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Amazon to launch digital music store
SEATTLE -- Amazon.com plans to open an online music store offering only songs that are free of copy-protection technology and can be played on anything from PCs to portable gadgets such as Apple's iPod or Microsoft's Zune.
The Internet retailer decided to steer clear of digital-rights management technology because consumers want to be able to listen to their music on any device they choose, executives said Wednesday.
The market-leading iPod, for instance, can't play copy-protected music purchased from Napster or RealNetworks Inc.'s Rhapsody store. A Zune can't play tunes bought on iTunes. All players support music in the MP3 format.
Amazon's strategy "is helping to pave the way for a much better, much more customer-centric experience in digital music," said Bill Carr, Amazon's vice president of digital media.
Shares of Amazon rose $2.16 cents, or more than 3.5 percent, to $62.74 in afternoon trading, toward the high end of the company's stock price over the past year.
Amazon's music store wasn't unexpected, and the company is tearing a page out of Apple Inc.'s songbook by offering music that's not locked down by digital-rights management technology.
Like Apple's iTunes Store, Amazon will offer DRM-free songs from Britain's EMI Music Group PLC. Amazon also said it will offer millions of tunes from 12,000 unnamed labels. Apple, however, will continue to sell copy-protected tunes.
Amazon said it would announce more labels when the service goes live later this year, but it did not identify a specific date.
By track or by album
Songs will be sold by the track or album, without a subscription option. Amazon didn't provide prices. Apple plans to charge $1.29 for tracks without DRM -- 30 cents more than copy-protected songs. It also said the pricier tunes would feature enhanced sound quality.
Carr said Amazon has always focused on giving customers good bargains and hinted that music will be offered at various prices.
"We have a track record of being very competitive on price and offering very low prices to customers," Carr said. "We also have a track record of offering a wide range of price points on our products, too. There's not one or two or three price points on our CD store today -- there are many, many different price points."
Last month, EMI agreed to let Apple sell tracks without the copy-protection technology on its iTunes Store. Apple has yet to begin selling the EMI tracks, but has said it would make them available on iTunes sometime this month.
Earlier this year, Apple CEO Steve Jobs called on the world's four major record companies, including EMI, to start selling songs online without copy protection software.
Asked how Amazon plans to compete with Apple's market-leading iTunes store, Carr said the Web merchant has a huge customer base, with 66 million active accounts. He also touted the success of its CD store, which in the United States alone offers some 1 million titles.
Barney Wragg, head of EMI's global digital division, said the company believes Amazon's entry in the digital music business will make an intensely competitive market even more competitive.
"Amazon has proven it's a really competitive, successful retailer in the CD business and we're very excited about having people who have a proven track record come into the download business," Wragg said.
EMI also announced deals to sell music without copy restrictions in France, through Virgin Stores' VirginMega chain, and with several online music retailers in Denmark, Norway and Sweden.
Other music labels have released some tracks online without DRM either as part of experiments or sales promotions. Nevertheless, they insist that safeguards are still needed to stave off online piracy and make other digital music business models work.
Warner Music Group, Vivendi's Universal Music Group and Sony BMG Music Entertainment, a joint venture of Sony Corp. and Bertelsmann AG, each declined to comment.
Amazon could push the digital music market forward by pressuring more major music labels to sell DRM-free music, IDC analyst Susan Kevorkian said.
"We think Amazon's position in the market could be influential enough to move some if not all of the remaining majors toward offering MP3-encoded, DRM-free downloads," she said. "The majors need to be looking at new ways and better ways to sell music to consumers because they're suffering substantial declines in their core CD business."
At a gathering of corporate chief executives at Microsoft's headquarters Wednesday, Microsoft CEO Steve Ballmer asked Amazon CEO Jeff Bezos if the online retailer would sell music in Microsoft's Windows Media Audio format.
Bezos said it would not, because the format doesn't play on the iPod.