Germany to launch music exchange service

Music production companies and distributors in Germany have agreed, after lengthy negotiations, to offer one of the world's first national music download services.

The service, code-named Phonoline, will allow customers to download music from German and international artists for a fee, via a delivery platform provided by Deutsche Telekom AG (DT), the German Phonographic Industry Association (BPW) said Thursday in a statement.

The BPW venture, to be launched in the third quarter, follows on the heels of a new pan-European pay-per-song service announced last week by Microsoft in collaboration with Italian ISP (Internet service provider) Tiscali SpA. The service, which can be accessed only through Microsoft's Windows Media Player 9 Series software, is itself a response to the success of Apple Computer's iTunes digital music store.

Rather than supplying music from a central Web site, Phonoline will rely on a network of online retailers to sell directly to consumers. A directory of all online retailers will be posted shortly on the Web site www.musicline.de, according to the association.

DT will provide both the content delivery platform and the billing system. The German operator will offer users four ways to pay for music downloads: their DT phone bill, a credit card, a prepaid card or direct debit from their bank account.

BPW provided no pricing details. To be competitive, however, its new online music venture will have to offer music at prices near or below those that Microsoft's online unit, MSN, is offering customers via its MSN Music Club in the U.K. Tiscali, which has a music club in the U.K. as well as Belgium, France, Germany, Italy, Spain, will launch new versions of its service in September.

Tracks in the U.K. are priced at £0.75 (US$1.21) or £7.99 per album. However, those who choose to subscribe to the music clubs can download tracks cheaper, from as low as £0.62.

The German online music service comes as the music industry in the country saw half-year sales plummet 16.3 percent year on year. Particularly hard hit were CD sales, down 20 percent in the first six months of this year compared to the same period a year earlier.

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