Sony to tie online music service into hardware
Phones and stuff
Sony lifted its skirt an inch this week to reveal the beginnings of a game plan on music, which is could potentially copy on film too, with its US head of Sony's entertainment operations telling journalists that Sony would launch its own online music services.
Dubbed Net Music Download, the key messages were that it will launch in Japan first, then US and Europe next spring, and that Sony will tightly integrate the music with its electronics devices and Sony- Ericsson phones.
Sony is currently negotiating the music licenses it needs for the service, but shouldn't find them hard to come by since every music company, from Vivendi's Universal Music group, to EMI, Bertelsmann, Time Warner and Sony itself, is in need of rejuvenated revenues and is hoping that someone can take the success that Apple has had with its smaller online Mac community, and duplicate it globally.
Apple's iTunes has led the way in re-pricing music, placing a 99 cents charge on a downloaded track in the face of piracy that has undermined all previous attempts to bring the industry back to life. Since Apple has launched, BuyMusic.com has used the same pricing model and successfully got a service off the ground in the US. Microsoft has worried more about supplying its Media Player to other services, letting partners run the services it offers.
But all of the existing services need a PC to download music, with the only other online music systems relying on the mobile phone. Sony has the power to launch a single service which has live portable players, such as phones and its Clie handheld, alongside its Playstation games platform ranges, and its digital home electronics media players.
Stringer was speaking in Paris and claimed that piracy had cost the music industry some $7bn in the past two years. He added that US film studios had lost $3bn-$4bn and risk losing bigger and bigger amounts.
Last year, the head of the Sony Music Group, was ousted after steep losses in that division. He was succeeded by Andrew Lack coming out of the television business, with insiders suggesting he was put forward by Stringer. Stringer himself has been elevated to vice president of the Sony Corporation. Since the move, Sony cut 1,000 jobs as part of a wide-ranging overhaul and has managed to bring the division back into profit.
Stringer also hinted that a foolproof, self contained digital rights management system would be built into the service.
This week Vivendi responded to piracy at its Universal Music Group, the world's largest music company, by announcing price cuts for compact discs
Stringer also pointed out that broadband would allow piracy to do the same to the movie industry if film studios did not react, and it is reasonable to assume that once Sony has streamlined its music delivery platform, tightly tied into its electronic music players, it will try to do the same with its film delivery and digital televisions and digital theater systems.
In an echo of Sony's announcement, German newspapers report that the ISP subsidiary of Deutsche Telekom, T-Online, also has plans for its own online music download site. The German press reports that the service will begin with 30,000 tracks and that Bertelsmann, EMI Group, Sony and Warner Music are supplying the music.
Copyright © 2003, Rethink Research
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