Amazon Invests in Demand-Based Pricing Digital Music Store

Amazon recently dumped an undisclosed amount of cash into AmieStreet.com, a start-up digital music store that throws in an element of social networking: track prices rise with their popularity. A song’s price starts at nada, but as more people download it, the price tag balloons until it hits a 98 cent ceiling. The cool twist in the model is that the more popular a song gets after you recommend it, the more store credit you receive for being ahead of the crowd.

While Amazon isn’t acquiring AmieStreet, the “Series A” financing it’s providing—accountants in the crowd, that means what in English?—shows it has a definite interest in the startup, whose model would fit in quite nicely with Amazon’s own recommendation system. It’d add some much needed spark to their digtal music store, which isn’t really anything special right now.

Obviously, there’d have to be some changes to the pricing structure for major labels to go along with it. But Amazon would stand a better chance of negotiating this kind of setup than other stores—it’s an internet retail powerhouse, but the labels don’t fear it like they do iTunes, whose dominating marketshare is unnerving enough they wouldn’t mind helping to chip away at it. [CNNMoney via /.]