Reuters
UPDATE - Puretunes launch tests music downloading legality
Tuesday May 20, 10:23 am ET
By Bernhard Warner, European Internet Correspondent
(Rewrites lead, adds detail, EMI and IFPI comments)
LONDON, May 20 (Reuters) - A controversial new music download service was launched on Tuesday in Madrid, pitting an upstart Internet firm against the record industry in a bid to sell digital recordings to consumers behind the labels' backs.
The new service, called Puretunes.com, lacks authorisation from music labels, but Puretunes said it is a legal service operating under licensing agreements from various Spanish trade associations representing performers and recording artists.
The site attempts to exploit a loophole in Spanish copyright law and carries thousands of songs from Madonna to the Beatles. Unlike other download services such as Kazaa, Puretunes manages a music library and says it will pay royalties to performers.
Not surprisingly, the music industry shot back that without music companies' approval, Puretunes -- which operates as a subscription download service -- cannot sell songs online.
"The record labels have the exclusive right to protect their recordings. There is no loophole here," said Allen Dixon, general counsel at the International Federation of Phonographic Industry (IFPI), the global trade organisation which represents the music industry.
"It's like saying I have permission from Ringo, George and Paul, therefore, I can start printing records. No they can't," he added.
Major recording labels Sony Music (Tokyo:6758.T - News), Warner Music (NYSE:AOL - News), Universal Music (NYSE:V - News; Paris:EAUG.PA - News), BMG , and EMI (London:EMI.L - News) have fiercely tried to crack down on unauthorised businesses that distribute songs online.
SCRAMBLING FOR A FIX
The music industry has been scrambling to derail online file-sharing services such as Grokster and Kazaa that enable consumers to trade tracks for free.
Such services have contributed to the industry's steep sales decline, highlighted on Tuesday by EMI which said sales of recorded music fell 12.6 percent in the last financial year.
In response, music companies have backed a host of Internet download services, the most successful of which appears to be Apple Computer's (NasdaqNM:AAPL - News) iTunes service.
EMI Recorded Music CEO Alain Levy acknowledged earlier on Tuesday that the official services don't quite cut it yet. "We have to make it more sexy to download music," said. "It will take some time."
According to Javier Siguenza, a Madrid-based lawyer representing Puretunes, the new company abides by Spanish copyright laws, but it is open to consumers everywhere. The IFPI's Dixon said they were reviewing the site but had not decided if they would take action against it.
Eight hours of downloads cost $3.99 while unlimited downloads for a month cost $24.99, a steep discount from industry-sanctioned services such as Pressplay and those operated by Britain's OD2.
Puretunes is not the first online music service set up to take advantage of Spain's copyright regime. Weblisten.com launched in 1999 selling music downloads without the labels' approval. It has been sued by various music companies but remains in operation.
Adding to the intrigue, Puretunes has signed Grokster, the free file-swapping network that won a recent U.S. legal decision against the music labels, as a marketing partner. Grokster will get a cut of sales leads it brings to Puretunes.
