When Napster came on the scene in 1999 and garnished attention in 2000, the music industry’s response was to declare war on file sharing and digital music. And with their massive financial advantage, the music industry was the first to field their army of lawyers, copy-protected CDs, and usage-restricted music formats. But ever since, the music industry has been unable to win a decisive battle anywhere – p2p sharing and Torrents still trade unprotected MP3s willy-nilly, the Digital Millenium Copyright Act’s provisions are being challenged in court, and pesky little things like rootkits on the CDs have caused strategic setbacks in the ongoing war.

But it’s more than a large, unorganized army of supposed music-loving miscreants – an unexpected alliance of unrestricted music boosters has been able to successfully deal the music industry’s empire tactical defeats. eMusic.com set up house in the empire’s backwaters and started corrupting it from within. Russia’s AllofMP3.com came like the Celts threatening to burn Rome, and with the prices and international on-line access, AllofMP3.com may yet succeed. Even the mercenary iTunes and it’s eminently capable general, Steve Jobs, have begun to work around some of the patricians of the music industry and, with the tacit and “corrupt” approval of some of those very music labels started to sell out Rome – so to speak.

But another general took the field on Tuesday, a general that has the potential to shake the music industry to its core, and maybe even to the ground. Amazon.com has started selling unrestricted MP3s, and they’re fielding an army of songs over 2 million strong.

Why do I think this is the beginning of the end? Simple – Amazon’s prices for the unrestricted versions are equal to or less than the same usage-restricted song from iTunes (and significantly less than the “premium” EMI-only MP3s available via iTunes), you can play the songs on any player without restriction, the songs are available on a per-song or per album basis, and Amazon’s list includes a lot of independent labels as well as the catalogs of both EMI and Vivendi Universal. Sure, you could buy them from other vendors, but everyone knows Amazon. And, quite frankly, 89 cents instead of 99 cents for some songs is a 10% savings. And some entire albums are available for less than $5.

With luck, this will mean an MP3 price war that finally drives the price of music down to where it belongs (my personal price for significant entry is roughly 50 cents per song, from a company that doesn’t support the authoritarian Russian government). After all, Amazon’s already reduced the price between 23% and 31% off the iTunes prices. But Amazon entering the fray may also mean that my anticompetitive concerns about iTunes and the iPod will start to fade. After all, if I can use iTunes to load my iPod, but I can buy all my music through Amazon, Rhapsody, Napster, and eMusic, then I’m not tied to iTunes for anything but a convenient library manager and a music loading mechanism. That makes me much, much happier.

The war’s not over yet – not by a long shot. Sony and Warner Music, the two patrician labels still resting on their financial, technological, and musical laurels, believe that they have a lot to lose by the changes that Amazon and eMusic are bringing. RIAA isn’t about to stop trying to prosecute p2p music sharing or using bogus DMCA claims to force expensive settlements any time soon. But with more and more music available for unrestricted legal purchase, the fall of usage-restricted music empire is coming.

Rome is dying – it’ll just take time for the rest of the body to figure it out.

Other good reads on Amazon’s new MP3 download service:
Motley Fool
Machinist blog at Salon
Louis Hau at Forbes-Media
Wired Magazine