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Despite Bertelsmann’s recent high-profile alliance with Napster, the German media conglomerate’s New York-based record label continues to plug away with a pay-per-download strategy. This week BMG Entertainment began testing a paid digital download system that it plans to roll out in the U.K. and Ireland in February. The trial, which will include popular BMG artists such as the Foo Fighters, Whitney Houston and Christina Aguilera, will then be launched in the rest of Europe later next spring. The download trial, which follows on the heels of a similar trial in the U.S. last summer, seems again to put the record label at odds with the thinking of the Bertelsmann e-commerce group, which is busy developing a commercial version of Napster. BMG director for new media Hasse Breitholtz explains that despite Bertelsmann CEO Thomas Middelhoff’s public embrace of Napster, paid digital downloads remain part of the record label’s long-term strategy. “Is it the only route going forward? I don’t think so,” said Breitholtz, who heads BMG new media initiatives in the U.K. and Ireland. “This trial is all about figuring out how the business will work online.” BMG has not decided on a price for the downloads but pricing in the U.S. was slightly less than what the same product would cost burned on a CD and sealed in shrink wrap — between $1.98 (2.25 euros) and $3.49 (3.97 euros) for singles and $9.98 (11.34 euros) and $14.98 (17.03 Euros) for entire CDs. The reason for the exhaustive testing of the service before it is offered to the public is to make sure the commercial download system, provided by Magex, will be able to handle the dozens of currencies required for a full European roll-out. The past year has been one of dramatic uncertainty for the $40 billion (45 billion euros) recording industry. To insulate themselves from the risks presented by the Internet, the labels have pursued multi-pronged, even contradictory strategies, hedging their bets until the legal cases are decided and the market is sorted out. It’s a strategy neatly summarized at a recent conference in London by Darryl Franklin, vice-president of business and legal affairs at Interscope: “If you have a finger in every pie, you’re not going to lose.” Related Articles from The Industry Standard: Bertelsmann: There Are No Talks With RecordTV If You Use Napster, You’re Being Watched Bertelsmann and Napster Ink Deal, Annoy Journalists Copyright � 2000 The Industry Standard

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