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Amazon.com begins offering digital music download service

Restriction-free tracks take aim at Apple's iTunes

SAN FRANCISCO - Amazon.com Inc., the world's largest Internet retailer, began a digital-music download service to compete with Apple Inc.'s iTunes, selling restriction-free tracks from more than 20,000 record labels.

The MP3 service offers 2.3 million songs from more than 180,000 artists, Amazon.com said yesterday. The songs, most priced from 89 to 99 cents, don't have software that limits how customers can store and play them.

The addition of a music-download service pits Amazon.com against iTunes, the world's most popular online-music store, and may offer the recording industry a chance to unlock Apple's dominance of the market. Adding the service also may lift Amazon.com's revenue as sales of compact discs decline.

"Amazon represents the best chance that the music industry has at building a competitor to iTunes," said James McQuivey, a Forrester Research Inc. digital-media analyst. Apple accounted for 70 percent of all online music sales last year, according to market researcher NPD Group.

While CD shipments to US retailers fell 13 percent last year, downloaded singles surged 60 percent, according to the Recording Industry Association of America. Sales of DVDs, CDs, books, and other media made up 64 percent of Amazon.com's second-quarter revenue, down from 68 percent a year ago.

The music offerings were added to Amazon.com's Unbox video-download service. The Seattle-based company sells products in more than three dozen categories, including jewelry, gourmet food, toys, electronics, and power tools.

"We already have 69 million active customers," Bill Carr, Amazon .com's vice president for digital music, said yesterday. "Most of those purchases are already in media products," he said. "We are adding MP3 downloads we think customers will love."

Amazon.com said the service will be refined based on customer feedback from using the earliest version.

Recording companies are trying to reduce Apple's dominance of the digital-music marketplace. Universal Music Group, the world's largest record company, said in July it refused to renew a long-term agreement for selling its music on iTunes, preferring to supply music to Apple "at will."

Already one of the top five sellers of music on CDs, Amazon.com also will benefit from sales of digital-music devices such as Apple's iPods, McQuivey said.

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