News 

The business news service says that EMI was asking for the payment to compensate it for the 'risk' of releasing unrestricted MP3s. It claims that operators including Apple, Microsoft and Real Networks had countered with a lower offer, but this was rejected.

Reuters suggested earlier this month that EMI was prepared to ditch its insistence on DRM, a position that put it at odds with the other three major record companies, Warner, Universal and Sony BMG.

But even before the breakdown of talks, its willingness to compromise over copy protection had been threatened by the renewal of Warner's interest in acquiring the UK-based company, given that Warner boss Edgar Bronfman is an outspoken advocate of DRM.