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SONY PREPS ONLINE ENTRY
Company Plans To Sell Digital Downloads Through Tower, Other Sites
Sony Music Entertainment is expected to make its first commercial digital downloads available to U.S. consumers later this month, offering about 50 songs from such roster artists as Lauryn Hill, Pearl Jam, Michael Jackson, Mary Chapin Carpenter and others.

Sources said the company plans to announce its online business model Monday.

Sony's entry into the digital world comes just one day after competitor BMG Entertainment unveiled its digital-distribution strategy.

Sources said Sony will sell downloads through the sites of retailers such as Tower Records, as well as via its own online retailers, thestoreatsony.com and Sony Electronics' musiclub.com.

For its initial download launch, Sony will set a $3.49 list price but the actual price will be about $2.50 at all participating retail sites, insiders said.

Initially, songs will be formatted for playback on the Microsoft Windows Media Player with Sony's ATRAC3 audio compression plug-in, and can be downloaded to compatible SDMI-compliant portable devices. Reciprocal, which built Sony's digital infrastructure, will provide rights management, clearinghouse and transaction services. As Sony moves forward, rolling out more titles over the upcoming months, other compression formats and systems will be utilized, sources speculated.

As part of its business plan, Sony will pay merchants 20% of the total price charged for each download, sources said.

Sony insiders said the company would encourage consumers to pass songs to friends via e-mail instead of using the sharing programs featured by Napster and Napster-like programs. By using e-mail, Sony hopes the downloaders will stick to guidelines set up by SDMI. In a perfect world, the friends receiving the songs would then be instructed to go to a site to pay for playback. In such cases, retailers would receive 12% for the first pass-along and two percentage points less for each subsequent pass-along, down to 6%.

More to come for sure as the majors begin to position themselves for the oncoming digital music revolution.

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