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Mon, Jan 28, 2008 - Page 10 News List

Vivendi not ready to abandon CDs

ONLINE SALES Record companies' revenue from digital music sales rose 40 percent to US$2.9 billion in the past year, but the growth has not covered losses in CD sales


The death of the CD is not nigh, despite the rapidly growing popularity of online digital music, the chief executive officer of Universal Music's parent company, Vivendi SA said on Saturday.

Jean-Bernard Levy told a music conference in the southern French city of Cannes he expected the market for CDs to last for "many years."


Record companies are reeling from the decline of the CD market, fueled by music piracy, according to the International Federation of the Phonographic Industry (IFPI).

"We still believe there is a big market to sell records physically for many years still," Levy said in a question and answer session with delegates at the Cannes conference.


"It's not the migration of one physical format to another, I think it's a transition into very diversified business models of which CDs will remain a part. I don't believe at this stage for the next few years we will see a complete showdown [elimination] of CDs," he said, speaking in English.

Record companies' revenue from online digital music sales rose 40 percent to US$2.9 billion in the past year, but the growth has thus far failed to cover losses from collapse of the CD market, the IFPI said last week.

CD sales fell 11 percent between 2005 and 2006 and are likely to have dropped further last year, the federation said.

Digital downloads account for 15 percent of the world's music sales.

More than 500 legally licensed music Web sites offer around 6 million tracks of music, the federation said.


Asked about moves away from copy-protection safeguards on downloaded digital music -- previously championed by the recording industry as a bid to prevent piracy -- Levy sounded a cautious note.

"We are still testing it -- but I want to recall our policy that is still we are strongly attached to DRM, especially for advertising-based models and subscription-based models," he said, referring to Digital Rights Management, which includes software coding that prevents copying downloaded music.

DRMs can frustrate consumers by limiting the type of device or number of computers on which they can listen.

Last year, Universal Music began testing an unlimited music download service in France offered through broadband provider Neuf Cegetel. It is also giving Nokia customers a year's unlimited access to millions of songs.

"We don't want to make too many comments at this stage," Levy said of the trials.

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