By Yinka Adegoke

NEW YORK (Reuters) - Sony BMG Music Entertainment, the world's second largest music company, will this month become the last of the big four majors to drop copy protection software on music downloads, also known as digital rights management (DRM).

Sony BMG, home to artists including Beyonce, Britney Spears and Celine Dion, said on Monday it will launch a gift card service on January 15 called Platinum MusicPass that will feature digital albums from its artists in the MP3 format. The format does not use DRM protection.

Fans will be able to buy the digital album cards in stores and download full-length albums from a MusicPass Web site after they type in an identifying number. The cards will be available at U.S. retail outlets such as Best Buy and Target .

"The introduction of MusicPass is an important part of Sony BMG's ongoing campaign to bring its artists' music to fans in new and innovative ways, and to develop compelling new business models," said Thomas Hesse, Sony BMG president, global digital business & U.S. Sales.

The music industry posted a 15 percent drop in album sales in 2007 as fans bought fewer CDs. Digital music sales did not make up for the revenue shortfall, forcing executives to explore new business models and ways of attracting consumers.

One of the biggest issues for music companies last year was whether dropping DRM would help drive digital sales.

In February, Apple Inc founder Steve Jobs called on music companies to stop requiring retailers to use DRM for services like his company's iTunes Music Store. Jobs said dropping DRM would help boost sales.

Digital music buyers have been frustrated by the limitations imposed by DRM, prompting industry analysts to support the call to drop copy protection. Music companies had required DRM to prevent users from making multiple copies or sharing songs with friends for free.

EMI, the number four music company in market share became the first major to drop DRM in April and was later followed by Vivendi's Universal Music Group. Last month, Warner Music Group said it would start selling its music in MP3 format through Amazon.com .

(Reporting by Yinka Adegoke; Editing by Tomasz Janowski)
© Copyright 2007 Reuters.

Photo:
Beyonce Knowles performs "Somewhere over the Rainbow" during the taping of "Movies Rock" at the Kodak theatre in Hollywood, California, December 2, 2007. Sony BMG Music Entertainment, home to artists such as Beyonce and Britney Spears, will this month become the last of the big four majors to drop copy protection software on music downloads, also known as digital rights management (DRM). REUTERS/Mario Anzuoni