Sony logs on to Net music biz

Connect service touts 23 compatible hardware devices

The online music market got a little more crowded Tuesday as Sony launched its Connect musicstore, offering a model that’s similar to its competitors’ but has greater compatibility with Sony hardware.

Like iTunes and every other online musicstore, Connect offers track downloads for 99¢ and albums for $9.99, a model that offers slim margins. Market leader Apple has admitted it uses its iTunes Music Store primarily to drive sales of the highly profitable iPod music player.

Sony’s strategy seems similar, with the company emphasizing its 23 compatible hardware devices. Although the electronics giant has a hard-drive device set to come out later this year, its current crop of portable devices use Sony’s proprietary mini-discs, the new high-capacity Hi-MD discs and flash memory sticks. Mini-discs have yet to gain much market traction, however, and consumers seem to have grown used to devices with internal memory, like the market-leading iPod.

“We’re starting this for the same reason Sony bought a studio and a label,” Connect general manager Jay Samit said. “It’s a new business model that brings together our hardware expertise and vast intellectual property.”

To draw attention to Connect’s launch, Sheryl Crow performed Tuesday on a flight by Sony promo partner United Airlines; Connect will redeem United frequent flier miles for songs. Soon to launch is a major marketing partnership with McDonalds.

Sony, one of Hollywood’s leading players in digital distribution, was the driving force behind Internet video-on-demand company MovieLink, backed by five of the majors. With Connect’s launch coming more than a year after iTunes, however, Sony will have to spend significantly on marketing to gain share over established competitors.

Connect will see more of an open market overseas, as it launches in the U.K., Germany and France next month ahead of all of its U.S. competitors.

Sony also may benefit next winter from its highly anticipated PSP handheld gaming device, which also will play music and undoubtedly be compatible with Connect.

In other digital music news, Napster announced it will be the first U.S. online musicstore to expand into Canada, launching its service north of the border this summer.