Apple working on digital albums, tablet PC: sources

Customers line up to purchase the new Apple iPhone 3GS at the 5th Avenue Apple store in New York June 19, 2009.[Agencies]

NEW YORK - The major music labels are planning a new digital album format that will debut with a tablet-like personal computer from Apple Inc in September, people familiar with the plans said on Monday.

The labels are attempting to revive the multi-track album format with new software that packages songs, traditional album liner notes, music videos, and other interactive extras as part of a premium-priced package.

The music industry first proposed the idea of an enhanced album format to Apple in 2007, according to two people who said the labels have been separately working on a project code-named "CMX".

The labels, including EMI Group, Sony Corp's Sony Music Entertainment, Vivendi's Universal Music Group and Warner Music Group had planned to roll out the new album format to all digital retailers this November.

But Apple decided to design its own version of an interactive album, which is expected to be launched with its new unnamed tablet-like device this fall, the sources said.

The Apple album project has been code-named 'Cocktail' and the format is expected to work with other Apple devices like the iPhone and iPod.

Industry sources said Chief Executive Steve Jobs would likely unveil the new device at an Apple event in September.

Apple declined to comment, saying the company does not respond to rumors and speculation. News of Apple and the label's plan was first reported by the Financial Times.

The partnership between Apple and the music labels is tinged with irony as it was the technology company that effectively marked the end of the multitrack album format in 2003, when it opened up its iTunes Music Store.

In early negotiations, Jobs made the labels agree to allow customers to buy any individual track they wanted from an album, in a bid to simplify the purchase process.

But record companies are desperate to breathe new life into the album format, which was responsible for the vast majority of profits when sales were primarily in compact discs.

All music companies have seen their revenues plummet as fans who buy music online choose the 99 cent-priced track they want rather than invest in an album which is typically priced around $8 to $10.

The new interactive format, which could feature extras like interviews with the artist while making the album, would be sold at a higher price than digital albums now. Insiders said there is early evidence from current bundling experiments than fans are prepared to spend more for high quality content.

"Almost every time we've sold product with extras at a premium price it outsells the normal priced product," said one label executive who asked not to be named while the companies are still in talks.