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Amazon has introduced a tiered pricing scheme for S3, its cloud storage service, that will take advantage of increasing economies of scale and go into effect November 1st.

Currently, American customers pay $0.15 for each gigabyte of data they store each month. With the new scheme, this will remain the price only for users who require less than 50 terabytes of storage. Once demands exceed that level, pricing drops to $0.14 and then $0.13 per gigabyte-month, and then settles at $0.12 for customers who need to storage over 500 terabytes of data.

Data transfer costs remain unaffected, as do those of simply making requests to S3. A similarly tiered scheme for storage will be made available to European customers, with pricing starting at $0.18 per gigabyte-month.

As part of the pricing announcement, Amazon has revealed that S3 currently stores over 29 billion objects with peak usage rates of 70,000 storage, retrieval and deletion requests per second.

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It was only a matter of time before Amazon would decide to release a Content Delivery Network, and according to the company in an official statement released today, it has done just that.

Designed to complement its S3 storage service and EC2 web services, the CDN will be available later this year and will provide users with a high performance method of distributing content to end users. Amazon claims it will have low latency and high data transfer rates when users access the content and it will be specifically designed (in the beginning at least) for “developers and businesses who need to deliver popular, publicly readable content over HTTP connections.”

Although the CDN space is crowded with similar services from Akamai Technologies and Limelight Networks, Amazon thinks it knows how to be successful in the space. And one of the key components of its plan is to undercut others on price and make it much easier to buy CDN services.

According to Amazon, it will charge customers based on usage instead of the common practice of charging through long-term contracts, but it would not discuss pricing at this time.

Amazon getting into the CDN business seems like the ideal move for a company that’s trying to provide storage and on-demand computing services already. And considering its size makes it easier for it to adapt its business model to satisfy smaller businesses and those that are less likely to want to enter into long-term agreements, Amazon could quite easily push its competitors aside and cement itself as the leader in the market.

And with a video streaming and distribution service already in place, Amazon is quickly becoming a CDN for itself, so it may know a thing or two about providing a robust service to its customers when its CDN becomes available later this year.

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Earlier today we reported that Amazon had acquired AbeBooks, an online retailer of rare and used books from independent publishers.

AbeBooks held a major (although not majority) stake in a site called LibraryThing, where the literati can list their favorite books and discuss them. Coincidentally, Amazon has put a reported $1 million into Shelfari, one of LibraryThing’s direct competitors (which also include GoodReads, BookJetty and many others). So it might not be surprising to see Amazon try to join the forces of these two modestly sized startups.

But if the history between LibraryThing and Shelfari is any indication, we’re more likely to see Amazon either place its bets on one and divest its shares in the other, or simply maintain a minority investment in both.

Tim Spalding, the founder of LibraryThing, has publicly denounced Shelfari for using dirty marketing tactics such as astroturfing blogs and spamming inboxes. And he hasn’t minced words or backed down from his charge that Shelfari is a “bad actor”, having repeated Gawker’s description of Shelfari as “basically social networking rapists” and criticized Shelfari’s attempts to fix its invitation system.

While Shelfari has publicly addressed the charges of astroturfing (calling it the “unintended work of an unexperienced but well-meaning intern”) and spamming (the unintended result of “explosive growth” and a poorly designed user interface), it hasn’t used its own corporate blog to lash back at LibraryThing. And since most of this drama occurred nearly a year ago, it’s possible that any bad blood as been surmounted. But factor in the fact that these two startups are based on opposite ends of the country (Shelfari in Seattle, Washington and LibraryThing in Portland, Maine), and it appears unlikely that Amazon’s acquisition of AbeBooks will result in any consolidation of the book-centric social networking space.

In any case, Spalding has publicly asserted that LibraryThing will continue to operate as an independent entity, sending only anonymized user data back to AbeBooks. When reached for comment, he did say that he was open to selling the same type of data to Amazon, but he insisted that he would never sell “core user data” to Amazon and that he really doubts anyone “will propose marriage” between his company and Shelfari.

Josh Hug, co-founder and CEO of Shelfari’s parent company Tastemakers, said he had no specific comments about the AbeBooks-Amazon deal, but he did say that “Amazon has been a very supportive investor and we look forward to continuing to work closely with them.”

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When cloud-computing services like Amazon’s S3 go down, as it did again this weekend, it raises the question of whether they are ready for prime time. If these services keep going down, can startups rely on them enough to build their businesses on top of them? At Fortune’s Brainstorm conference in Half Moon Bay today, in response to a question from the audience, Amazon CEO Jeff Bezos said that the company takes reliability and uptime very seriously, and knows that it will be the basis of competition in this budding industry. He said:

I think we are at the dawn of what will be an important industry. Important industries are rarely built by one company. Companies that can demonstrate high-availability track records will have bigger parts of this market. Market mechanisms will push companies to reliability.

