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Saturday, December 01, 2007, 08:55 am PT (11:55 am ET)

Amazon to fill Apple's shoes in Pepsi Super Bowl song promo?

A symbolic changing of the guard may take place February 3rd when Amazon borrows Apple's strategy and launches a song giveaway promotion during the 2008 Super Bowl, according to a claim by Billboard.

The music chart producer cites sources who allege that the plan will not be a direct copy of Apple's 2004 promotion, which randomly placed free song codes on bottle caps and let winners have free reign over their choice of songs. Both contests, however, will have offered as many as one billion songs before they expire.

Instead, entrants are guaranteed a free song but will have to collect five caps before they can be redeemed at Amazon's web-based MP3 store. Winners may also be locked out of redeeming music from certain labels: some record producers are purportedly balking at the low royalty rates that Amazon is negotiating for the one-off event, which would return only 40 cents to the labels versus the 65 cents for regular sales or 70 cents from iTunes, the insiders say.

The payment structure between Amazon and Pepsi is also unclear. For the iTunes promotion, Pepsi compensated Apple directly for at least some of the cost of every redeemed song.

Even so, the deal is said to represent a watershed moment for Amazon's fledgling digital download store, which Billboard reports has gained momentum since its tentative debut in late September. Amazon now holds 3 percent of download-only music sales in the US, which is still small compared to the 70 percent of iTunes but eclipses several of the online retailer's other competitors. Apple's Super Bowl promotion is considered by many to have been instrumental to the long-term success of the iTunes service and the iPod.

A large part of the appeal behind the Amazon store is believed to be a strict policy of carrying only unprotected MP3s, which allows virtually any software or digital music player to play purchased tracks. The company is also one of the few to embrace iTunes and has developed a conduit program for Macs and Windows PCs that feeds purchases directly into the Apple software.

This decision, and its link to the Super Bowl promotion in particular, are also exerting an influence on hold-out labels that until now have insisted on digital rights management (DRM) lockdowns for their songs, Billboard's tipsters claim. If true, Universal is now poised to sell DRM-free tracks on a permanent basis following a trial that ends in January, while Sony BMG and even the staunchly pro-DRM Warner Music Group are supposedly reconsidering their stances on unrestricted formats.

Whether Sony BMG, Universal, and Warner will extend this policy to iTunes is uncertain from the Billboard report. Universal has in recent months been deliberately confrontational with Apple in an attempt to force more favorable pricing, opting out of long-term iTunes contracts and excluding the Cupertino, California-based firm's digital store from its non-DRM song trial.