Warner Music casts lot with Amazon


One of the strongest rivals to Apple Inc.'s iTunes Store got stronger Thursday when Warner Music Group said it would sell digital songs without anti-piracy protections through Amazon.com Inc.

The move is an about-face for Warner, which became the third of the big four record labels to start selling digital downloads in the unencrypted MP3 format that lets songs be played on any portable device and copied onto multiple computers.

Warner, whose artists include Madonna, the Red Hot Chili Peppers and Led Zeppelin, had positioned itself as one of the staunchest defenders of the digital locks that were designed to curtail people from making copies of copyrighted songs and illegally swapping them over the Internet.

The music industry has been squeezed between falling CD sales and the active trade in music illegally copied and shared online. In November, Warner reported that its fiscal fourth quarter profits had plunged 58 percent, which the New York-based company attributed to slipping CD sales.

In a memo to employees Thursday, Warner Chief Executive Edgar Bronfman Jr. said the record label would still take steps to protect its artists' copyrights. But he said that the debate over anti-copying technology had produced no consensus among the music industry and technology companies about coming up with a single standard.

Meanwhile, the stalemate only frustrated consumers who want to listen to digital music on any device they own &

the copy-protected songs purchased through iTunes don't work with Microsoft Corp.'s Zune players or other rivals to Apple's iPod, just like songs bought through many rival music stores haven't been playable on the iPod.

The music industry should be cultivating the online market, Bronfman said, and joining Amazon's digital store could help that happen. Amazon refuses to sell digital music locked down with anti-copying restrictions, and its store already features music from Universal Music Group and EMI Group.

"We bring an energy-sapping debate to a close and allow ourselves to re-focus on opportunities," Bronfman wrote.

Warner will still sell encrypted music via music subscription services, he said, and it plans to announce a variety of online retail arrangements in coming months.

But the company's decision to join forces with Amazon was as much about helping to create a viable challenger to Apple, which dominates the digital entertainment market. Music companies have balked at renegotiating contracts with Apple, complaining about iTunes pricing and other issues.

An Apple spokeswoman declined to comment Thursday.

Amazon has benefited from the music industry's effort to kick start competition. In September, Universal, the world's largest record label, chose the Seattle-based retailer to sell some unencrypted music. Universal also began selling music without copyright protections through Wal-Mart Stores Inc. and Best Buy Co. &

but not Apple.

Amazon says it offers nearly — million songs in the unprotected format for download and is undercutting Apple by pricing one third of those, including most of the top 100 best-sellers, at 89 cents. Others cost up to 99 cents.

"Warner joining Amazon is a sign that Amazon is doing well," said Ross Rubin, director of industry analysis at the NPD Group.

Amazon declined to release sales figures. It faces a tough challenger. With a catalog of more than 5 million songs, iTunes is the No. — music seller overall in the U.S., after Wal-mart and Best Buy. A song on iTunes costs 99 cents.

Apple began selling unprotected music before Amazon did, but so far it has signed up only one record label.

In February, Apple Chief Executive Steve Jobs posted an essay on Apple's Web site titled "Thoughts on Music," which argued that the music industry needed to rethink its insistence that music come with copyright protection. Music piracy flourished anyway, he wrote, thanks in part to CDs, which are easy to copy and transmit digitally.

The essay angered some in the music industry who felt that Jobs was saying music didn't deserve the protection that TV shows and movies enjoy.

But others felt that Jobs knew the industry was about to push heavily into unprotected music and simply wanted to be ahead of the trend.

In May, Apple began to sell unencrypted music from EMI for a 30-cent-per-song premium. But in October, a month after Amazon opened its store, Apple dropped the price of EMI's unprotected songs from $1.29 to 99 cents, which analysts said was an acknowledgment that consumers aren't necessarily willing to pay more for the ability to do more with their music.

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