Sony BMG U.K. will not handle Prince's upcoming album release after a national British newspaper struck a deal to give the CD away. Columbia in the United States recently struck a worldwide deal, understood to cover just the new album, "Planet Earth." The major's U.K. company had sought, and has now achieved, an exemption from the terms of that deal, a spokesman for Sony BMG tells Billboard.com.

"The Prince album will not be released in the U.K.," the spokesperson says. "It's a one-off situation."

The unusual development is a direct response to a deal the Mail on Sunday is understood to have sealed with Prince's representatives, which will see the 10-track CD distributed as a "covermount" with an unspecified edition of the newspaper.

As previously reported, the album is slated for an international release July 16, and July 24 in the U.S. Columbia had previously released Prince's 2004 disc, "Musicology."

Furthermore, the album will be distributed free to thousands of gig-goers. Prior to confirmation of the Columbia deal, Prince last month announced plans to give-away copies of the album with tickets to his 21-date the Earth Tour residency at London's new O2 Arena, formerly known as the Millennium Dome, beginning Aug. 1.

The Mail on Sunday was at the center of a heated "covermounts" dispute within the U.K. music industry when it pressed up 3 million copies of Mike Oldfield's complete 1973 album "Tubular Bells," to distribute as a freebie with its April 22 edition.

"We're not in a fight with anybody," the publication's managing director, Stephen Miron, tells Billboard.com. "We're just trying to produce the best possible content we can do, and give it to an audience who clearly have an appetite for it. And what we are also able to demonstrate is we can stimulate that appetite, and people then go on to fulfill their appetite with extra product, be it album sales, DVD sales, concert tickets or whatever."

When asked if the newspaper would continue to covermount core catalog releases in the future, Miron said, "Yes. I think we've been able to demonstrate that we've got a commitment to music and a passion for music."

The Prince release, however, is threatening to blow up into another industry dispute.

Paul Quirk, co-chairman of the U.K.'s Entertainment Retailers Association, used his keynote speech yesterday at the London Calling conference to condemn the latest "covermount." Having said the news "beggars belief," he added, "If it turns out to be the case, The Artist formerly known as Prince should know that with behavior like this, he will soon be the Artist Formerly Available in Record Stores."