- The Washington Times - Wednesday, January 24, 2007

CANNES, FRANCE

Bad news for music enthusiasts. A world where music lovers can buy selections from Apple’s ITunes or any of the hundreds of online music stores and services, then listen to it the way they want, seems to be a long way off.

That’s what’s emerging this week at the world’s biggest music industry trade fair, MIDEM, where major record labels have come under increasing pressure from all sides to sell music in unprotected formats.

Music fans have been voicing increasing frustration at being prevented from listening to legally bought music on different devices because of codes, known as DRM (digital rights management), which initially were designed to protect the artists.

“Each of the majors is wrestling with the advantages and disadvantages of going with MP3s without any restrictions at all,” says John Kennedy, who heads the international record industry trade association IFPI. “But I think this is an experimental year.”

A move to release “unrestricted” music by the world’s four major record labels would be great news for music lovers.

However, it would be a different story for the record industry, now struggling to survive in a new digital world where sales of digital music, although growing fast, fall far short of compensating for the sharp drop in physical CD sales. DRM notably has been used by the music and computer giant Apple to lock millions of IPod owners into buying exclusively from its ITunes online music store, currently the world’s No. 1.

Owners of MP3 format players have a different problem. They can buy music from the ITunes store and enjoy it on their mobile jukeboxes, but they cannot buy music distributed by the four big record labels, EMI, Universal, Sony BMG and Warner.

MP3, however, is the main reason behind the phenomenal success of the biggest newcomer on the online block, EMusic. It’s the world’s largest retailer of independent music and has become the world’s second-largest digital music service in a very short time.

On Monday, just four months after hitting 200,000 subscribers, it announced it had more than 250,000.

EMusic is an inexpensive subscription-based service that sells music for about 23 euro cents per track, compared with ITunes’ price of 99 cents. [There are 100 euro cents in a euro. One euro equals about $1.30.] EMusic says it also has proved there are many music fans who want more than just a store.

“EMusic has been successful in Europe and the U.S. because we offer customers a combination that other digital music services don’t — music that plays on any device, high-quality editorial and music discovery tools, and a commanding focus on interesting music beyond the mundane commercial mainstream,” says David Parkman, who heads up EMusic.

Mr. Parkman is one of a number of major recording industry executives who believe the music sector will free up in the coming years. “It has to change, and it will change over the year or two as [the major record labels] don’t have any other choices,” he said.

EMI already has put a toe in these troubled waters. It announced last week that it would offer free streaming music on www.Baidu.com, China’s version of Google and the world’s fourth-most-popular Internet search site.

Another major showing signs of wavering is Warner Music. It says its struck a deal to make its video and music clips available on the world’s second-largest video-sharing site, Dailymotion [www.dailymotion.com]. Warner, in return, will share advertisement-derived revenues.

On the consumer front, European consumer groups stepped onto center stage of the MIDEM trade fair this week to increase pressure on Apple and the music industry to lift restrictions by the end of September.

However, some big music retailers already have changed their tune, with France’s highly popular Virginmega and Fnacmusic stores recently deciding to make 200,000 titles available in MP3 format.Calls to free up the music market were voiced by speaker after speaker at the conferences, held in parallel to the buying and selling that makes MIDEM one of the biggest dates for the industry.

Nevertheless, experts said that Apple is unlikely to change its stance until there is a competitive commercial reason to do so.

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