Sony BMG Music Entertainment and Warner Music Group have partnered with a joint venture operating in China that develops technology for distributing music downloads and other content to mobile phones, the record companies said Tuesday.
The music companies declined to disclose how much each had invested in ACCESS China Media Solutions, a joint venture between China's ACCESS Co. Ltd., and Seattle-based digital media firm Melodeo Inc.
"It's a strategic investment," said Michael Nash, senior vice president of digital strategy and business development for Warner Music Group.
ACCESS China Media Solutions was formed early last year as a vehicle for Melodeo to distribute its technology to wireless carriers and handset makers in China and other markets in Asia.
The company makes software through which mobile phone users can dial up digital content such as ringtones, listen to streams of audio like podcasts, or download full-length songs.
"Those are the platforms we're hoping to launch with some of the operator partners," said Thomas Hesse, president of global digital business for Sony BMG. "The fact that you've got the music companies supporting this, we believe, is going to strengthen the chance of those platforms being successful."
The music rivals' investment also gives them some say in how the technology works and, perhaps most importantly, helps protect their recording artists' music from unauthorized copying.
"We're definitely going to advise the company with respect to both (digital rights management) and also the consumer experience on the platform," Nash said.
Mobile phone networks are more secure than the Internet. Still, record labels are keen on avoiding the problems piracy poses with CDs and online content through unauthorized file-sharing.
ACCESS' offerings also include a digital rights management system to prevent content distributed over mobile phones from being copied without permission.
To date, the Chinese joint venture has only closed a deal with one cell phone network operator, Singapore's MobileOne Ltd.
"By investing directly in the market it signals a commitment by both companies to developing business there, and with good reason," said Susan Kevorkian, an analyst with research firm IDC. "Wireless and (Internet)-based distribution represent the future for the music industry."
Both Sony BMG and Warner Music have had licensing deals in place to sell digital music in China's mobile market.
While the Chinese ringtone market is growing, the record companies are eager to expand their content offerings.
"This is next generation. This is really very much about full-track (downloads) and mobile-casting," Nash said.