By BRAD STONE
and JEFF LEEDS
Amazon.com, the biggest online seller of CDs, is joining
the movement against copy-protection software for digital music. It plans to
sell songs that can be freely copied to any computer, cellphone or music
player, including the iPod from Apple.
The move could be another
step toward the demise of the copy-protection systems that have frustrated some
online music buyers and created confusion about compatibility between digital
players and downloaded songs. Critics charge that the software has slowed the
public embrace of legal digital downloads while failing to stop illicit
copying, at a time when the music industry is desperate for ways to make up for
declining CD sales.
Amazon announced plans
yesterday to add a music download store to its Web site this year. It will sell
songs and albums in the MP3 format without the layer of software for digital
rights management, or D.R.M., that is used by most other online music
retailers.
Amazon said its service
would include music from one major label, EMI, and from 12,000 independent
music companies that have chosen not to use copy-restricting software.
“We are offering a great
selection of music that our customers love in a way they clearly desire, which
is D.R.M.-free, so they can play it on any device they own today or in the
future,” said Bill Carr, Amazon’s vice president for digital media.
Amazon’s announcement comes
three months after Steven P. Jobs,
Apple’s chief executive, wrote an open letter to the music industry arguing
that it should stop using D.R.M. He noted that consumers get unprotected music
anyway when they buy CDs and copy the songs to their computers.
Last month, Apple followed
up on that letter, striking a similar deal with EMI to sell songs without copy
protection through its iTunes store. Apple, which controls more than 85 percent
of the United States market for music downloads, will charge $1.29 for
unprotected songs that will also have improved sound quality, versus 99 cents
for a protected track. Apple plans to start selling those songs this month.
If the unprotected tracks
from Apple and Amazon prove popular, other labels could feel pressure to follow
EMI’s example.
“More than 50 percent of
the entire music catalog is going be available without D.R.M. before
Christmas,” said David Goldberg, the former general manager of Yahoo Music
and now an entrepreneur in residence at the venture capital firm Benchmark
Capital. “The music labels do not want Apple to have control of the download
space, and although they won’t say it, they are very, very concerned about the
lack of growth of digital music.”
Among the four major record
companies, EMI has the smallest share of the United States market, and it has
been struggling, posting two profit warnings this year and fielding takeover
proposals from private equity investors. It potentially has the most to gain
from experimenting with new digital music formats as a way to increase online
sales.
Other major music labels,
like Sony BMG Music Entertainment and Warner Music
Group, have appeared reluctant to join EMI in forgoing copy protection. But
Universal Music Group, which is the world’s largest label with about one-third
of the United States market, may be getting ready to make the leap. It has been
dabbling with unprotected files in Europe, where it is selling new recordings
from artists like the French singer Émilie Simon in the MP3 format.
According to music
executives briefed on the company’s discussions, Universal has recently devised
a broader set of offerings meant to test the market for unprotected songs through
Amazon and other outlets.
In addition to the likely
sale of classical music in MP3 form, these executives said the company was
discussing selling unprotected recordings by stars like Gwen Stefani and
Fergie, the lead singer from the Black Eyed Peas.
Universal has also talked
about possible MP3 sales through Google,
which has been studying the music market, the executives said. A spokesman for
Universal declined to comment.
Several analysts noted that
the major labels could easily just stand back and watch EMI’s progress. “The
other labels will all wait to see how the EMI experiment goes,” said James L.
McQuivey, a vice president at Forrester
Research. “They
have the luxury of knowing good data is just around the corner.”
Amazon’s service could lead
to a shift in the record labels’ relationship with Apple. Four years after the
iTunes service established the market for paid downloads, the music
corporations have become unsettled by the company’s clout in determining
pricing and other terms.
Many label executives say a
successful entrance by Amazon could provide them with needed leverage in their
current talks with Apple over renewing their contracts. Of course, even if the
iTunes service faces new competition, Apple retains great power thanks to the
popularity of the iPod, which has 70 percent of the music player market and
works smoothly with the iTunes store.
Amazon did not announce
many details of its new service, and it would not comment on its planned
pricing for songs and albums. Executives who have talked with Amazon said they
expected the service to sell D.R.M.-free songs for 99 cents — less than Apple’s
$1.29 — though they noted the terms could still change.
Yesterday’s announcement
puts to an end several years of industry speculation about Amazon’s plans for
the digital music business. Last year, for example, there were reports that the
company was on the verge of selling its own music players that would be linked
to a subscription service. But the company later changed course, reportedly
after Microsoft unveiled its own Zune player.
Despite the long wait,
David Card, an analyst at JupiterResearch, said Amazon’s new store would
immediately position the company as a credible rival to Apple and Microsoft.
“We’ve been waiting for Amazon to be a serious player in digital music for some
time,” Mr. Card said. “They know how to sell music, and this is a powerful
endorsement of the MP3 strategy.”
Not everyone thinks selling unprotected music can
offset the decline in CD sales and save the music business. Many industry
watchers are urging the industry to experiment with other approaches, including
wholesale changes in its business model, like introducing music services that
are free and supported by advertising.