Last updated: May 17, 2007 12:46 am

Amazon to start selling digital music

Amazon moved to shake up the online music business on Wednesday by setting up a direct rival to Apple’s iTunes that will sell tracks without copyright ­protection.

Amazon said its decision to abandon so-called digital rights management software and instead sell tracks in the MP3 format would allow consumers easily to transfer music among a variety of devices – from iPods to personal computers and compact discs. The pioneering online retailer believes that will help to spur the next growth phase of the burgeoning digital music market.

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“Our MP3-only strategy means all the music that customers buy on Amazon is always DRM-free and plays on any device,” said Jeff Bezos, chief executive of Amazon.

The Amazon service will launch later this year with support from EMI, the third-largest record company, and more than 1,000 smaller labels. Six weeks ago, EMI became the first major label to abandon copyright protection when it announced an agreement with Apple to sell its catalogue through iTunes without DRM. The decision was hailed by Steve Jobs, Apple’s chief executive.

David Card, an analyst at Jupiter Research, said Amazon’s clout would increase the pressure on EMI’s competitors to follow suit. “Getting another big, big player to endorse DRM-free is a big deal.”

The other major record companies – Universal Music, Sony-BMG and Warner Music – are testing the MP3 format. Yet they are still concerned that dropping copyright protection could increase piracy or cut into their growing sales of music to users of mobile phones. Some indicated on Wednesday that they had no immediate plans to join Amazon.

The web-based retailer’s decision to enter the digital music market comes at a time when the record companies are desperate for a rival to iTunes. In spite of challenges from Microsoft, Yahoo and others, the Apple service still commands roughly 80 per cent of the online music market, which has allowed it to dictate terms to the music companies on pricing and other issues.

Bill Carr, vice-president of digital media at Amazon, would not disclose pricing information for the new music service but did say it would be “competitive”.

Barney Wragg, EMI’s top digital executive, predicted Amazon’s participation would “take the whole digital music business on to the next level”.

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