There is still so much room for innovation in the digital music marketplace for a better music library than iTunes–and ~99% of that innovation is going to be mp3 focused, rather than oriented towards proprietary formats. In other words, all music libraries are focused on helping you organize and listen to mp3s, and only a few are focused on helping you listen to a proprietary format like iTunes DRM AAC.
And, since Apple is not focused on selling mp3s, Amazon doesn’t have to compete with Apple to become the leading seller of mp3s. Being the leading seller of mp3s is going to keep being a better thing.
If and when there are mp3 libraries that work better than iTunes and integrate with iPods, there’s going to be a bigger shift, too. I think it’ll be like the rise of Firefox and Safari in relationship to Internet Explorer–some people will see iTunes to be like IE, and choose something else with features + freedom over iTunes stagnation and the specter of lock-in.
Of course, Apple isn’t Microsoft–iTunes keeps adding features whereas IE truly stagnated. And, user experience is key–some aspects of which Apple is so super focused on that few compete.