Sony-BMG working towards a music flatrate

Posted by Wolfgang Gruener

Frankfurt (Germany) – In an effort to turn around a declining music business, Sony-BMG is currently in discussions to offer a flatrate-based music download service. In an interview with a German newspaper, CEO Rolf Schmidt-Holtz mentioned that such a service could debut this year for a price between $9 and $12 per month.

The information provided by Schmidt-Holtz is surprisingly detailed, yet it is far from being a product announcement and makes us wonder how this information relates to recent rumors that Apple is negotiating flatrate music deals for its iPods and iPhone.

He told the Frankfurter Allgemeine Zeitung (FAZ) that one idea that could save the music industry from losses caused by the rapidly declining CD business is a digital music subscription service, which the company is “working on right now.” Schmidt-Holtz believes that the most attractive version of such a service would be a flatrate for all MP3 players, including the iPod. “For a monthly fee, you will have access to the entire world of music. The music flatrate will get you everything we have – ranging from the brand-new hits in the charts to Beethoven,” he told the FAZ.

The executive floated a few other ideas how this service could work, but there were very few definite features. For example, he said that the access to music would be canceled as soon as a subscription is canceled. But, he “could” imagine that music access will enable users to download-to-own music as well. Pricewise he mentioned a range of 6 to 8 Euro per month, which translates into about $9 to $12. If there will be a download-to-own option, consumers would be allowed to download about “40 to 50 songs” onto their hard drives – which would remain available even if the subscription is canceled.

There was no information on DRM features included in this model.

Last week, the Financial Times reported that Apple was in talks with music publishers about a music flatrate. This report was dismissed as potentially false by several sources later on, but Schmidt-Holtz now indicated that his company in fact may be in talks with Apple about such a service. “Apple is a strong partner. We are in talks with Apple, as we are talking with other companies as well.” While this is a very blurry statement that does not confirm the FT report, it is not denying it either.

We would have to speculate whether a Sony-BMG-iTunes deal is in the works and how much such a service would cost. Apple, of course would have to bring in other music publishers as well and it will be interesting to see, how the monthly subscription price could escalate from the $9-$12 Sony-BMG is claiming for its catalog alone.

There is no time frame for the launch of this service, but Schmidt-Holtz said that “if everything works out”, the service could debut “this year”.