Amazon Takes Aim at Apple

SAN FRANCISCO -- Amazon.com (AMZN Quote - Cramer on AMZN - Stock Picks) unwrapped a trial version of its music downloading service on Tuesday, hoping to lure users with competitive prices and music that's free of restrictions on copying.

The online retailer is clearly taking aim at Apple's (AAPL Quote - Cramer on AAPL - Stock Picks) iTunes music service. Amazon will sell songs at 89 to 99 cents each, vs. 99 cents to $1.29 at iTunes. The songs are free of digital rights management software, called DRM, so users can easily share music with each other and store tracks and playlists on multiple devices.

Amazon is betting that DRM restrictions will be the Achilles' heel that makes Apple vulnerable to competition. While Apple's Chief Executive Steve Jobs has publicly railed against recording labels' insistence on DRM, the company has not come up with a policy to make DRM-free songs widely available.

Without digital padlocks on music downloads, songs purchased on Amazon's service, called Amazon MP3, can be played back on iPods as well as rival devices, including Microsoft's (MSFT Quote - Cramer on MSFT - Stock Picks) Zune and SanDisk's (SNDK Quote - Cramer on SNDK - Stock Picks) Sansa.

Amazon's greatest chance to wage a successful campaign against Apple may be its deep databases that mine consumer purchases to spot buying patterns and make more accurate recommendations. This trove of information may give it a leg up in developing a service that suggests music to users.