The major record labels are finally making their moves into selling downloads of music tracks on the Internet. Sony plans to start the practice next week in a limited way with 50 pop tunes to be available for download on retail Web sites, including Alliance Entertainment, Hastings Entertainment and Tower Records, and plans to add other retail partners as it builds its online business.
"We have always stated that Sony Music would begin sales of secure downloads once SDMI-compliant devices came into the U.S. marketplace," said Al Smith, senior vice president of Sony Music Entertainment.
The Secure Digital Music Initiative (SDMI) was created by the five major labels as a means of stemming the tide of illicit downloads that were occurring online by establishing technical standards to enable secure commercial downloads.
Sony's tunes will be formatted on Microsoft's Windows Media player with an ATRAC3 plug-in, and can then be transferred to a PC user's hard drive for use with SDMI-compliant portable listening devices.
BMG will begin offering content from current hits and its catalog this summer, ramping up to include most of its available inventory in time for the Christmas sales season, selling through its respective label sites and unnamed retail sites. BMG has strategic partnerships in place with IBM for its Electronic Media Management System and with InterTrust Technologies for its Digital Rights Management technology and Windows Media Technologies.
BMG also struck a deal with Liquid Audio, an existing online music site, to create an end-to-end distribution structure that will enable BMG to control its product from point of creation to point of distribution online.
"We believe that the steps we are taking will help to accelerate the development of a legitimate commercial market for digital downloads of our artists' music," said Kevin Conroy, senior vice president of worldwide marketing and new technology for BMG Entertainment.
Sony will sell its singles online for $3.49, with a special introductory price of $2.49. BMG didn't reveal its pricing plans, but has previously released promotional and test recordings for $1.99, selling sets of three tunes for $3.49
The other major labels, including those from the new Time Warner-EMI partnership and Universal Music, have yet to reveal their plans to start commercial downloads.
Malcolm Maclachlan, media analyst for International Data Corp., said he doesn't expect the others to jump in quickly, and would be surprised if any of the others are as aggressive as BMG appears to be in its strategy. "They're at least going to have to give some lip service to it," Mclachlan said, "though there's nothing saying that's what Sony and BMG have done."
Maclachlan suggested Sony's pricing could dampen interest in legitimate downloads: "They're saying, Yeah, we've got downloads, but we don't want you to use them'."
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