Amazon acquires online music store Amie Street, targets iTunes

Amazon has acquired online music store Amie that it had funded in the past, as it gears up to counter Apple's iTunes dominance.

Amazon will buy the retail operations of Amie Street, according to a statement by Amie Street. However, details of the deal have not been divulged. The team behind Amie Street will divert its focus on Songza, a social music streaming service it acquired in 2009, reports say.

Amazon will cobrand Amie Street with Amazon Music Service and will give users $5 coupons to purchase songs on Amazon.

Amazon had invested in the start-up in 2007.

Amie Street allows artists to upload songs and the songs are free to download initially but as the volume of downloads increases the price rises marginally. The model was a hit with aspiring artists who used it as a tool for promotion.

However, the store failed to attract big music labels and saturated as a site for rookie artists. This resulted in the focus moving towards Songza which allows users to share music and create a personalized radio station.

For Amazon it's a traffic buy and hence it is due to discard the Amie music model later. Amazon's move to be a major cloud-service provider and its metamorphosis into a device manufacturer has opened new avenues for it to sell its content. With smartphones, tablets and e-readers driving web traffic the demand for streaming music and videos is seeing a surge. The company has evolved from being a book-seller to a company which is creating devices around its content like Kindle to boost revenue. Hence the present buy will support its plans to create new devices and also to stream content from the cloud to other devices.