June 18, 2002 2:45 PM PDT

AOL fills online bargain bin with new music

AOL Time Warner has begun selling songs encoded in the unprotected MP3 format as a way to promote unreleased tracks from some of its most popular artists.

America Online, Warner Music Group's corporate cousin, last week began offering 99 cent downloads of music from artists such as the Red Hot Chili Peppers, Alanis Morissette, Missy Elliott, Jewel and Brandy. In all, AOL plans to offer 15 songs at that price.

The promotion marks the first time Warner Music has teamed with AOL Music to offer songs in the unprotected MP3 format. The major record labels have routinely dismissed MP3 because of its ability to be used, copied and distributed onto many different mediums without any copy protection. Nevertheless, consumers have turned the format into a default standard for music files because of its universal ability to be downloaded onto digital devices or burned onto CDs.

"We've been experimenting with the 99 cent download for a while, and over time we continue to refine our offerings in an effort to see how consumers will react to different models and promotions," Warner Music spokesman Will Tanous said.

The sale highlights another example of the much-vaunted cross-promotions that were hyped as the beneficial by-product of the 2001 merger of AOL and Time Warner. Such agreements, however, have forced AOL Time Warner to find common ground between the protective music industry and the more vanguard actions of technology and new media.

Other companies are looking for a balance between enforcing their copyrights and giving tech-savvy consumers what they want. Vivendi Universal, for example, last month put a 99 cent price tag on an unprotected MP3 version of a new single. Since then, the media conglomerate's Universal Music Group has said it plans to slash prices on numerous downloads of singles and albums, albeit with digital rights management technology provided by Liquid Audio. Sony Music Entertainment is also cutting prices and adding features to its downloads.

Regardless of such efforts, the market for charging people any amount for music files remains uncertain, given the popularity of file-swapping services such as Morpheus, Kazaa and Grokster that offer a wider selection of songs that can be downloaded for free. The recording industry's legal battles have lead to the closure of file-swapping pioneer Napster; the labels now are suing other services including Morpheus and Grokster.

Warner Music's Tanous said the promotion is one test of whether the label can use AOL and MP3 technology to generate hype for a new album. Since the files being sold online are unreleased tracks, the MP3s will not cut into CD sales, he said. Rather, they will give listeners the flavor of new albums.

"Since these tracks are being made available in conjunction with the release of the artists' latest albums, we're hopeful that the downloads will help generate even more interest in the current releases," Tanous said.

 

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