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Sony BMG

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Sony BMG Music Entertainment
Company typeJoint venture
IndustryMusic & Entertainment
FoundedAugust 4, 2004
Headquarters
see List of Sony BMG offices,
New York City
,
USA United States
Key people
  • Andrew Lack
    Chairman of the Board of Directors
  • Rolf Schmidt-Holtz
    Chief Executive Officer
  • Tim Bowen
    Chief Operating Officer
  • Kevin Kelleher
    Executive Vice President
    Chief Financial Officer
    • ProductsMusic & Entertainment
    ParentSony Corporation of America (50%)
    Bertelsmann AG (50%)
    Websitewww.sonybmg.com

    Sony BMG Music Entertainment is a diverse music and entertainment group.

    History

    Sony BMG is the result of a 50-50 joint venture between Sony Music Entertainment (part of Sony) and Bertelsmann Music Group (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, Jive Records, RCA Victor Records, RCA Records, Legacy Recordings, Sonic Wave America, and others. The merger affected all Sony Music and Bertelsmann Music Group companies worldwide except for Japan, where it was felt that it would reduce competition in that country’s music industry significantly.

    Financial analysts covering the merger anticipated that up to 2,000 jobs could be cut as a result, saving Sony BMG approximately $350 million annually.

    The company's Chief Executive Officer (CEO) is Rolf Schmidt-Holtz, who succeeded Andrew 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.

    The company signed a content deal with the popular video sharing community YouTube.

    On August 5, 2008 Sony Corp. agreed to buy Bertelsmann AG's 50 percent stake in the music company for $1.2 billion to get full control. The music company will be renamed Sony Music Entertainment Inc. and will become a unit of Sony Corporation of America. [2]

    The merger

    On March 27, 2006, the New York Times reported that Bertelsmann was in talks with Sony to possibly alter the current venture. Two executives close to Sony BMG have said that Bertelsmann may offer Sony its half of the company in order to raise money by leveraging some of its media assets. Executives close to the label have stressed that any such agreement will likely take months to conclude.[3]

    On July 13, 2006, however, the European Court of First Instance annulled the European Commission's clearance decision as IMPALA (a trade association for independent labels in Europe) had applied for. This judgment was appealed by the merging parties. On October 3, 2007, after a new investigation, the European Commission upheld its prior approval of the merger.[4]

    It was also announced in 2006 that Sony BMG will dismantle the Sony Urban Music label. All of the artists will now be assigned to Epic or Columbia.[5]

    The international media and entertainment companies Sony Corporation and Bertelsmann AG announced on August 5, 2008 that Sony has agreed to acquire Bertelsmann's 50% stake in Sony BMG. The music company, to be called Sony Music Entertainment Inc. (SMEI), will become a wholly owned subsidiary of Sony Corporation of America.

    Management

    • Chairman of The Board - Andrew Lack
    • Chief Executive Officer - Rolf Schmidt-Holtz
    • Chief Financial Officer and Executive Vice President - Kevin Kelleher
    • Chairman, Sony Music Label Group - Rob Stringer
    • Chairman, BMG U.S. Label Group - Barry Weiss

    Controversy

    2005

    July

    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 . [1].

    October and November

    Main article: Sony BMG CD copy prevention scandal

    A controversy over digital rights management (DRM) software that automatically installed itself on people's computers and made them more vulnerable to computer viruses that was produced and shipped by Sony BMG ensued. The scandal caused numerous lawsuits and Sony BMG ended up recalling all affected CDs.

    November 16 - 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." [6] 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 blow among tech-product opinion leaders. "We've never done it before, and we hope we'll never have [an] occasion to do it again but, for 2005, eWeek Labs awards a Stupid Tech Trick grand prize to Sony." eWeek Vol. 22, No.50

    2007

    In October 2007, it was announced that Sony BMG successfully sued Jammie Thomas. The single mother, who made US$36,000 a year, was ordered to pay US$222,220 in damages for making 24 songs available for download on the Kazaa file-sharing network. Thomas is currently appealing the decision.

    List of Sony BMG labels


    Independent labels distributed by Sony BMG

    References

    1. ^ Sony Settles Payola Investigation from the Office of the Attorney General of New York [1].
    • Leonard, Devin (Nov. 28, 2005). "Music Lessons." Fortune, pp. 31–32.

    Listed Elsewhere

    See also

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