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| Sony/BMG Supports Unlimited Music, Says Profits Rose 15 Percent
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| Friday, March 28, 2008 |
Sony/BMG Supports Unlimited Music, Says Profits Rose 15 Percent
By Eliot Van Buskirk March 26, 2008 | 9:35:49 AM
The idea of tying unlimited access to major label music to devices has been gathering more steam. For record labels, it represents a chance to grab a percentage of the money being made by device manufacturers to create machines mostly used to play music people didn't pay for.
As for manufacturers, unlimited music will let them offer something extra to their customers.
And, of course, cellphone carriers love the idea of retaining customers by storing their music collections.
Rolf Schmidt-Holtz, the head of Sony/BMG, became the latest major label executive to announce support for unlimited music devices earlier this week. The Frankfurter Allgemeine Zeitung published an interview on Monday in which he said an unlimited music service could offer Sony/BMG downloads for six to eight euros per month ($9-$12).
Schmidt-Holtz also claimed the songs would play on the iPod. Either this is an indication of something new or he doesn't understand how subscription DRM works.
He said Sony/BMG is talking to a number of distributors -- most likely cellphone carriers, but possibly ISPs as well -- about tying unlimited downloads to their services.
Other nuggets from the interview (rough translation below):
- Sony/BMG is in talks with Nokia to join Total Music.
- Sony/BMG has 252 360-degree artist deals.
- He's not losing any sleep over label defections by Madonna and Radiohead.
- The unlimited music services he's talking about could roll out this year.
- Sony/BMG profits increased 15 percent last year.
Here's the Babelfish version of the article:
Sony BMG, the second largest music company of the world announces a new subscription offer and co-operation with mobile phone manufacturers. In the interview with the F.A.Z. speaks Rolf Schmidt Holtz, as he wants to stop so driving downhill of the music industry.
Mr. Schmidt Schmidt-Holtz, a whole generation of young humans wants to pay nothing more for your music. How is it to continue for disk companies such as Sony BMG?
Amazingly well it will continue for us. Because we by attractive digital offers and new business models will see medium-term again growth. And because we have fantastische artists - established like newcomers. Take only to Leona Lewis this year. Therefore are Sony BMG very well. We increased the profit in the past year by 15 per cent, although the music market shrank last year world-wide around approximately 10 per cent. To the topic *
How did this year begin?
For us very well. But the CD paragraph in the market falls at least just as strongly as in the past year. Growth in the digital business cannot adjust the losses with the CDs.
When does the music industry get again firm soil under the feet?
That is the hundredthousand dollar question. I expect that the industry still two to three years shrinks, then stabilized and afterwards again grows themselves.
How do you want to create that?
We have many ideas. For example a subscription offer in the digital music selling, on which we work at present. In the simplest and perhaps most attractive variant a kind would be inclusive the Musikflatrate for all MP3 Player iPod: For a monthly contribution the entire music world is open to you. With the Musikflatrate get you everything of us - from the fire-new Chart hit to Beethoven.
Subscription is called: If I do not further-pay no more, I can listen to also nothing more. Correctly?
If you do not extend the subscription, naturally also the music entrance becomes closed. It would be however even conceivable that the customers cannot partly evenly only listen to the music, but also some titles downloaden and thus possesses. They can develop themselves so a digital music collection.
How would much cost?
Six to eight euro in the month are realistic. That is half so much, as CD costs. And you consider: At the end of the yearly additionally 40 or 50 songs would belong to you. And counts itself for you? If there is sufficient prospective customer. Our market study shows that a large number of customers finds such an offer attractive.
Does the Musikflatrate come this year?
If everything runs smoothly, it can fold. We hold conversations.
Also with the other large music companies?
The offer becomes the more attractive, the music selection is the larger. I legend not that it would be uninteresting, if we make it alone. But it would not be reliably like that stretching.
Can you intersperse your Musikflatrate without the market leader Apple?
Apple is a very strong partner for us. We talk with Apple, as we with many other enterprises also talk.
Is Apples power too large?
The market share is enormous. On the other hand Apple developed a load-carrying digital business model for the music market, and of it we both profit.
