Amazon takes on Apple with launch of music download site

Amazon, the online retailer, is on the verge of opening another front in its quest for internet dominance by launching a music download service. The website, which last year had worldwide sales worth £6.6bn, is finalising plans for an online music store to challenge Apple's iTunes - the market leader with nearly 80 per cent of the download sector.

Amazon confirmed yesterday that it was looking closely at the MP3 market. It is expected that its service, which could launch as early as next month, will differ from its rival by selling music without anti-piracy measures.

The Seattle-based retailer headed by chief executive Jeff Bezos, which initially sold only books, approached the four major music companies in recent weeks to persuade them to remove copyright protection. The expansion of the download market, which saw iTunes sell its two-billionth track in January, has taken place despite the insistence of the majors on Digital Rights Management (DRM) software to limit the number of times a song can be copied.

An estimated one in three CDs sold worldwide is an illegal copy. One in five internet users in Europe downloads illegally.

EMI Group, the third-largest label with a catalogue from The Beatles to the Beastie Boys, became the first to break ranks this month when it signed a deal with Steve Jobs' Apple to sell unprotected tracks at a premium and signalled its readiness to strike similar deals with other online providers.

The Amazon service is expected to launch with EMI and several independent labels while its competitors wait to see if the removal of DRM significantly increases sales. Analysts said Amazon, which saw its profits halved in the final four months of last year, would nonetheless provide serious competition for Apple, which has cornered the download market with iTunes, which charges 79p a song.

Mark Mulligan, vice-president at Jupiter Research, said: "Amazon is the sleeping giant in the digital download market. The market currently accounts for only 8 per cent of users so there is a huge opportunity to bring [downloads] to the mainstream. The high-street names, like HMV or Virgin, have been reticent for the obvious reason that they don't want to damage their core business. But Amazon has a different model. They can no longer afford not to enter the market."

Amazon has been preparing its assault on iTunes for at least 18 months and at one stage was looking to produce its own MP3 player to rival the iPod.

It is now hoping that its brand and website, the most popular retail site on the internet, will draw customers who want tracks to download or copy tracks to multiple locations and use on players other than iPods.

Mr Mulligan said: "I think we are beginning to see a shift in attitudes among the major companies to DRM. Some 95 per cent of all music sold is in the form of CDs and they have no copyright protection. I would argue there is no significant risk for these companies if they lose DRM on the internet."