Warner Music Chief Says Apple's Online Music Plea Lac

[David Farber <dave () farber net>]

Begin forwarded message:

From: "CONNIE GUGLIELMO, BLOOMBERG/ NEWSROOM:"  
<cguglielmo1 () bloomberg net>
Date: February 8, 2007 1:40:54 PM EST
To: dave () farber net
Subject: (BN ) Warner Music Chief Says Apple's Online Music Plea Lac


Warner Music Chief Says Apple's Online Music Plea Lacks Logic
2007-02-08 13:40 (New York)


By Connie Guglielmo and Don Jeffrey
     Feb. 8 (Bloomberg) -- Warner Music Group Corp., the world's
fourth-largest record company, said a plea by Apple Inc. Chief
Executive Officer Steve Jobs to let songs be sold on the Web
without copy protection software lacks ``logic or merit.''
     Warner Music CEO Edgar Bronfman said Jobs's proposal that
companies drop digital rights management coding on songs sold
online would leave music vulnerable to piracy. He disputed Jobs's
claim that so-called DRM software prevents consumers from playing
music purchased from rival services on different devices.
     ``We advocate the continued use of DRM in the protection of
our and our artists' intellectual property,'' Bronfman said on a
conference call with analysts today. ``The issue is obscured by
asserting that DRM and interoperability is the same thing. They
are not. To suggest that they cannot co-exist is simply
incorrect.''
     Warner Music, Universal Music Group, Sony BMG Music
Entertainment and EMI Group Plc required Apple to add rights
management software as a condition of selling their music on
iTunes, the most popular legal site for music downloads, Jobs
said in a letter posted on Apple's Web site two days ago.
     Without the program, iTunes users could play songs purchased
online on a range of digital devices, rather than just on Apple's
best-selling iPod player, Jobs said.
     Shares of Warner Music fell $1.20 to $20.31 at 1:37 p.m. in
New York Stock Exchange composite trading. Apple's shares rose 9
cents to $86.24 in Nasdaq Stock Market composite trading.

                            No Doubt

     Bronfman's comments come a day after the Recording Industry
Association of America said Jobs should instead open Apple's
FairPlay rights management software to rival online sites.
     ``We all want to see this marketplace work and for fans to
enjoy the music they have lawfully bought on various devices or
services,'' Mitch Bainwol, chairman and CEO of the Washington-
based trade group, which represents the U.S. recording industry,
said in an e-mailed statement last night. ``We have no doubt that
a technology company as sophisticated and smart as Apple could
work with the music community to make that happen.''
     While Cupertino, California-based Apple could license
FairPlay to its competitors for a small fee, Jobs wrote that
distribution of the software might lead to leaks about how it
works, thereby rendering the copy-protection technique useless.
     Warner Music, Universal Music, Sony BMG and EMI together
control rights to more than 70 percent of the world's music,
according to Jobs.
     The four should drop the rights management requirement on
online music, which accounts for about 10 percent of global music
sales, since they don't require similar copy protection on music
sold on compact discs, he said.
     ``The notion that music does not deserve the same
protections as software, television, films, video games, or other
intellectual property, simply because there is an unprotected
legacy product available in the physical world is completely
without logic or merit,'' Bronfman said.
     EMI said it recognizes that interoperability among music
players and services is becoming an issue for music buyers and
the company is working with partners to find a solution.

--Editor: Antonelli

Story illustration: To graph Apple's stock performance, click on
{AAPL US <Equity> GP <GO>}. For a breakout of sales by product,
see {AAPL US <Equity> DES 6 <GO>}. For Warner Music Group shares
performance, see, {WMG US <Equity> GP <GO>}.

To contact the reporters on this story:
Connie Guglielmo in San Francisco at +1-415-743-3582 or
cguglielmo1 () bloomberg net;
Don Jeffrey in New York at +1-212-617-4876 or
Djeffrey1 () bloomberg net

To contact the editor responsible for this story:
Cesca Antonelli at +1-202-624-1949
Or fantonelli () bloomberg net

[TAGINFO]
AAPL US <EQUITY> CN
WMG US <EQUITY> CN

NI COS
NI TEC
NI CPR
NI MUSIC
NI CONS
NI CA
NI RET
NI SOF
NI ELE

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#<611545.555743.1.0.32.28506.25>#
-0- Feb/08/2007 18:40 GMT


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