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Sony brings digital music to retail channel

Major filip for record stores about to be made obsolete by online sales

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Sony's music division, Sony Music Entertainment, yesterday signed digital content distribution specialist Digital On-Demand to serve its album back catalogue to record stores worldwide. The move marks a major shift in the way music is provided to buyers, and could ensure the long-term survival of the high street record shop. Digital On-Demand's role will be to provide in-store kiosks that allow buyers to select and master CDs, DVDs or MiniDiscs. The music they choose is pulled from DoD's servers across its dedicated Red Dot Network, along with the sleeve artwork. Essentially, that allows record stores to offer the label's full catalogue of recordings, including those no longer available on LP or CD, without having to make room for all that extra stock. Providing a sufficient variety of recordings to keep attracting buyers was always the traditional record stores' weakness compared not only to the digital downloads across the Internet but to Net-based mail-order operations like Amazon. This kind of sales mechanism is something the stores themselves have understandably been keen on ever since the online music market began to take off. Sony's biggest signing for the DoD system is Virgin, which intends to put kiosks in all 20 of its North American stores to trial the system before deciding whether to roll it out globally. Meanwhile, HMV is working with IBM on a similar system that uses Big Blue's Electronic Music Management System, which has been designed as much for digital delivery to retail outlets as direct to buyers. Tower Records is also believed to be planning a series of Internet cafes that would double-up as showrooms for its Net-based mail-order service and ultimately as a sites for DoD-style kiosks. Sony's move is also an interesting commentary on how a major label perceives the development of the online music market. It has often been suggested that once the recordind industry sorts out the security issues of music downloads, the big labels would leap into action to become the sole source for digital music. Cut out the middle-man and you take a greater cut of the profits. Clearly the current retail channel will remain in place -- not enough music buyers yet have access to the Web and/or digital music players -- but it's not hard to forsee a time when the almost all music sales are made via the Web download model. Sony doesn't want to go too far down that route yet since the DoD deal is clearly about keeping the retail channel sweet. It must believe that buyers are still going to want to browse through music stores for some time to come. Ironically, of course, the stores themselves target the very buyers most likely to desert them for the online world: the young. The likes of Virgin, then, are not only going to need to embrace technologies like DoD's, but use it to attract all those older buyers they've been happy to alienate for years. ®

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