Music Industry, Sick of Jobs, Embraces Amazon

At the Super Bowl next month, the music industry will be switching teams — from Apple to Amazon.com.

The major record labels lined up with Pepsi-Cola and Apple four years ago to give away 100 million songs through Apple’s online store, unveiling the promotion in a Super Bowl commercial with music from the band Green Day. The effort helped spread the word about Apple’s iTunes offerings.

Pepsi’s promotion is back this year on a much bigger scale — but with the star wattage provided by Justin Timberlake instead of Green Day, and Amazon in place of Apple.

The switch is an indicator of the continuing tension between the music industry and Apple. Pepsi’s earlier ad, set to Green Day’s version of the song “I Fought the Law,” prodded music fans to quit pirating music online and instead buy songs — legally — from Apple’s then-fledgling iTunes. Four years later, iTunes is by far the biggest digital music store, and the industry is taking a liking to Amazon’s rival music service, introduced in September.

Though iTunes blazed a trail in encouraging fans to pay for music online, record executives now complain that Steven P. Jobs, Apple’s chief executive, wields too much clout in setting prices and other terms. At issue now is whether the labels can help popularize a more industry-friendly service and accelerate the pace of digital sales.

Behind this strategy is a growing desperation: sales of digital albums and songs are rising far too slowly to offset the rapid decline of the CD, the industry’s mainstay product. CD sales slid 19 percent last year; after adding in the 50 million digital albums sold last year and counting every 10 digital songs sold as an album, overall music sales were still down 9.5 percent, according to Nielsen SoundScan.

In trying to nurture Amazon’s service, the four major record companies have offered it one potential edge. One by one, they have agreed to offer their music catalogs for sale on the service in the MP3 format, without the digital locks that restrict users from making copies of the songs. (Sony BMG Music Entertainment, the second-biggest company and the last holdout, signed on last week. Sony BMG is a joint venture of Sony and Bertelsmann).

All of the companies except the EMI Group still require Apple to sell their music wrapped in digital rights management software, or D.R.M., which is intended to discourage rampant copying. Some consumers say D.R.M. creates confusing problems, like a lack of compatibility between most songs and the devices sold by Apple and Microsoft. In fact, it was Mr. Jobs who, in February, called on the industry to drop its longstanding insistence on the use of the software, saying it had failed to rein in piracy.

In any case, the industry is waiting to see whether — and how quickly — Amazon can grow into a credible alternative to iTunes, and whether Mr. Jobs will stand by as his service, which commands as much as 80 percent of digital download sales, is challenged.

“This is really a stare-down,” said one major label executive who was briefed on the new Pepsi promotion and who requested anonymity because he had not been authorized to speak about it.

http://www.nytimes.com/2008/01/14/technology/14clash.html?_r=1&ref=technology&oref=slogin