Sony BMG Music Entertainment
Encyclopedia
Sony BMG Music Entertainment was a recorded music company, which was a 50–50 joint venture between the Sony Corporation of America and Bertelsmann AG
Bertelsmann
Bertelsmann AG is a multinational media corporation founded in 1835, based in Gütersloh, Germany. The company operates in 63 countries and employs 102,983 workers , which makes it the most international media corporation in the world. In 2008 the company reported a €16.118 billion consolidated...

. The venture’s successor, the again-active Sony Music Entertainment
Sony Music Entertainment
Sony Music Entertainment ' is the second-largest global recorded music company of the "big four" record companies and is controlled by Sony Corporation of America, the United States subsidiary of Japan's Sony Corporation....

, is 100% owned by the Sony Corporation of America
Sony Corporation of America
Sony Corporation of America , based in New York, is the United States subsidiary of Japan's Sony Corporation, headquartered in Tokyo. It is the umbrella company under which all Sony companies operate in the United States....

.

History

Sony BMG Music Entertainment began as the result of a 50–50 joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...

 between Sony Music Entertainment
Sony Music Entertainment
Sony Music Entertainment ' is the second-largest global recorded music company of the "big four" record companies and is controlled by Sony Corporation of America, the United States subsidiary of Japan's Sony Corporation....

 (part of Sony
Sony
, commonly referred to as Sony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan and the world's fifth largest media conglomerate measured by revenues....

) and Bertelsmann Music Group (part of Bertelsmann
Bertelsmann
Bertelsmann AG is a multinational media corporation founded in 1835, based in Gütersloh, Germany. The company operates in 63 countries and employs 102,983 workers , which makes it the most international media corporation in the world. In 2008 the company reported a €16.118 billion consolidated...

) completed on March 4, 2004. It is one of the Big Four
World music market
The music industry or music business sells compositions, recordings and performances of music. Among the many individuals and organizations that operate within the industry are the musicians who compose and perform the music; the companies and professionals who create and sell recorded music The...

 music companies, and includes ownership and distribution of recording labels such as Arista Records
Arista Records
Arista was an American record label. It was a wholly owned subsidiary of Sony Music Entertainment and operated under the RCA Music Group. The label was founded in 1974 by Clive Davis, who formerly worked for CBS Records...

, Columbia Records
Columbia Records
Columbia Records is an American record label, owned by Japan's Sony Music Entertainment, operating under the Columbia Music Group with Aware Records. It was founded in 1888, evolving from an earlier enterprise, the American Graphophone Company — successor to the Volta Graphophone Company...

, Epic Records
Epic Records
Epic Records is an American record label, owned by Sony Music Entertainment. Though it was originally conceived as a jazz imprint, it has since expanded to represent various genres. L.A...

, J Records
J Records
J Records was an American record label, owned and operated by Sony Music Entertainment, and was distributed through the RCA Music Group.-Company history:...

, Jive Records
Jive Records
Jive Records was a record label based in New York City, operating under RCA Music Group. Jive was primarily known for a string of successes with hip hop artists in the 1980s, and in teen pop and boy bands in the late 1990s. The word "jive" was inspired by Township Jive, a form of South African...

, RCA Victor Records, RCA Records
RCA Records
RCA Records is one of the flagship labels of Sony Music Entertainment. The RCA initials stand for Radio Corporation of America , which was the parent corporation from 1929 to 1985 and a partner from 1985 to 1986.RCA's Canadian unit is Sony's oldest label...

, Legacy Recordings
Legacy Recordings
Legacy Recordings is Sony Music Entertainment's catalog division. It was founded in 1990 by CBS Records under the leadership of Jerry Shulman, Richard Bauer, Gary Pacheco and Amy Herot to handle reissues of recordings from the vast catalogues of Columbia Records, Epic Records and associated...

, 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 would be cut as a result, saving Sony BMG approximately $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

350 million annually.

The company's Chief Executive Officer
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...

 (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
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 (US) declined from 33% to 26% according to Nielsen SoundScan
Nielsen SoundScan
Nielsen SoundScan is an information and sales tracking system created by Mike Fine and Mike Shalett. Soundscan is the official method of tracking sales of music and music video products throughout the United States and Canada...

