By YOUNG MONEY Staff
29 March 2011

Over the past few years, online retailer Amazon has shifted its business model, deriving an increasingly bigger percentage of its profits from fields outside of eCommerce, including its cloud computing services and Kindle e-reader. The Seattle-based company is now challenging Apple in the online music sphere with its new Cloud Player service, which allows users to buy music, store it on the company's servers and play it on Android smartphones.

While rumors have circulated over the past few months that Apple is looking to tap into the market for cloud-based music purchasing, Amazon has beaten it to the punch. Apple acquired Lala.com, a streaming music site, in December 2009; nevertheless, many analysts thought it would lead to an iTunes cloud music service, but a streaming music model has yet to materialize.

Users who buy into Amazon's Cloud Player service will have the ability to upload their music libraries to the company's Cloud Drive, which will offer free storage up to 5 gigabytes. Users who purchase an album from Amazon will be upgraded to 20 gigabytes of Cloud Drive space, which according to the company can be used to store everything from music and photos, to videos and other files.

Critics of Apple's iTunes Store affirm the music downloading service precludes users from seamlessly shifting their music from one device to another. With its cloud offering, Amazon is looking to tap into that frustrated base. "Our customers have told us they don't want to download music to their work computer or phones because they find it hard to move music around to different devices," said Amazon vice president of movies and music Bill Carr.

With the launch of its Cloud Player service, Amazon has also beaten another of its rivals to the potentially profitable market. Rumors have swirled over the past week that Google employees are testing out the company cloud music service, Google Music, internally - though Google has not commented on the speculation. According to industry insiders, Google is still negotiating with record companies and top publishers to bring music to the service.

Amazon's Cloud Player will be compatible with smartphones running Google's Android software, effectively enabling those smartphone users to buy music through Amazon and listen to their music on a variety of their personal devices, including tablets running Android and laptops that run the Internet Explorer, Firefox, Safari or Chrome Internet browsers.

Nonetheless, Amazon's beating Apple to the cloud music punch will only serve to intensify the battle brewing between the two giants. Last week, Apple sued Amazon, saying the online retailer is using Apple's "App Store" trademark to sell software applications for mobile devices; with the lawsuit, Apple is hoping to prevent Amazon from using the "App Store" name and is seeking unspecified damages.

Analysts contend that cloud music services are the way the music industry will shift over the coming years. If it does happen and users flock to the model of storing music in the cloud, it could potentially free up space in personal devices like smartphones and tablets.

Currently, the physical disks and chips for memory storage take up a large portion of the devices and make them heavy; however, if users store more information in the cloud, companies could free up internal space and make personal devices lighter and faster. With its Cloud Player service, Amazon is hoping to expand its own cloud service and shift consumer behavior to buying music and keeping it in the cloud. Apple and Google also want that - but on their own terms.