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Napster rolls out MP3 store in challenge to iTunes

Napster Inc. on Tuesday opened what they claim is the world’s biggest MP3 download store with more than 6 million songs in a direct challenge to Apple Inc’s iTunes store.

The new Web-based music store will have digital songs from all major music labels as well as thousands of independent labels. The MP3-format songs will be compatible with the vast majority of digital media devices and mobile phones including Apple’s popular iPod as well as its iPhone.

Before now Napster has focused on selling all-you-can-eat monthly streaming music subscription packages but has struggled to win over the majority of fans who want to be able to transfer songs they like on to a portable device such as the market-leading iPod.

The new Napster service tries to take on Apple’s dominance in digital music by offering fans more songs without copy protection or digital rights management (DRM). Most of the six million songs on the iTunes Music store are available with Fairplay DRM, which prevents the songs from being played on most portable players other than the iPod.

Major labels in particular had previously been reluctant to allow online retailers to sell their songs without protection as a way to avoid piracy. As the industry outlook gets tougher more executives are willing to experiment or take a risk.

“We’re now moving from under the DRM cloud,” said Chris Gorog, Napster chief executive. “Now consumers can use Napster with any device,” he added.

Most songs on the service will be available for 99 cents each and $9.95 an album.

Though Napster will be hoping to take on iTunes it will try to do so by being compatible with Apple’s service. According to executives, MP3 songs bought on the Napster Web-based service will be automatically synched into a user’s existing iTunes music library if they use that library.

The success of iTunes, which accounts for more than 70 percent of all digital music sales in the U.S. has been a double-edged sword for the music industry.

iTunes has been widely acknowledged by music industry watchers as playing the lead role in developing the legal and commercially viable digital music sector. But in the last year, music executives at major labels have worried that iTunes’ dominant position might be hampering the expansion of the nascent market.

iTunes said last month it had overtaken Wal-Mart to become the biggest retailer of music in the U.S with more than 4 billion songs sold since launch in 2003.

But concerns have mounted in the music industry as CDs sales have dropped faster than expected while the growth of digital music sales is yet to make up for the shortfall.

Music industry executives have recently been encouraging new entrants to the digital music business such as online retailer Amazon.com and News Corp’s social networking site MySpace.

This makes Napster the latest name to join the ranks of recent music industry partners who might help tip the balance of power back from Apple in favor of the major labels.

Gorog said he still believes that despite the success of Apple’s download service Napster will still support its subscription service which will grow as people become more aware of it.

“We believe ultimately that consumers will be moving to an unlimited music model,” said Gorog.

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