Wednesday, January 28, 2004

Europe a tricky market for digital music

By Angela Doland
The Associated Press

CANNES, France - Now that they've proven U.S. customers will pay for digital music online, Napster and Apple's iTunes are preparing to launch legal download sites in Europe.

If only the market weren't such a minefield.

Europe is scored by a patchwork of different licensing and retail practices. From Sweden to Spain, an album often has different prices and staggered release dates. An Italian singer with a devoted following at home, for example, often doesn't have a distribution deal in Britain.

One big problem: No pan-European agreement exists between record labels and the various agencies that collect royalties for songwriters and music publishers.

For now, companies that sell music online in Europe have to negotiate royalty rates in each individual country - a nightmare of red tape. Record labels and representatives of writers and publishers across Europe are trying to reach an agreement to make things simpler.

The International Federation of the Phonographic Industry (IFPI), which represents the global recording industry, says there's still haggling over prices and terms, though it expects resolution within months.

Internet download services, meanwhile, are keeping their fingers crossed for a deal to streamline rights clearance in Europe.

"This is the holy grail," said Chris Gorog, chairman and chief executive of Roxio Inc., which owns Napster. "We think it's essential that it comes down this way."

Gorog and Eddy Cue, Apple's vice president of applications and Internet services, both discussed the difficulties of setting up in Europe during Midem, a music-industry conference this week in Cannes.

With so many uncertainties, companies are keeping their European plans vague. Cue said iTunes hopes to cross the Atlantic sometime this year. Napster hasn't given a time frame.

Though the Internet has no borders, consumers in Europe are not permitted to buy music on iTunes or Napster. Their technology makes sure customers have U.S. credit cards.

Most Europeans don't even know that legal downloading exists. When the IFPI polled people in Germany, France, Denmark and Britain, it found that only 23 percent were aware of legitimate alternatives to piracy.

The IFPI says it is prepared to take legal action against European fans who use unsanctioned file-swapping services on sites like Kazaa, similar to lawsuits launched by the Recording Industry Association of America. It's not saying when, however, or in what countries.

"When we're ready we'll make an announcement," IFPI chairman and chief executive Jay Berman said.

Berman did say, however, that people whose illicit download libraries contain only hundreds of files are at risk. He's hoping lawsuits will force Europeans to turn to legitimate alternatives.

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Europe a tricky market for digital music