Sony, Universal music units to offer cheaper downloads
(adds further Warner music comment, EMI declines comment)
By Sue Zeidler
LOS ANGELES, June 12 (Reuters) - Record company giants Sony Music and Universal Music on Wednesday said they planned to soon offer cheaper and easier ways to download music from the Web in the industry's latest effort to stem online piracy.
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"Times have changed, so the offerings have changed," said Larry Kenswil, president of eLabs for Universal Music, the No. 1 music company and a unit of Vivendi Universal (Paris:EAUG.PA - News; NYSE:V - News).
Entrenched in the worst market downturn in years, the world's five big music companies last year launched their own online subscription services, MusicNet and Pressplay, after previously dabbling unsuccessfully in digital download programs that priced songs around $2 and up.
Both approaches have done little to stifle consumers' enthusiasm for free music-sharing on services like Napster, Kazaa and Morpheus.
But the music giants are hoping to compete more effectively now by offering cheaper download prices, with additional features like the ability to burn songs onto CDs.
Beginning this summer, Universal plans to distribute tens of thousands of digital singles for 99 cents or less and albums for $9.99 through Liquid Audio Inc. (NasdaqNM:LQID - News) to online retailers like Amazon.com Inc. (NasdaqNM:AMZN - News), Best Buy Co Inc. (NYSE:BBY - News) and Sam Goody, which is part of Best Buy's Musicland Group.
Kenswil said Universal will also let buyers burn the music files onto CDs, enabling consumers to copy them again and again, marking a growing shift from the industry's resistance toward such licensing.
A spokeswoman for Sony Music, a unit of Sony Corp. (Tokyo:6758.T - News; NYSE:SNE - News), said Sony also plans to soon allow CD burning and is increasing the number of downloadable songs dramatically this summer at a lower price of $1.49. Sony will offer its music through online distributor RioPort Inc.
AGGRESSIVE PRICING
"The main thing that's changed is the peer-to-peer problem," Kenswil said, referring to the rise of online music copying and swapping through the unauthorized Napster-like services, which have cost the industry millions in lost sales.
"This has forced us to reevaluate what it takes to get people to buy music on the Internet. Basically, it takes aggressive pricing and to offer as much of our catalog that can be cleared," he said.
Universal and Sony through their joint Pressplay service, had previously allowed consumers for a monthly fee to burn a limited number of songs per month.
"I think we need lots of ways of selling products and we want all these ways to appeal to an audience. They're not mutually exclusive," Kenswil said.
Analysts said the labels have no choice but to keep on trying everything now that the genie is out of the bottle.
While Napster has been hobbled by litigation and Morpheus and Kazaa are being challenged in the courts, the new generation of music consumers continue to uncover new ways of getting their music online for free.
"This continues the experimentation phase of music industry business models," said P.J. McNealy, analyst with GartnerG2.
"All the labels dabbled in digital download programs in the past 18 months, but they had problems with pricing and lack of portability with the songs once you bought them," he said.
"These latest initiatives could be a breakthrough, but it remains to be seen how much of the catalog will be cleared and what the pricing will be," he said.
Other labels are watching the efforts closely.
"Currently, we have not granted any license to burn, but this is something that we are addressing," said Nathaniel Brown, a spokesman for BMG, part of Bertelsmann AG (Dusseldorf:BTGGga.D - News; Frankfurt:BTGGga.F - News).
A spokesman for AOL Time Warner Inc.'s (NYSE:AOL - News) Warner Music said the company has offered 99-cent downloads that are burnable on an experimental basis.
The spokesman said Warner Music has partnered with several online distributors for these offerings and expects to partner with more going forward.
A spokeswoman for EMI Group Plc (London:EMI.L - News) declined comment.
AI
