honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Friday, August 10, 2007

Universal to sell digital songs with no catches

By Joseph Menn and Dawn C. Chmielewski
Los Angeles Times

Moving to blunt Apple Inc.'s growing power, the world's largest music company is bypassing the iPod maker to sell thousands of songs in an unrestricted digital format through many other online music stores.

Universal Music Group said yesterday that it would begin selling current and back albums — from a collection of stars as diverse as 50 Cent, Maroon 5, Amy Winehouse and Johnny Cash — without anti-piracy software that restricts their use.

Online retail partners include Best Buy Co., Wal-Mart Stores Inc. and Amazon.com Inc. — but not Apple's iTunes.

A power struggle between Universal and Apple Chief Executive Steve Jobs accomplished what years of consumer complaints could not: persuading the top recording company to remove the digital handcuffs intended to prevent people from illegally sharing music.

"It seems like a bold move to blunt Apple's influence," said Mike McGuire, vice president of research with Gartner Inc.

Universal called the effort a "test" to see how sales and piracy rates are affected when it sells songs in the MP3 format, which can be copied freely and played on any computer or mobile device.

The lack of software will make it easy to put copyrighted music on file-sharing networks, but doing so is still illegal. Universal said it hired a company to monitor piracy during the test period, Aug. 21 to Jan. 31.

Publicly, Universal said it excluded Apple so that iTunes could serve as a "control group" to make sales comparisons easier. Songs sold through iTunes are wrapped in digital-rights-management software that prevents them from being shared on more than a certain number of computers and played on devices other than Apple's iPod and iPhone.

Universal Music Chief Executive Doug Morris said in a statement that the test would "provide valuable insights into the implications of selling our music in an open format."

But people familiar with Universal's strategy cited another strong motivation: to help Apple's competitors and reduce Jobs' clout with the music industry.

Cupertino, Calif.-based Apple's dominance in digital music sales has given the company major leverage in negotiating pricing, availability and other issues with the major record labels.

Apple began selling music only four years ago. But with digital downloads replacing CDs for millions of people, Apple's supremacy in the online business has left it trailing only Wal-Mart and Best Buy in overall music sales.

"That's far too much power for anyone to have, especially someone who has not seen things eye to eye with the music labels in the past," said James McQuivey, an analyst with Forrester Research.