coffee (illegal file sharing), you could drive an extra mile to a very good cafe and pay a little less for a pretty good cup (Amazon), or you could go to Starbucks, which is everywhere, and get some fairly overpriced not-that-great coffee that does the job, and quickly. And trust me, no one that goes to Starbucks cares about quality or DRM-free lattes.

itunes didnt sell the CD i wanted in one lot; it was 99 per song for 50 songs on a double album. Amazon sold me the 50 song album for 9.99 on a quick download...saved me $40 on one disk...thanks Amazon

I probably buy 5 or 6 records a week through Amazon's MP3 store. I love it. They have quite a selection of hard to find indie music and stuff Itunes doesn't yet have on the radar. And it is DRM free and high quality 256 kbps. I can't go back to Itunes. It seems to be getting slower to open and work through, Itunes Plus has not grown much, still a LOT of proprietary stuff there, and I have 2 ipods and a zune to contend with.

CDs are not going away anytime soon, I always buy albulms on CD because it is better quality, and provides a physical copy (don't have to worry about backing the files up) and is often cheaper. I use itunes to purchase singles due to their wide choice, if amazon provided a greater selection of tracks(or was available in the UK) i would use them.

The Amazon store is gaining popularity in the geekier circles. It's going to take a while before it gains any sort of traction in the broad consumer market. The average iPod user thinks 'buy music' = 'iTunes'. Non-iPod users will catch on to Amazon's positives much quicker since they're not in the happy walled garden that Apple provides.

Clunky, clunky, clunky.

Two weeks ago I tried to buy a single tune through Amazon. The transaction refused to go through and suggested that I try again. After 3 attempts I stopped fearing it would be charging my card 3 times. I get home from work and I have a phone call from my bank's fraud unit asking me to verify 3 identical charges. I told the bank to kill off all charges because I never did get my download even though I went through the motions exactly as Amazon requested.

I like that they are an alternative, but:
1. They are still way more clunkier than using iTunes.
2. I do not like being bombarded with music suggestions when I go to browse a book or video. Yes, Apple hits you with suggestions too but at least then I am shopping for music.

The couple of people I directed to Amazon's MP3 store have been very happy indeed -- including my girlfriend, who had only ever owned Apple music players and purchased from iTunes and uses it to buy DRM-free MP3s on her Mac.

I don't think this is rocket science: I think people don't know the thing is there. And I think there's more inertia in the general market. Amazon's business and promotion model has worked largely in expanding markets; I think they may need to put in a little more energy in converting people given how entrenched iTunes is.

I don't understand these analysts' statistics.

Why do they look at (#New Amazon users coming from Apple / #Current Amazon users) instead of (#New Amazon users coming from Apple / #Apple users before Amazon MP3's start).

That would be a much more significant number if you want to know if Amazon threatens iTunes...

Personally I just use amazon mp3 mainly because I don't own an ipod. However I tend to be behind the times and not buying the latest release which often means that I will see if it's available in amazon marketplace first and if that is/isn't cheaper than downloading once shipping is allowed for. Typically about 70% of my purchases are therefore a used CD, if it's not available used and I "need" it now then often the download is cheaper and therefore I use that.