Label Takes a Gamble on MP3

In an apparent first for a major record company, a subsidiary of Warner Music Group plans to release a single today as an unprotected MP3 file--a digital-music format embraced by consumers but rejected by many labels.

The move signals the labels’ growing willingness to experiment with online offers that fit consumers’ digital lifestyles, rather than trying to change their behavior. It’s also a gamble that the song, released without limits on copying or sharing, won’t fuel piracy.

The single is a remixed version of the song “Earth” by Meshell Ndegeocello, a genre-defying artist on AOL Time Warner’s Maverick Records. The company initially released a few hundred copies of the remix on vinyl to dance-club disc jockeys, but the 99-cent MP3 version will be the only format widely available to consumers.

Analyst P.J. McNealy of GartnerG2, a technology research and consulting firm, praised Maverick for trying to use the popularity of MP3s to boost the sale of Ndegeocello’s new CD, which is scheduled to hit stores next month.

“It’s going to take experimentation like this to see if it will work,” he said. “Every other label is going to be watching this.”

Maverick hopes the single will spur interest in Ndegeocello, a bass player and singer whose sales have dropped with each successive release. But it’s also betting that the MP3 will find a bigger market than the downloadable singles that the five major labels have been trying to sell, with little success.

Over the last five years, the major labels have released downloadable singles in a variety of copy-protected formats that barred consumers from moving the music to their living-room stereos, car CD players, boom boxes--anywhere, in fact, other than the computer that downloaded it. Recent versions have promised more flexibility, but they still were no match for the ease and portability of CDs.

By contrast, MP3 files have become the dominant format for downloadable music because they can be moved easily from computer to computer, played by any digital-music software or device, and burned onto CDs that are compatible with the vast majority of disc players. This freedom also is the biggest drawback for labels and artists, because MP3s can be copied easily over the Internet.

In fact, one of the main forces popularizing MP3s was the online song-sharing service from Napster Inc., which let millions of consumers copy songs from each others’ computers without paying for them. Although Napster’s free service has since been shut down by the federal courts, numerous other ways have emerged online to find and copy MP3s for free.

On the other hand, MP3 files are no more susceptible to piracy than the typical CD, whose songs can easily be converted into MP3s and copied freely.

Jeremy Welt, Maverick’s head of new media, said releasing the remix on MP3 was “the right thing to do for the artist, it was the right thing to do for the song, it was the right thing to do for the CD. There was no downside.”

DJs built an audience for the song, but it wasn’t available for sale except as a bootleg, Welt said. The MP3 release not only provides a legitimate alternative to piracy, he said, but also enables new, targeted promotions.

The initial outlets will be a group of Web sites owned by Vivendi Universal subsidiary Vivendi Universal Net USA, including EMusic.com and MP3.com. Those sites were pioneers in offering downloadable music in MP3 format, but until now they haven’t been able to attract songs from the major record labels.

“Everybody right now is a lot more amenable to experimentation,” said Derrick Oien, president of VUNet USA’s music and media group. “My impression with the [major] labels is they’re opening up to a lot of different things....The thing with Maverick is a good example of people trying to meet a halfway point or add value.”

Welt said the Ndegeocello single isn’t a stunt. “This is something we are committed to doing with many other sites” and artists willing to take a chance on the format, he said. The main limit today, he added, is that there aren’t a lot of online retailers equipped to deliver and promote MP3 files.