I prefer buying from iTunes rather than Amazon, but also prefer the higher bit rate, DRM-free tracks that Amazon now has more of.
I think iTunes does have to worry about Amazon catching up, but it would also be a better world if the recording labels had to worry about collusion charges for conspiring to manipulate the market by only providing the 256k, DRM-free option to Amazon.
Overall, however, a healthy, competitive market benefits the consumer with more choice, and benefits Apple, Amazon, et al by forcing them to keep innovating on price and features.
Apple: Apple Second Only To Wal-Mart in Music Sales, But For How Long?
More and more people will soon discover Amazons download store, with higher-res, lower-priced non-DRM MP3s, plus automatic loading into iTunes. Many iPod owners will also be drawn to Wal-Marts own increasingly busy download department, though in our Battlemodo we decided Amazon was the better bet.

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