Sony's Music Unlimited, a cloud-based music-streaming service, has been heavily scrutinized ever since its launch as Qrocity last year. Initially plagued by a hacking scandal that affected some 77 million accounts across Sony's PlayStation network, Music Unlimited has since fallen under the radar amid major user growth for similar services like Spotify, Mog and Rdio.
Although the company has announced that Music Unlimited has 1 million active users across all Sony devices, the service still has a ways to go before it's taken seriously by consumers and its ever-expanding competitive roster. This is all too apparent to Tim Schaaff, president of Sony's Entertainment Network division, who sat down with Billboard at MIDEM for a 30-minute discussion about the company's future plans for expanding Music Unlimited, its relationship with Spotify and bouncing back from the hacking scandal. Below are excerpts from the discussion.
Billboard.biz: Music Unlimited has one million active users but still hasn't gained much traction among consumers. How will you boost that awareness this year?
Tim Schaaff: You're gonna see two things. One, Sony investing to bring this story to the retail front. You'll also see Sony on a global basis in a global marketing campaign, whether that's TV ads or print, all talking about Sony Entertainment Network in a big way. It's not simple what we do at the retail front, it's also the messaging we deliver through all the other advertising and promotional channels we have access to. That's the beginning.
Will Sony artists be a part of that messaging?
I certainly would expect so. For some of the things we do that's an important part of the marketing strategy. We do that already for ordinary consumer electronics marketing.
Sony Entertainment Network launched in September, the same time that Facebook Music was introduced and helped raise the profiles of Spotify, MOG and Rdio. Many analysts look at Music Unlimited and say, why bother? What do you say to that?
A couple things. First of all, I would say this is going to be a long competition. This is not a sprint, this is a marathon. We feel very confident that it's going to take a concerted investment over a long period of time to really get where we want to get….We licensed music to more than 250 different services last year, so in some senses it's a very crowded marketplace. Really the basic reason why we would do this is we believe we can bring something of value to the marketplace, a meaningful innovation to the marketplace….Sony is an innovative product company and it has always been in our DNA to want to make those kinds of products.
What's your take on what Spotify is bringing to the marketplace from a revenue perspective? Are you satisfied with the current royalty structure?
I don't know anything about how they do their deal [with the labels]. But what I can say in general about the business relationship between us and recording labels and publishers is that we're a fully licensed service and we're paying our bills on time. I think there's a good amount of revenue going into the labels that's great for the industry. I think everybody's going to benefit form that.
The network hack last spring sent major ripples through your company and the entertainment industry. How will you earn back the trust of your consumer this year?
We're quite confident at this point that consumer trust in what we've built is as strong as ever. We've seen record-breaking engagement in our network in the last few weeks -- bigger than ever before. We feel quite confident that consumers are back and we're really talking about where are we going with our products, what are the innovations we're trying to bring to the market… Looking back at what happened last year we invested a lot of money to improve the security of our network. Continuing in that investment, the company announced we hired a chief information security officer, Phil Reitinger, to come and help the company as a whole improve the way we approach security as a company. Not just in the context of what happened back in April, because we all can see the world in the changing dynamic. You read every single day about threats to services, threats to people's personal information, threats to some of their national infrastructure all arising and becoming very tangible as all of our lives are getting connected to this internet. We've taken a very strong set of actions to enhance the security provisions. I think we're doing what we need to do. We've moved on and are looking forward at what's coming.