Why iTunes is in jeopardy

For quite a long time, iTunes has sat atop the music downloading business with nary a competitor to knock it off its pedestal. Because of this, the company has been able to capitalize on the success of its iPod and basically corner the music market.

And while most of us were perfectly fine with that, the music business wasn't. With Warner finding fault in everything Apple does and Universal practically wishing iTunes would explode so it wouldn't need to worry about it anymore, we've run into a situation where the desire for music is there, but record labels are unwilling to provide us with what we want.

And just when things looked like they couldn't get any worse, Amazon stepped in and dropped a bombshell on this industry that we still don't know the full effect of. With the flip of a switch, Amazon offers up 2.9 million DRM-free MP3s and as of today, features songs from four out of the big 5 record labels (Sony has yet to join).

Even better, Amazon's service is slightly cheaper than Apple's, as most songs come in at the $0.89 price point. And in the end, it's not just that Apple loses out or Amazon wins, the real result of Amazon's rise is that iTunes is being pushed into a tenuous situation.

And I'm loving every minute of it.

For some reason, there's a subset of fools who believe iTunes will always be the leader in the music downloading business. These people try to hold on to a lackluster argument that claims just because iTunes is the leader today, it will surely be a leader in the next few years. Huh? Why?

By and large, Apple's success on iTunes has been due to the success of the iPod. And while there is no sign of the iPod dying off anytime soon, there is a chance that the coupling of iTunes and the iPod may not last forever.

The way I see it, Apple may need to ensure that only iTunes music works with the iPod if it wants to stop any and all competitors. But will Apple find a way to make sure only iTunes music works with the iPod? Of course not. Consider this: Universal Music Group -- the world's largest record label -- is only selling DRM-free music on services other than iTunes and as it stands right now, only EMI is willing to give Steve Jobs the DRM-free tunes he has wanted for some time. Beyond that, what about the anti-competitive issues that will surely arise?

And while the record labels can't flat out remove all music from the iTunes catalog, they can win battles with Apple by leveraging Amazon and its DRM-free service. And as more songs become available through Amazon's store and more people become aware of the fact that those songs can be used on any device they want and they can do practically anything with the music, how long will it be before Apple is left out in the cold?

Think about it: you can currently buy songs at a cheaper price on Amazon and still add those to your iPod. Even better, the quality is superb and Amazon's service has become even more user-friendly over the past few months. Compare that to Apple's seemingly poor bargaining chip with record labels and a shift in the market may be upon us.

Is iTunes heading to its slow and agonizing death? Not yet. But as Amazon's service grows and people realize they can do much more with those songs than iTunes', how long will it be before Amazon becomes the downloading service of choice?

I don't care what you say, the record labels still wield significant control in this industry and if they want Steve Jobs to lose, not even his mystical powers can save iTunes. Trust me, even he knows that.