Microsoft Gets Boost From Sony in Digital Music Wars

Microsoft, Inc. (Nasdaq: MSFT) got a boost in the high-stakes race to supply software for downloading music when Sony Music Entertainment selected MS Windows’ digital format to sell downloadable songs on the Net.

Sony will become the first major music label to go with the Windows Media 4.0 format developed by Microsoft, which is struggling to catch booming RealNetworks Inc. (Nasdaq: RNWK), whose JukeBox gained instant credibility and popularity with its release this month.

The Sony-Microsoft digital music alliance comes as part of a new effort to collaborate and jointly promote software, music and videos on the Web through cross-marketing with streaming audio and video. Sony said the MS relationship, though not exclusive, would provide “enhanced music experiences for customers while offering new opportunities for Sony Music and its artists.”

Amazing Tool for Marketing Music

“The Internet has proven to be an amazing tool for marketing and promoting our artists,” said Fred Ehrlich, senior VP for new technology and business development at Sony Music Entertainment. “More and more fans are anxious to access music from their favorite artists via the Internet, and this agreement will provide a way for them to do just that.”

Digital music enjoys rapidly growing popularity but sales don’t yet approach that of traditional CDs and cassettes sold bought online. Still, analysts predict rapid growth, with faster connections and impending agreement among major labels on standards for online sales and anti-piracy efforts.

Recorded music sales exceed $38 billion (US$) annually, and online distribution and sales are expected to account for a much bigger share: Net-watcher Forrester Research estimates digital transmission sales will reach 7 percent of all recorded U.S. music sales by 2003.

Sony and Microsoft, both members of the Secure Digital Music Initiative, said they support the music industry-led effort to develop digital music distribution standards. Precisely what guidelines will come out of the effort, perhaps next month, remains uncertain. But Microsoft said Media 4.0 would comply with new requirements.

Sony Music, the No. 2 music distributor, lists among its artists Celine Dion, Mariah Carey and Bruce Spingsteen, but didn’t say which artists’ singles would be available in the Microsoft format. Each single will cost $3 to $6 with launch this summer.

Stiff Competition

The competition’s tough and getting tougher though. RealJukebox, which reported more than 250,000 downloads in its first two days, already features more than 60 artists, including big names like Aerosmith and Public Enemy.

RealJukeBox lets users copy, store and play audio compact discs on personal computers. JukeBox works in several formats, including the popular MP3. A parade of other companies have joined the fray, hoping to become standards for music downloads.

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