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Amazon's advantage comes from the relatively seamless ecosystem and the fact that their store is the best online experience available.
The other online stores just don't offer that great an experience...the stores are fine if you know exactly what you are looking for, but they really lack in discoverability.
I think the retailers would hugely benefit from going DRM-free and therefore being able to sell to anyone and everyone, at any store, but for anyone to seriously challenge Amazon, they need to develop a superior shopping experience, which is a tall order.
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