The bigger picture is that Amazon is my library - they keep all my books. Now they want to keep all my movies, music and apps. If they succeed, they will keep me as a customer for life, and that's way more than $10.
Similarly, Apple wants to be my library too - they keep some of my music, most of my apps, and now they also want to keep my videos, my app data (including but not limited to books) and the rest of my music via iCloud.
IOW, they key battle here is for being X in "I keep all my books/music/movies/games over at X" for the average Joe.
The difference is that your Amazon content can be used on virtually any device, whereas Apple has little interest in bringing iX to any additional non-Apple devices.
Similarly, Apple wants to be my library too - they keep some of my music, most of my apps, and now they also want to keep my videos, my app data (including but not limited to books) and the rest of my music via iCloud.
IOW, they key battle here is for being X in "I keep all my books/music/movies/games over at X" for the average Joe.