Amazon launches MP3 service. Record labels are still dumb.

Amazon.com has launched their awaited MP3 Download service. I don’t know if eMusic has such a thing, but one important feature that Amazon has is their song downloader tool. This tool automatically adds the new song to iTunes, which makes the experience of buying from Amazon as close to the seamless iTunes experience as possible.

Amazon wins points in my book for shipping DRM-free MP3 tracks. A couple of the major labels signed on with Amazon, but some of them held out on the foolish belief that DRM was actually doing something useful for their businesses.

I quickly discovered that Amazon has tracks in MP3 format that iTunes only offers in DRM-protected format. For example, Fall Out Boy’s Thnks fr th mmrs is only available as a standard iTunes track, not an iTunes Plus track. K.T. Tunstall’s “Suddenly I See” is available in iTunes Plus format for $1.29, but Amazon sells the same track for $0.89 in MP3 format.

Amazon’s catalog is reportedly a bit over 2 million tracks, whereas iTunes is at 6 million. Depending on the kind of music you buy, you’re likely to find some gaps in Amazon’s selection.

Right now, Amazon seems more likely a big new competitor to eMusic, the #2 download service. If Amazon manages to build out their selection more, it could pose a threat to iTunes domination (70%-plus in market share, from what I’ve read).

Update: John Gruber has similar praise and more detail about Amazon’s MP3 launch.