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2007

Warner Music To Sell Songs On Amazon.com

December 28, 2007 0

Warner Music Group is making its music available for download from Amazon in MP3 format without copy protection…

“Warner Music Group, the record company behind Led Zeppelin and James Blunt, dropped its long-standing opposition to releasing digital music without copy protection, as it made its entire catalogue available to the United States download site of Amazon.com…”

New York — Online retailer Amazon.com Inc. has signed on Warner Music Group Corp. into the growing trend Thursday to its music download service, the latest major record label to join the competitor to Apple Inc.’s industry-leading iTunes digital music store.

“Warner Music songs were available as of Thursday on the Amazon MP3 service, which lets users purchase the tunes and download them to Apple’s popular iPod or many other digital music players.”

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 companies said they will also offer exclusive tracks and special album bundles from Warner, the world’s No. 3 music company, whose artists include Linkin Park and Red Hot Chili Peppers.

“Launched in September 2007, Amazon MP3 offers a la carte MP3 music downloads that are free of digital rights management (DRM) software.”

Amazon MP3 launched in September after reaching deals with music labels Universal Music Group, part of Vivendi, and EMI. The remaining major recording group, Sony BMG Music Entertainment, has yet to offer its songs for the service.

The deal raises the total number of MP3s for sale through Amazon’s music download store 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.

The companies did not announce the price of the songs. However, it has priced about one-third of its nearly 3 million songs at 89 cents each, below the standard iTunes price of 99 cents. The retailer recently began allowing customers to purchase songs by using regular Amazon.com gift cards.

“Consumers want flexibility with respect to what they can do with music once they purchase it, and we want them to have that flexibility, which is why we are pleased to offer our artists’ music on Amazon MP3,” said Michael Nash, senior vice president, Digital Strategy and Business Development for Warner Music Group.

The U-turn — following similar decisions made by EMI in the spring and Universal in the autumn — means that in less than a year the music industry has abandoned copy protection and is selling digital music that, in theory, anybody can share freely with others.

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.

Eleven months ago Edgar Bronfman, the chief executive of Warner Music, said that proposals by Steve Jobs, the chief executive of Apple, to drop copy protection were “without logic or merit” and noted that his company would not “abandon” the traditional system. However, Warner Music now believes that it has little choice but to follow its competitors.

In an e-mail distributed to Warner employees Thursday, Bronfman noted that selling downloads without digital rights management 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.

Warner Music Group became the only stand-alone music company to be publicly traded in the United States in May 2005.

“Its vast portfolio includes record labels Asylum, Atlantic, Elektra, Nonesuch, Reprise and Rhino.”

Unlike Apple’s store, Amazon’s shop sells all of its songs without digital rights protection, allowing them to be played on a variety of devices in addition to the iPod.

By dropping copy protection, music companies are making it simple for consumers to buy songs online and load them on to any digital music player. The copying of music remains illegal, but it is harder to enforce in an industry in which piracy is rampant. Warner Music’s agreements with Amazon cover the US, but they are expected to extend internationally soon.

Customers “can feel confident” their songs will play on whatever music device they buy in 2008, said Pete Baltaxe, Amazon’s director of digital music.

“We are very pleased with where we are,” Baltaxe said of customer adoption of the music service, though he would not provide data on downloads to date or site traffic.

Baltaxe emphasized in an interview that the retailer’s music store stands out from most competitors such as iTunes in that it only sells MP3s, rather than a mix of protected and unprotected music.

Warner Music is also in discussions with Apple about releasing unprotected versions of its songs via iTunes. Only EMI has signed up with Apple, with Universal Music, the market leader, preferring to work with other digital retailers, such as Amazon, to enhance its competitive position.

Philip Leigh, a senior analyst with the 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.

“Sony BMG, the No 2 company, is the only major that is refusing to join in, although it has indicated privately that it believes it has little choice but to fall in line with its peers.”

U.S. album sales were down 14 percent in late November from a year earlier, according to Nielsen SoundScan data, as a growing number of fans buy individual songs online or use free file-sharing.

Digital music revenue has been growing in the double-digit percentages, but the total take is not enough to make up for the shortfall in compact disc sales.

“Warner Music did not comment beyond a public statement Thursday. Financial Terms of the agreement were not disclosed.”

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