EMI Considers Selling Music in MP3

EMI, the world's third largest music label, is actively considering removing the digital rights management restrictions from its song catalog and selling tracks online in MP3 format, according to a report published in The Wall Street Journal Friday.

The news comes on the heels of an open letter published by Apple CEO Steve Jobs, in which he advocated abolishing DRM as the best way to encourage digital music sales and benefit consumers. Jobs said that DRM systems only create walls that prevent interoperability and licensing technology has proven unworkable due to concerns the copyright protection will be more easily broken.

EMI apparently began floating the idea of selling its music library in unrestricted MP3 format in December, contacting online music retailers including Apple, RealNetworks, eMusic, MTV Networks and MusicNet, which powers Yahoo! Music Unlimited and other stores.

However, in exchange for allowing MP3 sales, EMI wanted a multimillion dollar payment up front as insurance in case the plan backfired and consumers simply began sharing the legitimate MP3 files with others who had not purchased the music. Apple's Jobs doubted a move to DRM-free music sales would hurt the industry, saying CD sales still make up the vast majority of the market and they can be freely uploaded and shared.

Music retailers balked at the payment request, leading EMI to circulate a survey in late January asking how much they would be willing to pay for the right to sell the label's songs in MP3. Those proposals were submitted yesterday, the WSJ reported, and a decision from EMI whether it would continue to pursue the option could come as soon as today.

Another source reported that EMI is in talks with Snocap about licensing its music in MP3 for sale on the popular MySpace social networking site owned by Fox. Snocap was founded by Napster creator Shawn Fanning as a way to facilitate music sales between labels and Web sites or services.

EMI has refused to comment on the speculation, but did note that it has experimented with the MP3 format. Singles from the likes of Norah Jones and Lilly Allen have been made available by EMI in MP3, and the label says the results have been positive.

Apple, which controls 70 percent of the digital music market, believes DRM-free sales are the way to go. "This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat," Jobs wrote this week. "If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store."

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