Apple, labels serve up ‘Cocktail’

New iTunes music offering to launch in fall

Apple and the four major recording labels are working on launching in the fall a music offering code-named “Cocktail” that aims to add value to digital albums sold on the online iTunes Store, according to two people with knowledge of the discussions.

The new package will include liner notes, artwork and potentially cell phone ringtones and music videos in a unified software package that the labels hope will boost sales of albums, instead of just single tracks. The people spoke on condition of anonymity because details of the offering had not been finalized, and they were not authorized to speak publicly.

Talk of the enhanced digital album offering was first reported by the Financial Times.

The offering may be announced in conjunction with a new tablet computer by Apple CEO Steve Jobs in September, one of the people said.

An Apple spokesman declined to comment.

Music sales have declined nationwide in seven of the last eight years, largely because of illegal file-sharing over the Internet, but also because consumers tend to buy individual songs rather than full albums.

The “Cocktail” project is the latest attempt by the labels to get consumers to spend more.

In February, Apple and fourth-ranked EMI Group PLC unveiled an iTunes Pass, which gave music fans willing to pay $18.99 access to early release singles, a new album upon its release and exclusive videos, remixes and other content.

In April, Apple also allowed record labels to set song prices in three different tiers, at 69 cents, 99 cents and $1.29.

So far the impact of such efforts on sales volumes has been minimal.

U.S. album sales are down 14 percent so this year, while digital track sales are up 13 percent, according to Nielsen SoundScan. The net effect is that music sales are down about 8 percent this year at 263.5 million albums and album-equivalents.

The labels – Vivendi SA’s Universal Music Group, Sony Corp.’s Sony Music Entertainment, Warner Music Group Corp. and EMI – presented their special album proposal to Apple two years ago but the company rejected it, one person said.

When the labels informed the device maker they planned to offer the album product to other retailers such as Amazon.com in October or November, Apple decided to work with them on an iTunes version, the person said.

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