Labels to serve digital albums to iTunes rivals

When news broke late Sunday that Apple has plans to create the next-generation music album, some in the record industry were steamed.

The Financial Times reported that Apple was working on a plan code-named "Cocktail" that involves the creation of "new type of interactive album material, including photos, lyric sheets and liner notes that allow users to click through to items that they find most interesting." That's nearly identical to a plan that executives from some of the four largest music labels pitched Apple about 18 months ago, said a music industry source who requested anonymity.

Even as the music industry cooperates with Apple's efforts, what has some insiders upset is that Apple rejected the labels' plan. By seizing credit, Apple is being "disingenuous," said the source. He added that Apple's attempt to develop a proprietary technology around the new interactive album is an example of the company once again falling back on "the walled garden approach."

What he was referring to was how users of Apple's iPod were prevented from playing songs wrapped in digital rights management made by competitors. That effectively blocked anybody but Apple's iTunes from selling music files to iPod owners. Now, most download stores sell songs in the MP3 format and these DRM-free tunes can play on iPods and iPhones.

Apple representatives did not respond to an interview request.

But Apple's refusal to participate in the labels' plan didn't mean they gave up. The largest recording companies have continued to develop software that will help them release their own version of a new interactive album. Apple will have Cocktail, but Amazon and all the other competing services will get access to the labels' version, which will offer more content than Apple's, said the music industry source.

Apple plans to have Cocktail ready to launch by September, according to the Financial Times, and that's when the labels hope to have their version ready as well, said the source.

Both Apple and the top recording companies appear to be pursuing the same goal: rejuvenating the album, which was the benchmark sales unit that helped the music business generate billions of dollars over the past half-century. Up until the digital download turned the music industry on its head, the album was the standard means for music distribution. Even after the switch from vinyl to the CD, the album format was preserved, as most CDs featured about a dozen tracks.

Record industry execs have long said that there's no way to grow the business by selling single-song tracks. But the big labels have an uphill fight--many consumers may well resent any attempt to force them into paying a premium for packages that include unwanted tracks.