Sony may buy firm that poses threat to music industry

SONY, the record company, is considering buying a small London-based company that aims to distribute CD-quality music and videos over telephone lines.

The new service is a considerable threat to the established music industry. It allows consumers to select tracks from a central store of thousands of compact discs using little more than a computer and a telephone link.

Steve Hodges, music development manager for Sony UK, visited Cerberus to see the new service. 'The people who would hook into this over the Internet are the same people to whom we are marketing,' he said.

Mr Hodges has sent his report on Cerberus to the board of Sony UK. He said Ricky Adar, managing director of the new company, had caused considerable concern at mainstream record companies.

'They are a very bright bunch. Mr Adar knows what he is talking about. He is a sort of techno-punk, quite anarchic, but what they are trying to do is very interesting,' Mr Hodges said yesterday.

The Cerberus 'Digital Jukebox' challenges the whole chain of spin-off industries that flow from musician to consumer, and could render obsolete recording studios, publishing companies, CD manufacturers and even high street record shops.

Mr Adar is inviting artists to send in digital tape recordings of their music, which he will upload on to a giant database and make available, for a fee of a few pence per track, to anyone with access to the Internet global web of computer systems. Estimates of the number of people connected electronically via Internet vary from 20 million to 35 million.

Mr Hodges said buying Cerberus was one option, but did not rule out the possibility of striking a deal with Mr Adar. First Cerberus must enter into 'some sort of formal discussion with the British Phonographic Institute so we can sort out who collects the revenue and who gets what payment. We can't just give away our product free,' Mr Hodges said.

But Mr Adar is wary: 'I am not interested in being bought out by a major record company because that would put the digital domain in the same position as today's music business. It's imperative that Cerberus remains completely independent.'