Music industry to replicate Hollywood’s content release “windows”

Releasing content in tightly controlled windows — first in theaters, later to home video, and finally to TV, for example — has been hugely profitable for movie studios in the past few years
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As it continues to shorten its longstanding system of “windows” for access to copyrighted material, the music industry is betting its future on just such a model of staggered, tiered releases, CNET News reported last week.

Digital download services such as Apple Computer’s iTunes have gleaned most of the headlines to date. But the digital music market has already moved to a diverse model, particularly when mobile consumers are counted.

Sony BMG is already seeing 10 percent of its revenue in the United States, and more than 20 percent of its revenue in China and South Korea, come from digital and mobile products. In the next year, labels will increasingly find ways to boost those figures by offering a large range of different products at different times, and through different channels.

These budding music windows — ranging from exclusive tracks posted on iTunes or pre-release ring tones to live CDs released long after an album’s street date — are signs of how seriously the music industry is taking the digital business at last, CNET said.

Physical CD sales continue to drop, and executives say they don’t realistically expect that to turn around or even to stabilize immediately. Peer-to-peer use continues to rise worldwide, and according to research firm NPD Group, 44 percent of music found on consumers’ hard drives in 2004 still came from file swapping or copying other CDs.

Digital sales continue to grow by leaps and bounds, however. According to the International Federation of the Phonographic Industry, about 180 million songs were sold online in the first half of 2005, up from 57 million in the same period last year.

Releasing content in tightly controlled windows — first in theaters, later to home video, and finally to TV, for example — has been hugely profitable for movie studios in the past few years. These windows have shrunk substantially as DVD releases have been moved substantially closer, but the studios have kept strictly separate release dates for theaters, home video and on-demand services, the CNET report said.

This new product model is also changing the role of record companies, which are increasingly dealing with other giant corporations, from telephone companies to Internet portals, as music distributors.

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