UPDATE - EMI unveils major online music push
Wednesday April 23, 1:26 pm ET
By Merissa Marr and Bernhard Warner
LONDON, April 23 (Reuters) - EMI Group Plc made its boldest online push yet on Wednesday, signing deals to put the bulk of its music catalogue on the Web in Europe in a drive to exploit a medium that has threatened to bring the industry to its knees.
Hobbled by the spread of free music on the Internet, EMI said it was supplying 140,000 songs for download through 20 European digital music distributors including Microsoft Corp's (NasdaqNM:MSFT - News) MSN, music channel MTV (NYSE:VIA - News) and retailer HMV(London:HMV.L - News).
Norah Jones, Pink Floyd and David Bowie are among 3,000 artists on EMI labels who have agreed to supply their music to the Web sites as the bruised music industry attempts to revive its fortunes after three years of declining music sales.
"This will undoubtedly grow the market ... it means potentially consuming more music in more places more often," said Tony Wadsworth, CEO of EMI Recorded Music UK.
EMI shares closed 3.8 percent up at 115 pence in London.
The music industry has been scrambling for a remedy as a host of renegade online services draw away fans with free music, forcing global sales sharply lower. Music companies are now beginning to turn to the technology sector with greater zeal.
Earlier this month, reports surfaced that computer maker Apple (NasdaqNM:AAPL - News) and Microsoft have taken a look at buying the world's biggest music company Universal Music (Paris:EAUG.PA - News) -- talks that many observers regard as remote, but which symbolise the age of greater interaction between the two industries.
GOING LEGIT
To combat online piracy, music companies have started backing legitimate subscription sites, while filing lawsuits against free sites.
In the latest legal battle, EMI and Universal Music filed suit on Monday against venture capitalists who backed Napster.
But so far the industry has had little success in persuading users to abandon free sites that carry a larger music selection.
Under the EMI deal, consumers will be able to make permanent copies of songs and transfer them to recordable CDs, portable music players and their computer hard drives. Consumers can also purchase singles online once they hit radio airwaves.
With this deal, European consumers will be able to listen to and download more than 200,000 tracks from the major music companies, giving them access to many top-selling artists.
Having doubled its online catalogue, EMI said it also plans to double the number of European sites selling its music.
PRICE STILL AN OBSCTACLE
In addition to a limited selection, a big criticism of the online efforts of major music companies so far has been price.
In many cases, it has proved more costly to download a full album off the Internet than buy it in a store, providing little incentive to fans currently downloading for free.
"Making more music available online is significant, but making it available at the right price would be more significant," said one Internet music official.
EMI declined to comment on the wholesale price it had set with retailers. However, the music company acknowledged that online prices needed to be lower than traditional retail.
"We could very well see keener pricing among the online retailers but we are not in control of that. We have priced with the intention of achieving something that compares favourably with traditional retail," said Fergal Gara, vice president of EMI Recorded Music Continental Europe.
Analysts say the price per track download needs to fall to below the current pan-European market price of one pound ($1.57) before significant consumer demand kicks in.
Many analysts forecast more pain before the music industry tames the online beast. Market analysis firm Jupiter predicts the market for music downloads in Europe will reach just 550 million euros ($602.3 million) by 2007.
EMI said more than 90 percent of its live catalogue, with the notable exception of the Rolling Stones and Beatles, had signed up to its European online deals.
"Some artists will want to wait and see how the market develops," said Wadsworth.
Up until now, EMI placed stringent restrictions on which songs European consumers could download. A similar deal was drafted in November for the North American market.
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