12/27/2007

By JESSICA MINTZ  / Associated Press

Warner Music Group, a major holdout over selling music online without copy protection, caved in to the growing trend Thursday and agreed to sell its catalog on Amazon.com Inc.'s digital music store.

Until now, Warner Music had resisted offering songs by its artists in the MP3 format, which can be copied to multiple computers and burned onto CDs without restriction and played on most PCs and digital media players, including Apple Inc.'s iPod and Microsoft Corp.'s Zune.

The deal raises the total number of MP3s for sale through Amazon's music download store, which launched in September, to more than 2.9 million. Warner Music's entire catalog, including work by artists Led Zeppelin, Aretha Franklin and Sean Paul, will be added to the site throughout the week.

Major music labels Universal Music Group and EMI Music Group PLC had already signed to sell large portions of their catalogs on Amazon, as had thousands of independent labels. Most songs cost 89 cents to 99 cents each and most albums sell for $5.99 to $9.99.

Warner Music Chairman and Chief Executive Officer Edgar Bronfman Jr. had been reluctant to follow in the steps of the rival recording companies.

In February, when Apple Inc. CEO Steve Jobs penned an essay calling on record labels to drop Digital Rights Management from tracks sold on iTunes, Bronfman shot back during a conference call with Wall Street analysts: "We will not abandon DRM nor services that are successfully implementing DRM for both content and consumers."

The recording industry had argued that DRM itself is not what makes some songs incompatible with some digital players, but the fact that there are different versions of DRM in use, suggesting Apple, whose iPod outsells all other media players, should license its DRM technology to other music services.

Apple didn't budge, and the industry's position began to unravel when EMI struck a deal with Apple to sell DRM-free versions of its content on iTunes. A few months later, Universal announced it would do the same with a host of online retailers — with the exception of iTunes.

In an e-mail obtained by The Associated Press and distributed to Warner employees Thursday, Bronfman noted that selling downloads without DRM would help spur new types of online music applications and foster competition among online retailers.

"By removing a barrier to the sale and enjoyment of audio downloads, we bring an energy-sapping debate to a close and allow ourselves to refocus on opportunities and products that will benefit not only WMG, but our artists and our consumers as well," Bronfman wrote.

Philip Leigh, a senior analyst with research group Inside Digital media, said Warner Music's changing strategy is a signal that all the record labels will move in the same direction, including the last major player to drag its heels, Sony BMG Music Entertainment.

"It's not surprising they've chosen to do this first with Amazon," Leigh said in an interview. "They don't want to admit to Apple right away that they were wrong. They would rather do it indirectly."

Warner Music did not comment beyond statements in a press release Thursday, but Leigh said it is likely the company is discussing a similar deal with Apple.

Pete Baltaxe, director of digital music at Amazon, emphasized in an interview that the retailer's music store stands out from competitors like iTunes in that it only sells unprotected MP3s, rather than a mix of formats.

___

AP Business Writer Alex Veiga in Los Angeles contributed to this report.