Universal bypasses Apple to sell unrestricted songs online

"That's far too much power for anyone to have, especially someone who has not seen things eye to eye with the music labels in the past," said James McQuivey, an analyst at Forrester Research. "So Universal, and I would expect others, have said, 'We need to get hands on this market. We need to stimulate growth in more than one place.' "

Apple declined to comment.

Analysts and industry executives said that whatever Universal's motivation, consumers would benefit, especially if the other major labels follow suit.

"One of the biggest frustrations for the consumers is that there are too many formats out there, and what they play on an iPod might not be able to be played on other MP3 devices," said Mehrdad Akbar, director of Best Buy's music sales.

Aram Sinnreich, a senior analyst at Radar Research, said digital software locks annoyed law-abiding consumers while doing nothing to stem piracy. CDs have no restrictions, so their songs can be turned into MP3s and spread online.

Universal's move follows a decision in April by EMI Group, the world's fourth-biggest record label, to sell MP3s on iTunes and elsewhere. EMI executives have said they saw an increase in sales as a result, especially in Europe, where the company had a stronger position to begin with. The company declined to comment on Universal's move.

EMI's unprotected tracks have a higher sound quality and are sold for $1.29, instead of the standard 99 cents. Universal expects most retailers to charge 99 cents for its unencumbered tracks at various quality levels.

Universal recently refused to commit to long-term distribution through Apple, a move that gave Universal the right to offer exclusive tracks to smaller retailers.

Analyst McQuivey said Universal's strategy probably wouldn't cause consumers to flock to Apple's rivals. But the announcement comes at the right time for online bookseller Amazon, which he said was preparing to make a serious bid for the online music market.

It also put pressure on the two other major labels, Sony BMG Music Entertainment and Warner Music Group, to follow suit.

"It's less a question of whether they do it and more a question of when and to what degree," said Susan Kevorkian, an analyst at research firm IDC.

Rob Glaser, chairman and CEO of RealNetworks Inc., hailed the Universal test as a milestone in the development of the digital music market.

"When you get the biggest music company in the world putting this much content out, and it's the second company to do it, I think it's a tipping point," Glaser said.

McQuivey predicted that if unrestricted music catches on, Universal will be forced to offer the same unencumbered tracks through Apple's iTunes.

"You'd be foolish not to take advantage of the billions of tracks being sold there," McQuivey said. "It's like being a hamburger supplier and refusing to sell to McDonald's 20 years ago."

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joseph.menn@latimes.com

dawn.chmielewski@latimes.com

Times staff writer Michelle Quinn contributed to this report.