AMAZON’S REILLY TELLS IT LIKE IT IS

Departing Amazon digital music chief Scott Ambrose Reilly wrote a farewell email to colleagues and business associates on Friday, which was obtained and published by CNET. Naturally, we’ve picked it up as well. It’s definitely worth a read. But first, some context:

Reilly was Amazon's Senior Manager of Digital Music. He oversaw content deals, operations and helped maintain the relationships with the labels. Today, he starts work running business development for Kindle Periodicals.

In January, I.B. Bad reported that Apple was pressuring labels to drop support for Amazon MP3's Daily Deal, in which the download store slashed prices on specific titles and promoted them heavily the day they were released.

Music biz sources told CNET’s Greg Sandoval that the Daily Deal died after Apple managers told the labels that any music included in the Daily Deal would receive zero promotion at the iTunes Store. In one case, Apple complained to Sony Music after seeing material from Alicia Keys on the Daily Deal, according to one industry source.

In his coverage, Sandoval asked: “Is the decision by the labels to abandon the Daily Deal the source of Reilly's frustration?”

He then answered his own question: “Maybe, but ever since Amazon launched its MP3 music store in September 2007, the labels have acted as if they appeared to favor the service. In January 2008, Amazon became the first music store to sell tunes from the major labels free of digital rights management software. Then there was the issue of price. Amazon was ahead of iTunes in introducing variable pricing and, at least initially, often sold songs for less than the standard iTunes price of 99 cents.

“Music industry sources have said that Amazon decided on its own to cut prices. The labels don't set minimum amounts and as long as a retailer pays the agreed upon wholesale price, they can sell songs at a loss as much as they want. Whether or not Amazon's price cutting was done with the labels' blessing, what is certain is that the record industry wanted another strong player in digital music to help counter Apple's enormous power.”

Reilly's email :

From: Reilly, Scott Ambrose
Sent: Friday, April 09, 2010 3:02 PM
To: XXXXX
Subject: Sad Eyes

Dear friends and music business colleagues,

On Monday I start a new position running business development for Periodicals for the Amazon Kindle team. It is an exciting opportunity to be on the ground floor of another exciting opportunity. The many years of experience in digital music provides a great insight into some of the challenges and opportunities ahead for the digital periodical space.

Monday will be the first day in nearly 20 years I won't spend the entire day thinking, working and plotting how to get more music in front of more people. Monday will be the first day in a long time where growing the digital music space will not occupy 100% of my awake time. Monday also means I get to listen to music just for pleasure. Just because I want to and just because it moves me. It will be lots of Tom Jones, Tom Waits, Dolly Parton, The Yayhoos and Ryan Bingham on Monday.

I am very proud of my 20 years in music. I still remember selling tickets online via the Sonicnet bulletin board for a God Street Wine show at Irving Plaza in 1993. I distinctly remember a conversation with Jim Griffin in the Geffen offices about how to use the Internet to promote the next God Street Wine album and he said "have you heard of the World Wide Web?" Had band websites up in 1994, MP3 downloads in 1996. Got a small piece of the late ’90s new media bubble in the way of advances for Mojo Nixon for digital rights to his catalog. Between the years at Digital Club Network, eMusic and Amazon, I have been responsible for more than 10,000 digital licensing deals.

I am particularly proud of the last 3+ years at Amazon. 11.5 million tracks available in six countries. All DRM-free which they said couldn't be done just three years ago. How can I not be proud of the Daily Deal that has been so successful it riled the Cupertino beast? Having the opportunity to lead the content acquisition, vendor management and operations teams for this brand new digital music category at Amazon has been a privilege and responsibility I have not taken lightly. Being the co-chair of the NARM Digital Think Tank Operations work group has been a good way to give back to an industry that has given so much to me.

I appreciate all that Pete Baltaxe and Bill Carr have taught me and have allowed me to accomplish in 3 1/2 years. I have had an amazing team of people working with me and working hard everyday to make this the best customer experience possible for digital downloads. Most of you have made this journey memorable, introduced me to some great music, allowed me to try some cockamamie schemes, made a few bold bets, and I will miss the characters that make up the music business. A few of you have been a total pain in the ass and really should think about trying to make this business a better place once in awhile. Maybe listen to Elvis' "If I Can Dream" on your way into the office. The music business and the world could use more positive energy.

Jill Chapman will continue to run the operations team and will report directly to Pete Baltaxe. Jill knows more about digital operations than I ever could but she is much shyer about it.

The indefatigable Griff Morris will take over all the content acquisition and vendor management responsibilities also reporting to Pete Baltaxe. I am honored to have had Griff handling all content acquisition for the last 3 years and have utmost confidence he will bring a grace and compassion to the role where I have many times faltered. Remember, always bet on bald if you want to get the job done.

I have a few things to still wrap up over the coming weeks so some of you will continue to hear from me. Some of you will continue to hear from me just cause I like you or want to talk about music. But if you want to argue Sinatra vs Dino or talk about the new Band of Horses, it will just be as a fan, so don't bring up units or demographics.

Thanks to all my team over the last 3+ years and my extended family in the MP3 and CD teams here at Amazon. Thanks to every nutjob in the business that can't stop trying to spread the music and still find themselves in the midnight hours in loud clubs, feet tapping, hips swaying trying to keep the madness locked behind their glowing eyes (at least until the boss and the bloggers leave). I'll probably shed a few tears over the weekend.

But then on Monday it is time to start the adventure of Kindle Periodicals. I am thrilled Amazon is giving me another great opportunity like this to help develop and grow a burgeoning digital media space. And now I get to listen to music just for PLEASURE!!!

Scott Ambrose Reilly
Sr. Manager, Digital Music