Amazon takes on Apple with copy-protection-free music

— -- The music industry is finally comfortable selling digital music without copy protection, but the huge shift hasn't resulted in dramatically higher sales.

Instead, it produced something that major music labels have long sought: a strong No. 2 competitor to Apple.

The push for copy-protection-free music began nearly a year ago, when Apple and major label EMI shocked the industry by announcing a landmark arrangement to sell 150,000 songs without digital rights management (DRM) software. It was the first time a major label had agreed to such terms.

Apple, which claims an 80% share of digital music sales, said consumers would be ecstatic about the EMI deal and that digital sales would greatly increase. CEO Steve Jobs predicted his iTunes catalog would be 50% DRM-free by the end of 2007. But that never happened.

Apple now has 2 million songs from EMI and independent labels available without DRM, out of its 6 million-song catalog. Amazon offers 4.5 million DRM-free songs.

Amazon's arrival "removed some of the stranglehold iTunes had on the market," says Ted Cohen, a former EMI Music executive and managing partner of the Tag Strategic consulting firm.

Apple originally sold each DRM-free song for a premium, $1.29, compared with 99 cents for a song with copy protection. But Apple was forced to lower the price to 99 cents when Amazon launched its MP3 download store at that price.