Record companies cozy up to free music on Web

Fri Oct 31, 2008 6:51pm EDT
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By Alex Dobuzinskis

LOS ANGELES (Reuters) - It could be seen as the music industry equivalent of fighting fire with fire.

For years, record labels battled Web pirates for copying songs then giving them away on the Internet, but increasingly industry executives and musicians such as the venerable Bob Dylan have been offering their own songs free on the Web. The result has been, perhaps surprisingly, higher sales.

This month, Columbia Records made Dylan's "Tell Tale Signs" available for free streaming and boosted sales. It saw similar results with a Kings of Leon album in September.

Also this month, the publisher for Radiohead music unveiled sales of an album the band posted on the Web, in some cases for free, showing the CD outsold Radiohead's previous work.

"It's something that never would have happened in the major label universe even five years ago," said Aram Sinnreich, founder of music industry tracking firm Radar Research.

As use of the Internet grew in the late 1990s, the music industry battled peer-to-peer sites like Napster that allowed anyone to share songs for free on the Web. Even though the industry successfully beat Napster's song-swap service in court, music piracy continued to cripple the business.

In the United States, CD sales plunged to 449.2 million last year from 706.3 million in 2000, according to tracking firm Nielsen SoundScan.

Musicians have tried to make up for the loss in CD sales by touring more, raising ticket prices for live shows and quickly licensing songs for films, TV shows and advertising. Record companies have sold a wider range of products including old-style vinyl records and luxury versions of albums and CDs.   Continued...