They could boycott and on other selling partners set Apple?
That would not be present in our interest, and if we intended it, I would not say it to you.
Can you on the 99 cent, which Apple requires today for the Download of a song, live?
Compared with the margins in the CD business, our digital profit margin is good. But we cannot be lucky nevertheless with the today's prices. They reflect the value of the music not sufficiently. Our market study shows that the customers are ready to pay for the correct music more. And we will try to intersperse this.
How?
For example there is co-operation "Comes with Music", which locked universal Music with Nokia. Who buys a certain mobile phone, pays a unique surcharge and has thus unlimited entrance to the music. One pays thus for the music in the package with a mobile telephone. That is a large wachstumschance for the music industry. Sony BMG does not cooperate however at all with Nokia. Not yet. We have a total concept and to talk not only with Nokia, but with numerous mobile phone manufacturers and network carriers. They will hear very soon of us.
Also regarding Apples iPhone?
We talk with many offerers.
Which ideas have you still, in order to earn with music far moneys?
First of all: The CD market is not dead. It shrinks, but the people are still ready for example to pay for a Premium CD a Premiumpreis. In addition we lock ever more so-called 360-Grad-Vertraege with our musicians. That is, we participate also at their concert and Merchandisingeinnahmen. We want besides regionally to expand, particularly in India and China. In India for example the business with sound TRACKS is promising.
Are your artists really ready to divide their tour incomes with you?
Functioned better than original expects. We have today 252 this so-called 360-Grad-Vertraege with our artists. That I could not be dreamed before one and a half years, when we began thereby.
In addition nevertheless however only newcomers are ready, or?
Yes, but we make also with established artists new contracts, which include for instance the Merchandising. With "IL Divo" for example. We close each year more such contracts and make to it something money already. In two to three years we will make about a quarter of our business in this way - thus beyond the pure clay/tone carrier business.
Past year Topkuenstler such as Madonna and Radiohead began to bring their music out without disk company. Run away you thus not rather star?
Really prepares for me no sleepless nights. I am sure me that the large music companies - and we are world-wide the number two - are continued to use. An artist is a mark, and this to construct and maintain is not simple. The very most successful musicians, who tried it without major, failed and returned.
For example?
I do not call names. But I legend you: It needs hard work to make a newcomer the star and just as hard work, so that the new album of a superstar sells itself as well as its previous. Therefore 99 per cent the large star remains with us. Also to the Bertelsmann boss Hartmut Ostrowski applies.
Is the music fan?
Definitely. It was always inspired, if with Bertelsmann meetings Sony BMG artists arose.
Who will have interest in the future still to possess enterprises in a so difficult industry?
Enterprises, which believe in the music and its digital future.
And who does that?
At present Vivendi, Sony, Bertelsmann believe in it and obviously also financial investors. Bertelsmann is no longer very much interested in the music business. Otherwise they would have sold probably hardly the crisis-firm music publishing trade. The music publishing house of Bertelsmann was never part of Sony BMG; its sales does not concern us. We make money with clay/tone carriers, a music publishing house with author rights, thus for example with the percentages of profits of the music, which runs in the radio. There are however group advantages between publishing house and clay/tone carrier business. We would have gladly both together under our roof, because a broader and closer co-operation with our artists and producers makes possible for us. Our two owners Sony and Bertelsmann talk at present about it. We are optimistic that we in the publishing trade soon to become active to be able.
However on much smaller basis than with the earlier Bertelsmann publishing house, or?
Naturally, we must again develop the business.
It means, Sony is not inspired of the idea, because you could make their own publishing house ATV competition?
The rumor is wrong. In the opposite, Sony supports us. They are now 59 years old and oscillate between its residence Hamburg and the company center in New York.
How long do you want to still do yourselves?
For the moment my work makes large fun for me.
And which you make thereafter?
Their contract runs until March 2009. Legend I you today not yet, but it will remain interesting.
The discussion led Marcus Theurer.
Source: WiredLabels: Apple, BMG, DRM, iPhone, iPod, Nokia, Sony, Total Music |
posted by Perimbean @ Friday, March 28, 2008
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