UPDATE 1-Wal-Mart selling digital music free of copy curbs

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NEW YORK, Aug 21 (Reuters) - Wal-Mart Stores Inc WMT.N said on Tuesday it is now selling digital music downloads on its Web site without the customary copy-protection technology that limits where consumers can play the songs.

Wal-Mart, the world's largest retailer, said its new MP3 music catalog includes thousands of albums and songs from major record labels such as Vivendi's VIV.PA Universal Music Group and EMI Group Plc EMI.L without copy-protection software, known as digital rights management.

The move puts Wal-Mart in closer competition with Apple Inc AAPL.O. Apple's iTunes online music store is the third-largest music retailer in the United States. In May, Apple launched iTunes Plus, a copy-protection-free music download service.

Apple’s iTunes Plus offers downloads for $1.29 -- higher than the 99 cent price of its typical downloads.

Wal-Mart said it will sell the "DRM-free" MP3 downloads of music by artists like the Rolling Stones, Amy Winehouse and Maroon 5 for 94 cents per track, or $9.22 per album. It said the new format lets customers play music on almost any device, including Apple's iPods and iPhones and Microsoft Corp's MSFT.O Zune portable media player.

Wal-Mart said it will still sell its Windows Media Audio-format downloads, which often come with copyright protection limiting where songs can be replayed, for 88 cents per track.

Wal-Mart’s move into DRM-free downloads comes as major record labels debate whether dropping DRM will hurt digital music sales or encourage piracy. Copy protection software prevents unauthorized copying of a digital song bought from an online store, but it also limits where an owner can listen to it.

Apple founder and Chief Executive Steve Jobs has called on the music industry to allow online retailers like iTunes to sell songs without restrictions to give the digital music sector a boost and to give consumers what they want.

Universal, the world's largest music label, said earlier this month that it was testing the sale of songs without copy-protection software and said vendors including Google Inc. GOOG.O, Wal-Mart and Inc. AMZN.O, would participate in the DRM-free trial.

EMI has also agreed to drop DRM, but the Sony BMG Music Entertainment venture of Sony Corp and Bertelsmann AG and Warner Music Group Corp WMG.N are still testing the impact of such a move on digital music sales.

(Additional reporting by Yinka Adegoke)

((Editing by Lisa Von Ahn and Gerald E. McCormick; Reuters Messaging:; (646) 223-6173)) Keywords: WALMART MP3/ . Keywords: WALMART MP3/

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