SanDisk to sell music on memory cards

Michal Lev-RamBy Michal Lev-RamSpecial Correspondent
Michal Lev-RamSpecial Correspondent

Michal Lev-Ram is a special correspondent covering the technology and entertainment sectors for Fortune, writing analysis and longform reporting.

By Michal Lev-Ram

Here’s a novel invention: A thin, portable piece of hardware that stores digital music. No, it’s not a compact disc – it’s a microSD card, a fingernail-sized memory device that fits into that tiny slot on the side of your cell phone.

On Monday flash memory maker SanDisk (SNDK) announced an initiative called slotMusic, which will store songs on the small cards. Top record labels EMI Music, Sony BMG, Universal Music Group and Warner Music Group (WMG) are also backing the new music format. While microSD cards are nothing new, this is the first big push to put pre-loaded content onto memory cards, which SanDisk and its music industry partners are hoping will help revive the ailing music industry.

The DRM-free, mini-devices do have more going for them than CDs, whose sales have been declining. For starters, microSD cards can be plugged into a range of devices, including cell phones, MP3 players, PCs and even some personal navigation devices. The 1GB (gigabyte) cards will be able to hold an entire album, in addition to liner notes, videos and album art. But in an age when more and more people are getting their tunes online, will consumers want a new version of the CD?

Daniel Schreiber, general manager of SanDisk’s audio and video division, says a company-sponsored survey showed 74% of people still value a tangible form of music they can stack and carry around with them. What’s more, says Schreiber, slotMusic will appeal to people who don’t want to deal with creating playlists online and downloading songs to devices. “It’s incredible how high a barrier these [online music] services have for taking music on the go,” says Schreiber, adding that slotMusic was made to be as easy as slipping a disc into a CD player or “buckling a belt.”

But Michael McGuire, an analyst at research firm Gartner, says he’s not sure bundling albums into a physical format makes much sense as a long-term business model, given the direction music consumption is heading. “Consumers are getting used to controlling their music [through online playlists],” says McGuire. “But the industry is still trying to push this concept of bundling more stuff into a physical package.”

And like any new digital music initiative, success will at least partly depend on getting the price right and being able to offer a wide enough selection of artists – SanDisk refused to provide details on both of these questions, saying only that more information would be revealed in coming weeks.

SlotMusic cards will be available in Wal-Mart and Best Buy stores later this fall.