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Music Industry Makes Peace With MP3

1/11/2008 02:41:00 PM Eastern

New York – The music industry has universally embraced the compressed-music format that it once demonized and shunned, the MP3.

In recent days, Sony BMG and Warner Music announced they were opening up their entire digital music catalogs in DRM-free MP3 format to Amazon’s download store.

When Sony BMG’s music becomes available on the Amazon site later this month, Amazon will be the first download site to offer DRM-free music from all of the big four music companies. Amazon also offers music from about 33,000 independent music companies. Warner’s MP3 songs went live on the site earlier this month.

In a related announcement, Napster will shift its entire catalog to DRM-free MP3 for a la carte downloading. Napster will launch its MP3 service in the second quarter.

Amazon’s songs are not watermarked to track downloaders who might share songs promiscuously over the Internet, Amazon said. However, there is “anonymous watermarking” from music labels “that only tracks the retailer where the file was purchased, which in this case is Amazon,” a spokeswoman said. “There is no watermarking that identifies individuals.

Napster’s watermarking plans, if any, weren’t revealed.

Like the other big four music companies, Warner and Sony BMG continue to use DRM technology to protect music streamed and downloaded from subscription-streaming sites, subscription-download services, and over-the-air cellular download services.

The announcements reflect the music-industry’s impatience with failed industry efforts to develop a protected format compatible with a wide range of devices, from portables to home and car audio systems, and music companies hope to encourage authorized-download sales, analysts said of the announcements.

The announcements are also seen as a music-industry effort to break Apple’s lock on the authorized music-download market, analysts added. Apple does not license its proprietary Fair Play DRM technology to any other MP3 player supplier or download service. Apple’s DRM technology protects all songs on the iTunes site but EMI songs, which became available last year in unprotected AAC format on the site.

The embrace of unprotected MP3 also reflects the music-industry desperation to boost authorized-download sales at a time when total music-industry revenues are on the decline. As of mid December, year-to-date music-album sales (physical media and downloads) were down 10 percent in units when multiple individual-track downloads are counted as albums, SoundScan reported.

 “We believe that giving consumers the assurance that the music they purchase can be played on any device they own will only encourage more sales of music,” said Michael Nash, Warner Music Group’s  senior VP of digital strategy and business development.

Said Bill Carr, Amazon;s digital music VP, “Our Amazon MP3 customers will be able to choose from a full selection of DRM-free music downloads from all four major labels and over 33,000 independents that they can play on virtually any music-capable device." 

Added Napster chairman/CEO Chris Gorog, “The ubiquity and cross-platform compatibility of MP3s should create a more level playing field for music services and hardware providers and result in greater ease of use and broader adoption of digital music.”

Downloaded DRM-free MP3 files can be played back on any MP3 player, on most music-capable cellphones, and on any device capable of playing CDs burned with MP3 files. The downloaded files can be played back through any music-management application on a PC, including iTunes and Windows Media Player, and the songs can be burned as many times as consumers want to CDs.

Most songs available on Amazon are priced from 89 cents to 99 cents. Most albums are priced from $5.99 to $9.99.

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