Napster to sell music as unprotected MP3 files

By Alex Veiga

updated 12:59 p.m. ET Jan. 7, 2008

LOS ANGELES - Napster Inc. said Sunday it will begin selling music downloads as unprotected MP3 files in the spring, joining other online retailers.

The file format change will apply only to single tracks and album purchases, according to a company press release. Tracks downloaded as part of the company's music subscription service will continue to have copyright restrictions.

Unlike music files that come with copy protections embedded, MP3 files are compatible with most portable music devices, including Apple Inc.'s market-leading iPod media players, Microsoft Corp.'s Zune and mobile phones that play music.

"The ubiquity and cross-platform compatibility of MP3s should create a more level playing field for music services and hardware providers and result in greater ease of use and broader adoption of digital music," Chris Gorog, Napster's chairman and chief executive, said in a statement.

The company did not say which record companies had agreed to license music for sale as MP3s via Napster.

Three of the world's biggest recording companies — Vivendi's Universal Music Group, Warner Music Group Corp. and Britain's EMI Group PLC — cleared the way last year for some online retailers, including Amazon.com, to sell their artists' music as unprotected MP3 files.

Many analysts expect the fourth major recording company, Sony BMG Music Entertainment, to follow suit this year.

Napster, which offers a la carte downloads and a monthly unlimited music subscription plan with the option to transfer copy-protected tracks to certain devices, said it would continue to focus primarily on its subscription business.

The company recently told subscribers that it will increase fees on its basic subscription plan from $9.95 to $12.95 a month beginning Jan. 30. It gave existing subscribers the option to lock in the lower monthly fee if they pay for a full year in advance.

Napster did not change the $14.95 monthly fee for its top subscription tier.

The company disclosed in November it had narrowed its loss in the second quarter, which ended Sept. 30, to $5.1 million, from $9 million in the same period a year earlier.

Napster ended the quarter with about 750,000 paid subscribers.

Napster shares closed at $1.94 on Friday.

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