Sony BMG Music Entertainment

Sony BMG Music Entertainment, Inc. is the result of a 50/50 joint venture between Sony Music Entertainment (part of Sony) and BMG Entertainment (part of Bertelsmann) completed on August 5, 2004. It is one of the Big Four music companies, and includes ownership and distribution of recording labels such as Arista Records, Columbia Records, Epic Records, J Records, RCA Victor Records, RCA Records, Sonic Wave America, and others.

Financial analysts covering the merger anticipated that up to 2000 jobs could be cut as a result, saving Sony BMG approximately States dollar|$" target="_blank" >^*350 million annually.

The company's Chief Executive Officer (CEO) is Rolf Schmidt-Holz, who succeeded Andy Lack on February 10, 2006. In the first half of 2005, the company's share of new releases in the United States (US) declined from 33% to 26% according to Nielsen SoundScan. This, and Lack's negotiation of what some called an "ill-conceived" deal with Bruce Springsteen led to Bertelsmann informing Sony that it would not renew Lack's contract. Lack now holds the position of Chairman of the Board, the position formerly occupied by Schmidt-Holz.

Controversy

In July 2005, Sony BMG was fined 10 million dollars after the New York Attorney General's office determined that they had been practicing payola mostly in the form of direct payments to radio stations and bribes to disc jockeys to promote various artists including Franz Ferdinand, Audioslave,Celine Dion and mainly Jessica Simpson. Epic Records, one of their labels, was specifically cited for using fake contests in order to hide the fact that the gifts were going to disc jockeys rather than listeners .
In October and November 2005, a controversy over digital rights management software produced and shipped by this company ensued; see 2005 Sony CD copy protection scandal. On November 16, 2005 US-CERT, the United States Computer Emergency Readiness Team, part of the United States Department of Homeland Security, issued an advisory on Extended Copy Protection DRM, citing the XCP use of rootkit technology to hide certain files from the computer user as a security threat to computer users and saying that one of the uninstallation options provided by Sony also introduced vulnerabilities to a system. US-CERT advised, "Do not install software from sources that you do not expect to contain software, such as an audio CD." ^* In its "Top Flops of '05" issue, the enterprise newsweekly eWeek had to create a new category for the "Sony BMG root-kit fiasco." Peter Coffee, of eWeek Labs reported, "The Sony brand name was already in trouble—it lost 16 percent of its value between 2004 and 2005.... Now it has taken a body blow among tech-product opinion leaders. We've never done it before, and we hope we'll never have occasion to do it again but, for 2005, eWeek Labs awards a stupid tech trick grand prize to Sony." eWeek Vol. 22, No.50

Future of the merger

On March 27, 2006, the New York Times reported that Bertlesmann was in talks with Sony to possibly alter the current venture. Two executives close to Sony BMG have said that Bertlesmann may offer Sony its half of the company in order to raise money by leveraging some of its media assets. Executives close to Sony BMG have stressed that any such agreement will likely take months to conclude. ^*

On July 13, 2006, however, the European Union annulled the merger, ruling that the two companies must end their venture and become separate companies once again in order to have fair competition with independent labels. The case is being appealed.

List of Sony BMG labels

Japan

In Japan, Sony's Japanese recorded music subsidiary continues to operate independently of Sony BMG due to the strength and size of its business. BMG's former Japanese subsidiary is part of Sony BMG.

References

Sony Settles Payola Investigation from the Office of the Attorney General of New York ^*.
Leonard, Devin (Nov. 28, 2005). "Music Lessons". Fortune, pp. 31–32.

Listed Elsewhere

Big Four

External links

Sony BMG Music Entertainment | Sony BMG Music Entertainment | ソニーBMG・ミュージックエンタテインメント | Sony BMG | sonybmg