Amazon offers songs for download

SEATTLE: Seattle-based Amazon, which began a modest download section almost

two years ago, will also let independent artists offer music for download and

set up virtual tip jars so that appreciative fans can donate money, with Amazon

taking a 30 per cent cut.

While the offering will not have the depth of file-swapping services like

Napster, it is one of the broadest efforts yet by a major retailer to tap into

the booming digital music phenomenon with the blessing of the recording

industry.

"Basically, the goal here is to dramatically expand what we've done in

the past and do it in a way that's much more integrated with our existing

store," Greg Hart, group manager of Amazon's music store, told Reuters in

an interview.

The downloads will be offered in a special section, but Amazon is also

weaving them into its CD store, so a user looking at, for example, CDs by The

Eagles would also see they have songs for download, Hart said. "There are

lots of bridges back and forth between the CD buying area and the download

area," Hart said.

Driving CD sales



The effort also comes as Amazon grapples with slowing growth in its core
books, music and video business, which grew by just 11 per cent last quarter,

performance dubbed anemic by at least one analyst.

Chief executive Jeff Bezos has also announced a raft of changes in the

company as he tries to make good on his pledge to turn a pro forma operating

profit by the end of the year. In recent weeks Bezos has called for a halt to

the sales of unprofitable items and moved to capture new revenue like charging

publishers to promote books in e-mail promotions.

Amazon won't make any money on downloads, and Hart said it was too early to

tell how much the virtual tipping system would contribute to revenues. More

importantly, Amazon's experience with downloads so far shows that such offerings

can give a major boost to CD sales by letting consumers sample the music before

they buy, Hart said.

"Definitely it will help us do better job selling CDs. The free

downloads have had a big impact in driving CD sales," Hart said. "We

definitely believe that each (part of the service) will provide value to our

business in different fashions."

"See what works"



Songs will be available in the popular MP3 format or a format from Liquid
Audio Inc. that lets record labels - eager to protect copyrights - set limits on

usage, such as by making the song expire after a certain time, Hart said.

"In all the cases the labels recognize that free downloads do drive CD

sales," Hart said. "We've had great relationships with them and now

they see it as a legitimate way to market CDs and drive sales."

Amazon would add more artists, but Hart said it was unclear if the service

could evolve into selling music downloads. He said the industry was looking at

things like subscription services and pay-per-album or single offerings.

"I'm not sure how the industry will develop. There are lots of business

models out there and I'm not sure which ones will be the long-term winners, but

downloads will increasingly be an important piece of the music puzzle for

fans," Hart said.

"I don't see this as the first step towards any particular model, but

more trying a bunch of things at the same time to see what works," Hart

said.

By courting downloads from independent artists, Amazon is taking a page from

the book of one of the first online music services, MP3.com Inc. , which started

out as a showcase for unknown artists to reach millions of Web surfers.

"We add lots of editorial around the songs we get so it's not like

searching for a needle in a haystack," Hart said.

Musicians can sign up to post their music, sell CDs, and collect voluntary

payments through an extension of Amazon's Honor System service it launched this

month. Amazon will take a 30 percent cut of all funds collected, Hart said.

(C) Reuters Limited 2001.