When we have an outage like yesterday, we see that as a crucial driver. We won’t be satisfied until we have uptimes and availabilities that are statistically indistinguishable from perfection.

When we have a problem, we know the proximate cause, we analyze from there and find the root cause, we will find the root fix and move forward.

Perfection is not necessary. Amazon’s S3 customers would probably be happy with just more redundancy so that they don’t have to suffer eight-hour outages. Amazon will no doubt get a pass as it learns how to scale these services, but how long will that goodwill last? There are other alternatives out there, with more coming on every day, even if they are not as well known.

(On a different subject, when talking about the Kindle, he had a nice quote about the importance of devices becoming invisible:

We had a microwave oven that would beep every minute until I turned it off. I called it a self-important device.

This is a favorite theme of his, but it is a good design principle. He didn’t mention anything about the next-generation Kindle though).

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Streaming music service Rhapsody has joined the likes of Wal-Mart, Amazon, and Napster by launching an MP3 store.

Its move to offer unprotected music downloads has been anticipated since last Fall when Real Networks joined forces with MTV and Verizon. The Rhapsody MP3 Store offers music from all four major labels (Universal Music Group, Sony BMG, Warner Music Group, and EMI) at 99 cents per single and mostly $9.99 per single disc album.

While Rhapsody specializes in streaming music to paying subscribers ($13 per month gives you on-demand access to its entire music collection), this is not the first time Rhapsody has offered downloads. Most of its downloads have been protected by RAX-formatted DRM, although lately MP3 files have been mixed into its collection as well.

But with the launch of its MP3 store, Rhapsody fully endorses the idea that DRM is dead. And it goes toe-to-toe with the aforementioned DRM-free music stores, as well as iTunes Plus (whose files are actually in AAC format, not MP3), by providing over 5 million tracks that can play on virtually any music player without any restrictions. All songs will be provided with a 256 bit rate.

The Rhapsody MP3 Store sits to the side of the regular Rhapsody streaming music service on its own subdomain, but the two are also integrated with one another. Shoppers on the MP3 store site who are also paying subscribers can play full-length samples (non-subscribers can also play up to 25 full length samples per month). And subscribers have the option of buying and downloading the files they’ve enjoyed streaming but want to play when not at their computers (or connected to the internet).

The purchase experience is mostly browser-based; however, Rhapsody also provides a download manager that can automatically load songs into iTunes. Only Windows is supported at launch, with Mac support coming later.

Rhapsody is also working over the next couple of months to integrate its streaming and downloading functionality into Viacom’s network of music sites, including MTV, VH1, and CMT. It has teamed up with iLike as well to power music across all of that startup’s social networking apps and on its main website. Expect the same level of integration that we’ve already seen on MOG.

On related notes, Rhapsody is putting the finishing touches on its powering of Yahoo Music, which should go live soon so that Yahoo users aren’t simply redirected off-site. And it has just helped launch a new Verizon VCAST music service for getting its songs onto mobile handsets. With all of these partnerships, Rhapsody is working to become not only a destination but a platform for music distribution as well.

Streaming music may be the way of the future - especially when reliable and fast wireless technology becomes ubiquitous - but the launch of Rhapsody’s MP3 store goes to show that consumers still want to own their music - and control when and where they can use it.

Also see our round up of DRM-free music providers from last fall, which includes some of the more indie-focused services like Amie Street.

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Last week at the D6 conference, Om Malik caught Jeff Bezos on video after his on-stage appearance (in which he talked about a new pay-per-download movie service). In the five-minute hallway interview (embedded below), Bezos explains why a Web retailer is offering cloud computing services. The answer is because Amazon, as a Web-scale application, had to build these services for itself anyway. (Many investors and Wall Street analysts apparently still don’t get the connection).

Also, when asked if Amazon is considering starting its own venture fund to encourage Web Services startups like the iFund or the fbFund, Bezos laughs, and points out that plenty of venture-backed startups are already using Amazon’s Web services.

If you haven’t seen the video yet, here it is:

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One thing Citi analyst Kevin Mahaney didn’t know about earlier this week in his very optimistic sales estimates for the Kindle: Jennifer Aniston is apparently a fan. At least, that’s what it looks like in the picture above published by US Weekly (that is the first time and also the last time that publication will be mentioned here on TechCrunch, promise).

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The Kindle, Amazon’s ugly but useful ebook reader that launched in November 2007, may be a burgeoning hit, says Citigroup Analyst Mark Mahaney. Citi expects Amazon to generate between $400 million and $750 million in revenue from the Kindle by 2010, or 1% - 3% of Amazon’s total revenue.

