Why Sony’s Planned Music Store Won’t Start Out As A Serious iTunes Challenger


*Sony* keeps flip-flopping over adding music downloads to the PlayStation Network (PSN). After scrapping plans to add a music store to the gaming network — complete with the ability for gamers to port tracks to the handheld PSP — comes news that the company will indeed expand the PSN into a full digital download store, with music, books, as well as mobile apps available. It has been tentatively (and blandly) named the “*Sony* Online Service.”

SCEA President Kaz Hirai said the company was thinking about charging PSN members for “premium content,” since they currently can use the network to play games with each other for free; the new music and content store would be in addition to the growing library of movie and TV show downloads, as well as streaming content from *Netflix* that people can already get through the PSN.

Full details, like when and how the online store will launch, are scarce. BusinessWeek is already calling it Sony’s “answer to iTunes,” but if it’s tied to the PSN initially, then the Sony (NYSE: SNE) Online Service won’t have nearly as much reach as Apple’s music platform. (The company says there are currently 31 million registered PSN accounts worldwide. In contrast, iTunes has a global install base of over 100 million, per a recent Credit Suisse research note). At a presentation in Tokyo, Hirai (pictured) said that Sony would “target quite a few” of the PSN users, though the company wasn’t even sure whether they would all “migrate to the new service.”

There’s also a question of how to make the logistics work. Sony will be able to feed music content in from its own BMG labels, and then work to license content from others, but its previous attempt at an online music service, Total Music, crashed and burned earlier this year.

Still, it’s an ambitious plan that makes financial sense in the long run. Sony expects to generate around $500 million in revenue from the PSN for this fiscal year, triple the amount from last year, per BusinessWeek. By adding music, e-book and and even mobile app downloads, the company could definitely increase that revenue, as well as demand for its new suite of e-readers.

The Sony Online Service will also include photo and video-sharing capabilities — giving people the ability to store content in “digital lockers” on the PSN — and reasons, perhaps, for them to perhaps buy more Sony digital cameras and camcorders. The company also said it was considering letting third-party developers create apps for the service, much like the iPhone App Store. Hirai said the service would be “one key factor” in the company’s plans to launch new mobile products, as well.


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