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Competing with the webtards

Q: There was a McKinsey report earlier this year that estimated the consumer surplus of services web companies give away for free – Facebook, GMail – is around €100bn a year. How much money is being left on the table by Silicon Valley companies, who are better at giving stuff away for free than they are realising value. How do you tap into that?

TS: I think it's really important how to be able how to make it simple for consumers. We all have a handset, pay that monthly bill, we pay TV subscription bills essentially. We have to find ways of adding services – but people will get annoyed if it's complicated.

We launched a sub model related to gaming – a year and a half ago – and we've been really happy with that. We can bring these together in interesting ways – it's not compelling because it's just music. Consumers are really hungry for content and entertainment that spans all the content. That's the essence of the vision – realising that.

Q: Do you see Facebook as a platform threat, eventually?

TS: If anything Sony and Facebook should e working more cosely. These are environmental conditions, not simply 'friend or enemy' - that's not how it works at all. We've got a lot more experience working with Google [on Google TV] – partnerships are complicated.

Q: Google has a very different idea of where money comes from...

TS: Well that's their model, and their struggle is to find more diversified revenues. And secondly they want to make Android dominant relative to iOS. I think there are lots of ways Sony and Google can work together. It's a new world for Google to be working with device companies, sometimes that's a difficult fit – but it's growing pains for a company that's going somewhere.

Q: It seems to be a Silicon Valley Achilles heel. Web advertising is not a good fit for tapping into that consumer surplus, is it?

TS: That's true. I don't know enough about Google to know where they might be going. There's a huge revenue stream now that's the foundation of their business, and it can fund a lot of other interesting things. The question is: how you survive in the long run? The winner is going to be decided over one or two years. I'm optimistic about working on these problems from inside Sony is because we have the capability to deal with these inevitable changes – that will force us all to reset or expectations about what the model should be.

The Cloud is going to be critically important – it is already – the question is how is it going to be utilised.

Q: We have SOPA coming in the United States, for example. Paying for content is still optional. Is there anything you look for from regulators or policy-makers?

TS: I think that trying to get money from people who don't have money is not a very effective way of spending your time. I think that making things attractive and convenient for people who have money is always a good strategy.

If you make it easy for people to get what they want to get, they're happy to give you money. If you build compelling content experiences people will find a way to pay for it. Those principles are pretty robust. They may not get every last dollar that's on the table, but they will take us every bit as far as we need to go for the next few years. We're already in a growth period – we don't have to be 100 per cent efficient to be successful. ®

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