August 11, 2007 in Business

iTunes faces a new challenger

Associated Press The Spokesman-Review
 

NEW YORK — Add gBox Inc. to the growing list of online music services hoping to chip away at iTunes’ dominance.

The Cupertino, Calif., startup was forced out of a stealth mode when Universal Music Group announced late Thursday it would test sales of some digital music without the customary copy-protection technology.

Under the program, gBox will get referrals through ads Universal will buy through search leader Google Inc., gBox Chief Executive Tammy Artim said Friday.

Google will get standard advertising fees rather than a cut of sales under the arrangement. The ads, which would appear when a Google user searches for specific terms such as the name of an artist, will direct the user to gBox.

The arrangement with Universal and gBox is separate from Google’s music search service, which directs users to online music stores when they search for specific albums or artists. The company says it does not get paid for such referrals, and it does not restrict links to a single retailer.

Google, which has said it has no plans to create a music store of its own, described the new arrangement as strictly an advertising relationship.

Songs at gBox cost 99 cents each. For the Universal songs that are part of the test, gBox will offer an MP3 version free of copy-protection technology known as digital-rights management, or DRM. A DRM-enabled version will be available at the same price.

DRM technology is designed to block or set limits on copying and CD burning.

Although DRM can help stem illegal copying, it can also frustrate consumers by limiting the type of device or number of computers on which they can listen.

Copy-protected songs sold through Apple’s market-leading iTunes store generally won’t play on devices other than its popular iPod digital player, and iPods won’t play DRM-enabled songs bought at rival music stores, including gBox.

Although many independent music labels have for years sold their tunes without copy restrictions, the major recording companies have resisted.

Earlier this year, Britain’s EMI Group PLC became the first of the major labels to embrace DRM-free tunes, letting Apple sell versions of songs with higher audio quality and without any built-in copying hurdles.


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