EMI has a big release for iTunes

The giant label will end copying constraints on most songs, sources say. Exception: the Beatles.

Customers of Apple Inc.'s iTunes store will soon be able to play downloaded songs by the Rolling Stones, Norah Jones and other top-selling artists free of the copying restrictions once imposed by their label.

EMI Group, the world's fourth-largest record label, and Apple, the biggest seller of digital music and players, plan to announce a landmark deal today that would remove copying protections from songs, according to two people familiar with the negotiations. The decision is likely to pressure other major recording companies to follow suit.

The agreement covers nearly all of EMI's catalog, which also includes the likes of Coldplay, Gorillaz and Janet Jackson.

There's at least one notable exception: the Beatles. The surviving band members and their estates have yet to permit online sales of their songs.

London-based EMI became the first of the four major record labels to heed Apple Chief Executive Steve Jobs' call to sell songs free of the software designed to protect music against theft. Jobs has maintained that copying protections are ineffective in stemming piracy and only create hassles for consumers.

"EMI, which has historically been one of the more experimentation-friendly major labels, realized that that's the future," said Aram Sinnreich, a senior analyst with Radar Research.

EMI and Apple declined to comment.

Consumers have long chafed at the restrictions placed on music purchased through iTunes and other online music stores. Record labels have insisted on attaching software "locks" to prevent unauthorized copying.

But the software Apple uses to achieve this is proprietary, and songs bought through the online store won't work with competing services or devices. That practice of linking iTunes with the iPod has drawn the scrutiny of European regulators, who say it limits buyer choice.

Some technologists and consumer advocates have argued that lifting the restrictions would give a boost to online music, which now generates about 15% of U.S. music sales.

Jobs acknowledged consumers' frustration in "Thoughts on Music," a manifesto he published on Apple's website in February. He noted that the music companies insist on anti-piracy measures for the songs sold online even though the vast majority of the music they sell is on CDs, which lack any copy protection.

"If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players," Jobs wrote. "This can only be seen as a positive by the music companies."

Jobs said anti-piracy protections restricted customers' ability to do what they want with the music they bought but didn't stop determined pirates from illegally swapping songs.

As the man whose company's iPod player became the cornerstone of digital music, Jobs has tremendous clout. But Cupertino, Calif.-based Apple, too, would be taking a risk by promoting such unfettered commerce. The company has become the dominant force in online music partly by fusing its online store to its devices.

Some music industry executives said Jobs' call for them to drop anti-piracy protections was disingenuous. If he really wanted to help consumers and protect the record labels, they said, Jobs could license Apple's copy protection software to rival companies. He has dismissed the idea.

EMI has been in discussions with online stores for months about selling its songs without copying protection. Some retailers balked at the size of the advance payment that the label demanded to compensate for the risk of releasing its music without anti-piracy software.

Other labels have tested the idea. For example, Universal Music Group released songs from teen heartthrob Jesse McCartney and French singer-composer Emilie Simon in the unprotected MP3 format to gauge the effect on overall sales. Sony BMG Music Entertainment did the same with a Jessica Simpson song. Online service eMusic.com has sold more than 100 million tracks from independent labels without copying protections.

IDC analyst Susan Kevorkian said the EMI deal would help Apple reach beyond the iPod to cellphones and other devices that play MP3 music files as well as address the concerns of European regulators.

But if the other big labels didn't follow EMI's lead, she said, it could create even more uncertainty among consumers about what they can and cannot do with the digital music they buy.

"Without the other three majors following suit, and doing so sooner rather than later, it's less meaningful," Kevorkian said. "There's still the possibility of confusing consumers about what's available in MP3 and what isn't."

EMI announced a news conference today with Chief Executive Eric Nicoli and Jobs about an "exciting new digital offering." That spurred speculation that Apple had secured the rights to sell songs from EMI's most prominent holdout, the Beatles. Apple settled a trademark dispute with the Fab Four's company, Apple Corps, in February.

EMI's recent business struggles may be driving the bold move to drop the restrictions. The label has been beset by sagging CD sales in North America and high-level departures. It has been involved in on-and-off discussions about combining with Warner Music Group since 2000. It rejected Warner's most recent takeover bid.

The move could nonetheless be a boon for music lovers.

"There are probably some people who have been unwilling to buy music on iTunes because of concerns about iTunes and the rules involved," said Josh Bernoff, a vice president at Forrester Research Inc. With EMI songs, he said, "they don't have that concern."

Forrester found that only 3% of U.S. online households buy anything from iTunes, and one-third of iTunes buyers make 80% of the purchases, he said.

"If you want to get the rest of the world involved, this might be what it takes," Bernoff said.

Source: http://www.latimes.com