The key points of differentiation with the Kindle and competing devices is the fact that books and other content is delivered to the Kindle wirelessly and that the Kindle has the largest book selection by a significant margin (more than 120,000 books, magazines, newspapers, and blogs, including 98 of 112 current New York Times Best Sellers). Mahaney also points out that the Kindle has more memory than competitors, and supports newspapers, magazine and blog subscriptions. See Mahaney’s comparison chart below for additional details:

Mahaney points to slim public data about Kindle sales to date in making his predictions:

How Is Kindle Doing So Far In The Marketplace?

Our ability to answer this question is very limited. Amazon is the sole retailer of the Kindle and it has disclosed no information about its sales other than to say
that it sold out in the first 5 1⁄2 hours. But we have pieced together four different clues to gain a sense of Kindle’s traction.

First, we note that Kindle has consistently been ranked among Amazon’s Bestsellers in its Electronics category. Ahead of the Apple iPod Nano, the Garmin GPS Navigator, and the Canon Powershot Digital Camera.

Second, we note that the Kindle has received a very large number of customer reviews. Per the exhibit below, we note that Kindle has received more customer
reviews than any of the other Top 10 Bestselling items in Amazon’s Electronics category – 2,537 reviews as of May 12th – vs. 663 for the Apple iPod Nano 4
GB Silver (3G), the #2 Bestseller. This is in part an unfair comparison. Kindle is a new product sold only on Amazon.com, while there are numerous versions of the iPod, and they are sold by numerous retailers. But still, the volume of reviews does indicate material traction for the Kindle.

Third, we see that the quality/tone of the customer reviews the Kindle is receiving is relatively positive. Below we compare the Star Rating Diffusion – 5 Stars vs. 4 Stars vs. 3 Stars etc… – for each of the Top 10 Bestselling Electronics Items on Amazon. What we see is that the Kindle actually receives fewer high scores than the other Bestsellers – 69% of its reviews are 4 or 5 Stars vs. an average of 80% for the other items. And it receives more low scores than the other Bestsellers – 22% of its reviews are 1 or 2 Stars vs. an average of 13% for the other Items. But for a Version 1 of a product “competing” against a several times iterated leading consumer electronics item like the iPod, a 69% Star 4 or 5 rating is relatively positive.

And fourth, we note that the most reviewed Customer Review of Kindle (“Why and how the Kindle changes everything” by Steve “eBook Lover” Gibson) has been reviewed by at least 27,000 people. Specifically, as of May 13th, 26,931 have read Steve Gibson’s review and actually commented on it by pressing the Yes or No button when asked if the review was helpful. And logically, there would be more people who read the review and didn’t bother to vote, although the voting step is hyper-easy. We believe that this helps provide something of a proxy for how many Kindles have likely been sold. We’d peg the number as somewhere between 10,000 and 30,000 Kindles sold to date.

Citi took this indirect sales data and built a model based on the adoption curve of the iPod “Here’s what’s known. Launched in CQ4:01, the iPod went from 129,000 unit sales in its first quarter to becoming a mass market phenomenon, with a current installed base of approximately 100MM.”

They apply similar adoption rates to the Kindle that the iPod saw (starting at a much lower base: 129,000 iPods v. 10,000 - 30,000 Kindles in first three months on the market) and then discount the entire model by 50% - 75% to hedge risk in coming up with the three year revenue model. “So perhaps, if Amazon executes right with its Kindle product and marketing strategy, the iPod analogy for the Kindle won’t be too far stretched,” Mahaney says.

About half the projected revenue is from Kindle sales, half from book sales after purchase.

What’s our take? I was down on the Kindle when it first launched but quickly fell in tepid like with it once it was in my hands for a few weeks. But then John Biggs at CrunchGear borrowed it from me in January, apparently permanently. I’ve learned to live without it. The biggest issue I had with it, once I got the hang of it, was accidental page turns. I’m still buying a lot of normal books, but when I get my Kindle back I’ll happily switch back to the ebook world.

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The title of this post, a (mis)quote from computer scientist Alan Kay, is the last line in a job listing posted by Jeff Bezos in 1994 to the Usenet group mi.jobs. The title of the job listing was “Well-capitalized Seattle start-up seeks Unix developers.” Via HackerNews.

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Shelfari, the Amazon-backed community networked around books, has introduced editable author profiles in hopes that it can become a destination for not only biographical information but interactions between authors and their fans as well.

Each author’s page will feature an open wiki in addition to a message board and a list of written books. Shelfari hopes to set itself apart from other big name wikis (namely Wikipedia) by encouraging authors themselves to join the community and modify their own pages. Many sites tend to discourage this practice because of obvious bias concerns, but Shelfari believes the interaction to be seen between authors and their fans will compensate for this drawback.

