Sony and its Japanese music subsidiary, Sony Music Entertainment (Japan) are expected this week to announce a satellite-based service to sell music to Japanese consumers.
The service will offer music that Japanese customers can download and buy via terminals in their homes, according to the sources, who said the music could then be copied on to recording devices such as Sony's MiniDisc recorder. The sources did not say when the service will be launched, but a report in Tuesday's Nihon Keizai Shimbun said the service will start in July and will offer music from independent artists.
The copy-protected music service will run over Sky PerfecTV, a digital television service managed by Japan Digital Broadcasting Services Inc., a joint venture with shareholders including Sony, Softbank Corp. and Australia's News Corp. To be called Music Link, the service will be managed by Digital Media Entertainment (DME), a wholly-owned subsidiary of Sony, sources said. Staff at DME, reached today, would not comment on the plan.
Music Link will mark Sony's first attempt at selling music over networks and comes as rapid Internet growth and the resultant spread of pirated music online is forcing record companies to examine alternatives to compact disks and other so called packaged media. The chief concern among record companies is how to protect their online music from illegal copying.
"If Sony wants to be a growth company they have to take the risk," said Hitoshi Kuriyama, an analyst at the Tokyo office of Merrill Lynch. "They have to do it [distribute music electronically] if they want to be an innovator."
Kuriyama estimated that Sony Music holds a 20 percent share of the worldwide market for music CDs. But If Sony sticks to packaged media and resists online and satellite sales, "long term they will possibly lose market share," he said.
Sony is not alone in pushing into satellite music. A group led by Nippon Telegraph & Telephone Corp. and Victor Co. of Japan Ltd. (JVC) later this year will start a satellite trial that beams music to kiosks in record stores throughout Japan, according to Hirobumi Doi, managing director of Tokyo-based Japan Digital Contents, Inc., the joint venture that will manage the project.
In the U.S., IBM later this year will test a distribution system that offers copy-protected music to cable television customers in the San Diego area. The so-called Madison project is supported by five leading record companies including Sony Music Entertainment, Warner Music and Seagram Co.'s Universal Music.
Sony is also promoting a set of recently announced technologies called MagicGate, which it says will enable audio data to be downloaded by PCs and handheld devices without the risk of being illegally copied.
The MagicGate technologies are part of a larger plan to offer a sort of next-generation Sony Walkman that runs on flash memory. The cornerstone of the plan is Sony's Memory Stick, a slim storage media that by the end of this year will be available in a 64M-bytes version, or enough memory to hold more than two hours of stereo recording, Sony officials said in interviews. The "Memory Stick Walkman" is expected to ship sometime later this year, they said.
Sony, based in Tokyo, is at +81-3-5448-2200 or on the World Wide Web at http://www.sony.co.jp/.