. This, and Lack's negotiation of what some called an "ill-conceived" deal with Bruce Springsteen
Bruce Springsteen
Bruce Frederick Joseph Springsteen , nicknamed "The Boss," is an American singer-songwriter who records and tours with the E Street Band...

 led to Bertelsmann informing Sony that it would not renew Lack's contract.

The company signed a content deal with the popular video sharing community YouTube
YouTube
YouTube is a video-sharing website, created by three former PayPal employees in February 2005, on which users can upload, view and share videos....

.

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. This will allow Sony the rights to artists on the current and historic BMG roster and would allow Sony Corporation to better integrate its functions with its PlayStation 3 and upcoming new media initiatives.

The merger

On March 27, 2006, the New York Times reported that Bertelsmann was in talks with Sony
Sony
, commonly referred to as Sony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan and the world's fifth largest media conglomerate measured by revenues....

 to possibly alter the current venture. Two executives close to Sony BMG 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.

On July 13, 2006, however, the European Court of First Instance
Court of First Instance
The General Court is a jurisdictional instance of the Court of Justice of the European Union. From its inception on 1 January 1989 to 30 November 2009, it was known as the Court of First Instance .-Competence:...

 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.http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/1437

It was also announced in 2006 that Sony BMG would dismantle the Sony Urban Music label. All of the artists will now be assigned to Epic
Epic Records
Epic Records is an American record label, owned by Sony Music Entertainment. Though it was originally conceived as a jazz imprint, it has since expanded to represent various genres. L.A...

 or Columbia
Columbia Records
Columbia Records is an American record label, owned by Japan's Sony Music Entertainment, operating under the Columbia Music Group with Aware Records. It was founded in 1888, evolving from an earlier enterprise, the American Graphophone Company — successor to the Volta Graphophone Company...

.http://www.urbannetwork.com/cms/index.php?news=792

It was announced in March 2007 that Sony Music Entertainment Japan
Sony Music Entertainment Japan
is Sony's music arm in Japan. SMEJ is directly owned by Sony Corporation and independent from the United States-based Sony Music Entertainment due to its strength in the Japanese music industry....

, which is not part of Sony BMG, would dismantle the Tofu Records
Tofu Records
was a US record label of Sony Music Entertainment Japan that was launched in 2003 to distribute Japanese Sony artists in the United States, and that closed in 2007. Their first signed artist was T.M.Revolution, and they used the anime fandom community to spread the word. T.M.Revolution's U.S...

 label. All of the SMEJ artists will be now signed to Epic or Columbia.

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. (SME), will become a wholly owned subsidiary of Sony Corporation of America.

On October 1, 2008, Sony Corporation completed the acquisition of Bertelsmann's 50% stake in the companies' joint venture. The music company is now a wholly owned subsidiary of Sony Corporation of America and operates music labels such as Arista Records, Upstate Records, Columbia Records, Epic Records, J Records, Jive Records, RCA Records and Zomba Records. The sale price was not disclosed when the deal was announced in August, but news reports valued it at $1.5 billion.

July

Sony BMG was fined 10 million dollars after the New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...

 Attorney General
Attorney General
In most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may also have executive responsibility for law enforcement or responsibility for public prosecutions.The term is used to refer to any person...

's office determined that they had been practicing payola
Payola
Payola, in the American music industry, is the illegal practice of payment or other inducement by record companies for the broadcast of recordings on music radio, in which the song is presented as being part of the normal day's broadcast. Under U.S...

 mostly in the form of direct payments to radio stations and bribes to disc jockey
Disc jockey
A disc jockey, also known as DJ, is a person who selects and plays recorded music for an audience. Originally, "disc" referred to phonograph records, not the later Compact Discs. Today, the term includes all forms of music playback, no matter the medium.There are several types of disc jockeys...

s to promote various artists including Franz Ferdinand
Franz Ferdinand (band)
Franz Ferdinand are a Scottish post-punk revival band formed in Glasgow in 2002. The band is composed of Alex Kapranos , Bob Hardy , Nick McCarthy , and Paul Thomson .The band first experienced chart success when their second single, "Take Me Out", reached #3 in...

, