Sony makes music with Microsoft

The race by the major record labels to begin distributing music digitally has sped up with Sony's decision to team up with Microsoft . Sony plans to begin selling music online mid-year, through the use of the new Microsoft Windows Media 4.0. Sony will offer singles, rather than full-length CDs, for sale at a price Ehrlich described as 'what the consumer is paying at retail.'

The race by the major record labels to begin distributing music digitally has sped up with Sony's decision to team up with Microsoft .

In a press conference today, Fred Ehrlich, senior VP and general manager of new technology and business development for Sony, spelled out the details of how the label plans to begin selling music online, through the use of the new Microsoft Windows Media 4.0 this summer.

Sony will offer singles, rather than full-length CDs, for sale at a price Ehrlich describes as being "what the consumer is paying at retail." Sources close to the deal said the price had been pegged at US$3.49 a single.

"This is the first time Sony will release music for pay," said Ehrlich, who noted that online retailers, as well as Sony Music Group's own Web site, would participate in the sale. Sony and the other "big five" labels will continue to support IBM's Madison Project, which will begin trialing its secure delivery system over broadband in San Diego this summer.

The announcement comes on the heels of Universal's revelation that it would deliver music digitally via the secure system developed by Intertrust Technologies. However, when questioned, Ehrlich said that Sony's decision had not been a reaction to Universal's move. He called the timing "coincidental."

Ehrlich also acknowledged that, although the record industry is trying to arrive at a standard for secure distribution through the Secure Digital Music Initiative, there would be "many technologies involved" in online music distribution. The image of healthy competition painted by Ehrlich's comments and by cheerful press releases describing the SDMI procedings may be rosier than the reality, however.

Although Sony and Universal may compete directly, their chosen technology suppliers will not. In fact, they're partners. Last April, Microsoft announced that future versions of its Media Player would support Intertrust's Digital Rights Management System. In the same vein, Intertrust's system of "secure envelope"-based delivery is format agnostic, meaning it works with Audio 4.0, MP3, and any other codec available.

Sony hasn't always waved the Microsoft flag. When Microsoft made its rounds in April, sources say all major labels, including Sony, were unhappy that the Redmond giant's new Media Player supported the dreaded MP3 format. Furthermore, the labels were reluctant to welcome a powerful technology company into the insular music biz.

So why the change?

"The evolution of our relationship with Microsoft was their willingness to recognize the concerns of the recording industry," explained Ehrlich, pointing out that Microsoft intends to apply SDMI standards to its product, once the standard is approved.

The word in the music industry is that the new Real Jukebox product, launched May 3, with distribution reaching the 1 million mark, has made Microsoft's technology look sweet. The Real Jukebox pushes record-label buttons by offering, not only unprotected delivery of MP3 files, but also a CD ripper, which allows users to copy their CDs onto their hard drives while listening to them, and convert them into MP3 files.

Microsoft, on the other hand, offers no way for consumers to "rip" their CDs into the new MS Audio 4.0 codec, and plans to put restrictions on the way content in the format is consumed.

Did Real Jukebox's unpopularity with the record industry help break the ice between wary label types and geeky Microsoft agents?

"It was a point that was not lost on us," chuckled one Microsoft employee.

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