With the introduction of these new profiles, Shelfari is poised to become a uniquely rich repository of literary information, and has the potential to become an IMDB for books. At the same time, the success of these wiki pages will rely heavily on author interaction, which will likely be difficult to establish. Without this interaction, users might as well head to Wikipedia to get the dish on their favorite authors.

Besides the new profiles, Shelfari offers book reviews, recommendations, and community groups. Members can browse their book collections in virtual libraries, and books can be easily purchased through links to external sites (Shelfari gets a portion of the revenue from these sales). The site was founded in October 2006, and received $1M in Series A funding from Amazon in Feburary 2007.

Competitors in this space include LibraryThing, Goodreads, and Delicious Monster”.

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What’s the first thing Amazon does to counter the launch of Google App Engine? Makes sure its current customers are happy just where they are by providing two premium tech support packages.

AWS users can now pay for either a silver or gold level of support. Both packages offer “fast and predictable response times, an unlimited number of support cases, and personalized support from our team of developer support engineers.” The gold version takes things up a notch by also affording developers with round the clock phone support and a max 1 hour response time to urgent requests.

The silver package will cost $100 per month or $0.10 per dollar spent on monthly AWS usage, whichever is higher. The gold level is either $400 per month or $0.20 per monthly usage up to a certain charge, after which the rate declines.

Amazon hasn’t been slacking in terms of releasing new features, but we can expect that App Engine to drive even more rapid innovation from Seattle-based retail giant.

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Our live coverage of the Google App Engine launch event is here (Update: we’ve built and launched a test application here).

Google isn’t just talking about hosting applications in the cloud any more. Tonight at 9pm PT they’re launching Google App Engine (Update: The site is live), an ambitious new project that offers a full-stack, hosted, automatically scalable web application platform. It consists of Python application servers, BigTable database access (anticipated here and here) and GFS data store services.

At first blush this is a full on competitor to the suite of web services offered by Amazon, including S3 (storage), EC2 (virtual servers) and SimpleDB (database).

Unlike Amazon Web Services’ loosely coupled architecture, which consists of several essentially independent services that can optionally be tied together by developers, Google’s architecture is more unified but less flexible. For example, it is possible with Amazon to use their storage service S3 independently of any other services, while with Google using their BigTable service will require writing and deploying a Python script to their app servers, one that creates a web-accessible interface to BigTable.

What this all means: Google App Engine is designed for developers who want to run their entire application stack, soup to nuts, on Google resources. Amazon, by contrast, offers more of an a la carte offering with which developers can pick and choose what resources they want to use.

Google Product Manager Tom Stocky described the new service to me in an interview today. Developers simply upload their Python code to Google, launch the application, and can monitor usage and other metrics via a multi-platform desktop application.

More details from Google:

Today we’re announcing a preview release of Google App Engine, an application-hosting tool that developers can use to build scalable web apps on top of Google’s infrastructure. The goal is to make it easier for web developers to build and scale applications, instead of focusing on system administration and maintenance.

Leveraging Google App Engine, developers can:

• Write code once and deploy. Provisioning and configuring multiple machines for web serving and data storage can be expensive and time consuming. Google App Engine makes it easier to deploy web applications by dynamically providing computing resources as they are needed. Developers write the code, and Google App Engine takes care of the rest.
• Absorb spikes in traffic. When a web app surges in popularity, the sudden increase in traffic can be overwhelming for applications of all sizes, from startups to large companies that find themselves rearchitecting their databases and entire systems several times a year. With automatic replication and load balancing, Google App Engine makes it easier to scale from one user to one million by taking advantage of Bigtable and other components of Google’s scalable infrastructure.
• Easily integrate with other Google services. It’s unnecessary and inefficient for developers to write components like authentication and e-mail from scratch for each new application. Developers using Google App Engine can make use of built-in components and Google’s broader library of APIs that provide plug-and-play functionality for simple but important features.

Google App Engine: The Limitations

The service is launching in beta and has a number of limitations.

First, only the first 10,000 developers to sign up for the beta will be allowed to deploy applications.

The service is completely free during the beta period, but there are ceilings on usage. Applications cannot use more than 500 MB of total storage, 200 million megacycles/day CPU time, and 10 GB bandwidth (both ways) per day. We’re told this equates to about 5M pageviews/mo for the typical web app. After the beta period, those ceilings will be removed, but developers will need to pay for any overage. Google has not yet set pricing for the service.

One current limitation is a requirement that applications be written in Python, a popular scripting language for building modern web apps (Ruby and PHP are among others widely used). Google says that Python is just the first supported language, and that the entire infrastructure is designed to be language neutral. Google’s initial focus on Python makes sense because they use Python internally as their scripting language (and they hired Python creator Guido van Rossum in 2005).

Update: Here is Guido van Rossum at the launch event talking about App Engine: