The Technophilez

The world's biggest music companies, including Warner Music Group Corp and Sony BMG, denied that they have agreed to license songs for a free download service that was launched by Qtrax on Monday.

Qtrax told Reuters and other media outlets last week that it had deals with the major labels representing about 75 percent of all music sales, to let users download songs for free in a new service to be supported by advertising revenue.

But by Monday, Sony BMG Music Entertainment and Warner had publicly denied that they had agreed to back the new Qtrax service.

A source close to Universal Music, the largest of the group, said it also had not signed a deal for the new Qtrax service and is still in discussions.

And a source close to EMI Group said that while its song publishing unit has an agreement with Qtrax, its recorded music arm, EMI Music, does not.

"Sony BMG can confirm it has not signed a deal with Qtrax for the ad-supported service," said a spokesman for Sony BMG, a joint venture between Sony Corp and Bertelsmann AG.

EMI Music, Sony BMG and Warner all previously had agreements with Qtrax, which was testing a paid music download service. Sources say those agreements expired in the last year and did not cover the new free, ad-supported model now being promoted by Qtrax.

Hollywood laid much of the blame for illegal movie downloading on college students. Now, it says its math was wrong.

In a 2005 study it commissioned, the Motion Picture Association of America claimed that 44 percent of the industry's domestic losses came from illegal downloading of movies by college students, who often have access to high-bandwidth networks on campus.

The MPAA has used the study to pressure colleges to take tougher steps to prevent illegal file-sharing and to back legislation currently before the House of Representatives that would force them to do so.

But now the MPAA, which represents the U.S. motion picture industry, has told education groups a "human error" in that survey caused it to get the number wrong. It now blames college students for about 15 percent of revenue loss.

The MPAA says that's still significant, and justifies a major effort by colleges and universities to crack down on illegal file-sharing. But Mark Luker, vice president of campus IT group Educause, says it doesn't account for the fact that more than 80 percent of college students live off campus and aren't necessarily using college networks. He says 3 percent is a more reasonable estimate for the percentage of revenue that might be at stake on campus networks.

"The 44 percent figure was used to show that if college campuses could somehow solve this problem on this campus, then it would make a tremendous difference in the business of the motion picture industry," Luker said. The new figures prove "any solution on campus will have only a small impact on the industry itself."

The original report, by research firm LEK, claims the U.S. motion picture industry lost $6.1 billion to piracy worldwide, with most of the losses overseas. It identified the typical movie pirate as a male aged 16-24. MPAA said in a statement that no errors had been found in the study besides the percentage of revenue losses that could be attributed to college students, but that it would hire a third party to validate the numbers.

"We take this error very seriously and have taken strong and immediate action to both investigate the root cause of this problem as well as substantiate the accuracy of the latest report," the group said in a statement.

Terry Hartle, vice president of the American Council on Education, which represents higher education in Washington, said the mistakes showed the entertainment industry has unfairly targeted college campuses.

"Illegal peer-to-peer file-sharing is a society-wide problem. Some of it occurs at college s and universities but it is a small portion of the total," he said, adding colleges will continue to take the problem seriously, but more regulation isn't necessary.

Sony BMG Music Entertainment on Jan. 15 becomes the last major record company to sell downloads without copy restrictions — but only to buyers who first visit a retail store.

The No. 2 record company after Universal Music will sell plastic cards, called Platinum MusicPass, for individual albums for a suggested price of $12.99. Buyers enter a code from the card at new Sony BMG (SNE) site MusicPass.com to download that card's album.

"The bigger picture is to make our music available in many different formats, through many different channels, in many different ways," says Thomas Hesse, president of Sony BMG's global digital business and U.S. sales.

Best Buy (BBY), Target (TGT) and Fred's (FRED) stores will be first to sell them. By Jan. 31, they'll be in Winn-Dixie, Coconuts, FYE, Spec's and Wherehouse. Like gift cards, MusicPass cards are activated at the store.

Sony BMG initially will offer cards for 37 albums by performers including Alicia Keys, Avril Lavigne, Bruce Springsteen, Chris Brown, Carrie Underwood, Daughtry, Jennifer Lopez and Santana.

Buyers also can download a digital booklet like those with CDs and material such as bonus tracks and videos.

For a suggested $19.99, Sony BMG also will offer cards for Kenny Chesney's album Just Who I Am: Poets & Pirates and Celine Dion's Taking Chances that let users download a second album by the same artist.

"I'm excited that Taking Chances will be included in the launch of these new cards, and I hope that my fans will see it as a great Valentine's Day present," Dion said in an e-mail.

The cards come as music sales continue to fall. Sales of 584.9 million albums or their digital equivalents last year were off 9.5% from 2006, according to Nielsen SoundScan. The outlook remains cloudy as retailers cut space for CDs, and online piracy continues.

Other record companies have already thrown in the towel and sell music without copy restrictions online, where sales were up 45% last year. Lifting copy limits lets fans listen to their songs on any PC or player. Warner Music (WMG) joined the bandwagon in December with a deal to sell on Amazon's MP3 service.

While conventional download services, such as iTunes, (AAPL) make impulse music buying easier than the cards, Sony BMG feels "strongly that there's a group that will enjoy carrying the imagery of an artist they love around with them, or sharing it with their friends," Hesse says. Cards allow one download, though they have a provision for a backup.

He says that Sony BMG would like other music companies to offer album cards. It also expects to sell MusicPass cards in additional stores and possibly at concert venues.

Warner Music Group, a major holdout on selling music online without copy protection, caved in to the growing trend Thursday and agreed to sell its tunes on Amazon.com Inc.'s digital music store.

Until now, Warner Music had resisted offering songs by its artists in the MP3 format, which can be copied to multiple computers and burned onto CDs without restriction and played on most PCs and digital media players, including Apple Inc.'s iPod and Microsoft Corp.'s Zune.

The deal raises the total number of MP3s for sale through Amazon's music download store to more than 2.9 million. Warner Music's entire catalog, including work by artists Led Zeppelin, Aretha Franklin and Sean Paul, will be added to the site throughout the week. The Amazon store launched with nearly 2.3 million songs in September.

Major music labels Universal Music Group and EMI Music Group PLC had already signed to sell large portions of their catalogs on Amazon, as had thousands of independent labels. Most songs cost 89 cents to 99 cents each and most albums sell for $5.99 to $9.99.

Warner Music Chairman and Chief Executive Officer Edgar Bronfman Jr. had been reluctant to follow in the steps of the rival recording companies.

In February, when Apple Inc. CEO Steve Jobs penned an essay calling on record labels to drop Digital Rights Management from tracks sold on the company's iTunes Store, Bronfman shot back during a conference call with Wall Street analysts: "We will not abandon DRM nor services that are successfully implementing DRM for both content and consumers."

The recording industry had argued that DRM itself is not what makes some songs incompatible with some digital players, but the fact that there are different versions of DRM in use. The companies suggested Apple, whose iPod outsells all other media players, should license its DRM technology to other music services.

Apple didn't budge, and the industry's position began to unravel when EMI struck a deal with Apple to sell DRM-free versions of its music on iTunes. A few months later, Universal announced it would do the same with a host of online retailers — with the exception of iTunes.

In an e-mail obtained by The Associated Press and distributed to Warner employees Thursday, Bronfman noted that selling downloads without DRM would help spur new types of online music applications and foster competition among online retailers.

"By removing a barrier to the sale and enjoyment of audio downloads, we bring an energy-sapping debate to a close and allow ourselves to refocus on opportunities and products that will benefit not only WMG, but our artists and our consumers as well," Bronfman wrote.

Philip Leigh, a senior analyst with the research group Inside Digital Media, said Warner Music's changing strategy is a signal that all the record labels will move in the same direction, including the last major player to drag its heels, Sony BMG Music Entertainment.

"It's not surprising they've chosen to do this first with Amazon," Leigh said. "They don't want to admit to Apple right away that they were wrong. They would rather do it indirectly."

Warner Music did not comment beyond statements in a news release Thursday, but Leigh said it is likely the company is discussing a similar deal with Apple.

Pete Baltaxe, director of digital music at Amazon, emphasized in an interview that the retailer's music store stands out from most competitors like iTunes in that it only sells MP3s, rather than a mix of protected and unprotected music.

TiVo Inc. on Thursday proclaimed itself winner of the latest round in its battle against EchoStar Communications Corp. after federal regulators validated the digital video recorder maker's patent that is central to the case.

EchoStar was disappointed in the U.S. Patent and Trademark Office decision but said the agency's conclusion won't affect its pending appeal of a court ruling in TiVo's favor. The court decision requires it to pay TiVo $89.6 million in damages for patent infringement and to stop distributing DVRs or to modify features of its products.

TiVo sued EchoStar in 2004, and the patent office launched a re-examination of TiVo's "time warp" patent after EchoStar protested the validity of it. The patent focuses on the ability to record a television program while watching another — a fundamental feature of DVRs.

Alviso-based TiVo agreed the patent office's action won't have a direct bearing on EchoStar's appeal but contended it is important.

"It eliminates any arguments EchoStar can make before the court of appeals about the patent's validity," said Matthew Zinn, TiVo's general counsel. "It also results in a much stronger patent, and it will be difficult for anyone to try to invalidate the patent again."

EchoStar said in a statement it remains hopeful of winning the appeal. The Englewood, Colo.-based satellite TV operator runs the Dish Network and was among the first, along with TiVo, to introduce DVR features in a set-top box.

The case is awaiting a ruling from the Court of Appeals for the Federal Circuit. EchoStar claims the trial court construed TiVo's patent too broadly and that it is not infringing on the patent because its DVR technology is different from TiVo's.

TiVo shares, which were also buoyed by the company's report Wednesday of a narrower third-quarter loss and an analyst upgrade, skyrocketed nearly 25 percent, gaining $1.48 to close at $7.46. Shares of EchoStar fell 14 cents to $42.70.