Digital developments could be tipping point for MP3

Sat Dec 1, 2007 6:55pm EST
 
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By Ed Christman

NEW YORK (Billboard) - A yearlong download promotion planned between Pepsi and Amazon, Billboard has learned, is among several developments forcing further consideration by Warner Music Group (WMG) and Sony BMG Music Entertainment to follow EMI and Universal Music Group's lead in distributing music in the MP3 format, which forgoes restrictive digital rights management technology.

News of the Pepsi promotion, which is expected to be announced February 3 during the Super Bowl, coincides with Wal-Mart's ultimatum that major labels supply walmart.com with their music in MP3, sources said.

Labels said they have been watching the success of an MP3 test that Universal Music Group (UMG) began in August. The major label continues to allow the sale of 85 percent of its current catalog as MP3s. Sources said UMG is on the verge of permanently embracing that digital format. But a source close to the testing insisted that the decision is still up in the air while the company awaits conclusive results from the trial, which are due in mid-January.

Meanwhile, Disney's Hollywood Records has joined the list of major-distributed labels testing MP3 at Amazon and walmart.com. The company has supplied 30 to 40 titles from its mammoth catalog in the MP3 format. A check of those sites shows the latest albums from Atreyu and Grace Potter & the Nocturnals on the Hollywood label available in the MP3 format, though they are not available at iTunes.

EMI began selling its music in MP3 format in June. WMG and Sony BMG Music Entertainment both declined to comment, but have continued to publicly maintain their separate stances in favor of using digital rights management for downloads.

Sources said Sony BMG is considering an MP3 test. The company initially was steadfast against MP3 and wouldn't allow its independent distributor, RED Distribution, to engage in negotiations on behalf of its labels with Amazon when the merchant was trying to set up its MP3 download store. But Sony BMG management relented and let RED become involved in those negotiations. The parent company, however, refused to supply Amazon with its catalog in the MP3 format.

PEPSI FREE

Pepsi's track record with download giveaways may be motivating labels. According to sources, Pepsi will feature a download promotion on the inside of 5 billion of its soda bottlecaps. Sources said Pepsi customers will need to collect five caps in order to exchange them for a download; this yields the potential for 1 billion redeemable tracks. A Pepsi spokesperson declined to comment.   Continued...

 
<p>A model walks the runway at the Ubiquitous Fashionable Computer Fashion Show in Koyang, north of Seoul, November 17, 2006. Devices the model is wearing are a MP3 player and a mock-up earphone set. A yearlong download promotion planned between Pepsi and Amazon, Billboard has learned, is among several developments forcing further consideration by Warner Music Group (WMG) and Sony BMG Music Entertainment to follow EMI and Universal Music Group's lead in distributing music in the MP3 format, which forgoes restrictive digital rights management technology. REUTERS/Lee Jae-Won</p>