French subsidy for music downloads gets EU nod

BRUSSELS (Reuters) - The government of France’s strategy to combat illegal music downloads by contributing to the amount young people pay for them won European Union (EU) approval and praise for promoting cultural diversity.

Under the scheme, French residents who purchase a card to download music from subscription-based website platforms, will only pay half the cost of a 50-euro credit included in the card, with the French government paying the rest.

The scheme, which will benefit 12-to-25-year-olds, is expected to last two years, with consumers limited to one card a year. It will cost France 25 million euros ($34.65 million) annually based on its sales estimate of a million cards.

The European Commission, the EU competition watchdog, said on Tuesday that the benefits of the French plan outweighed any potential anti-competitive effects.

“We welcome initiatives ... to increase the availability of music online at a lower price for consumers and through legal distribution channels,” EU Competition Commissioner Joaquin Almunia said in a statement.

“The scheme will contribute to preserving pluralism and cultural diversity in the online music industry,” the commission said, adding it would also help economic development.

In return for the state aid, website operators will be required to cut the price of music, extend the duration of subscriptions, and contribute to the cost of advertising the card. Their benefit will be capped at 5 million euros each.

Rampant illegal music downloading has eroded legitimate digital and physical sales, with even Apple’s iTunes and Spotify failing to counter the damage.

Reporting by Foo Yun Chee; Editing by Sharon Lindores