Apple Is Said to Negotiate to Allow Unlimited Downloads of Music Purchases

By Adam Satariano & Andy Fixmer
Bloomberg | Article Link

Apple Inc. (AAPL) is in talks with record companies to give iTunes music buyers easier access to their songs on multiple devices, three people with knowledge of the plans said.

Apple is negotiating with music companies, including Vivendi SA (VIV)’s Universal Music Group, Sony Music Entertainment, Warner Music Group Corp. (WMG) and EMI Group Ltd., said the people, who asked for anonymity because the talks are private. An agreement may be announced by midyear, two of the people said.

The arrangement would give users more flexibility in how they access purchased music. Apple and the record labels are eager to maintain demand for digital downloading amid rising popularity for Internet services such as Pandora Media Inc., which don’t sell tracks and instead let users stream songs from the Web, whatever the device.

A deal would provide iTunes customers with a permanent backup of music purchases if the originals are damaged or lost, said the people. The service also would allow downloads to iPad, iPod and iPhone devices linked to the same iTunes account, they said. The move would be a step closer to universal access to content centrally stored on the Internet.

Apple gained 44 cents to $360 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have climbed 12 percent this year.

DOWNLOAD DECLINE

Tom Neumayr, a spokesman for Cupertino, California-based Apple, declined to comment, as did Amanda Collins, a spokeswoman at Warner Music in New York, and Liz Young at Sony Music. Peter Lofrumento, a spokesman for Universal Music, and Dylan Jones, a spokesman for EMI, didn’t have an immediate comment.

Apple, which first began selling tracks through iTunes in 2003, became the top U.S. music retailer in 2008, surpassing Wal-Mart Stores Inc. (WMT) ITunes accounted for 69 percent of all digital downloads in the U.S. as of September, according to research firm NPD Group Inc.

An agreement about so-called re-download rights may be reached by midyear, though it could be later, one of the people said. Apple typically announces new features for iTunes and its lineup of iPod media players in September. Last year, it introduced the Ping social network for iTunes users.

ITunes is facing competition from new Web-based services such as Spotify Ltd., Rdio Inc. and MOG Inc. They focus on letting customers listen to songs from anywhere with an online connection, instead of downloading tracks to a hard drive.

SALES SLUMP

Music companies are grappling with stalled growth in digital-download sales, raising concern that online purchases won’t be enough to make up for declining sales of compact discs. Digital-track sales rose 1 percent in 2010, while total album sales fell 12.7 percent, according Nielsen SoundScan.

The new download policy is among several service changes Apple is exploring. The company also has weighed plans to overhaul its MobileMe service for storing pictures, videos and other content online this year, one of the people said.

Under one plan for MobileMe, the $99-a-year service would become free. Users could store photos, contacts, e-mail and other content on Apple’s servers, one person said. The content would be accessible through any wireless connection. The potential changes to MobileMe were previously reported by the Wall Street Journal.

Apple will be able to accommodate new services with its new $1 billion data center in North Carolina. Chief Financial Officer Peter Oppenheimer said at the company’s annual shareholder meeting last month that the facility will be a hub for the iTunes and MobileMe services.