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Amazon Said to Start Apple Cloud Music Challenger in July

Amazon.com Inc. (AMZN) reached agreements with the four major U.S. record companies to start a music service that lets users store songs on a remote server and access them online, people familiar with the matter said.

Amazon plans to start the U.S. service in the first week of July, with Europe availability shortly after, said the people, who asked not to be identified because the plans are private.

With the agreements, Amazon’s music service will work similarly to Apple Inc. (AAPL)’s iTunes, letting multiple devices access a centrally stored music collection. Amazon, whose Kindle Fire tablet computer sells for $199 -- a lower price than Apple’s least expensive iPad -- is seeking to make money by offering higher-margin digital content on the device, such as books, music and movies.

Sally Fouts, a spokeswoman for Seattle-based Amazon, declined to comment. Vivendi SA (VIV)’s Universal Music Group, Sony Corp. (6758)’s music business, EMI Group Ltd. and billionaire Len Blavatnik’s Warner Music Group declined to comment in e-mail statements.

Amazon, the world’s biggest Web retailer, gained 1.8 percent to $218.35 at yesterday’s close in New York. The stock has climbed 26 percent this year.

The company first offered a cloud music service in March 2011 that circumvented the need for agreements with individual record companies. Legally, the service required users to upload tracks to Amazon’s servers, a lengthy and cumbersome process depending on Internet speed. It also had limited playback options.

With the new agreements, customers who buy music through Amazon’s music store will be given a free amount of storage, while those who choose to store their entire collections, including tracks purchased elsewhere, will pay an annual fee, the people said.

Amazon’s music service will also be available on iPads and iPhones through the Kindle application for Apple devices, the people said.

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net

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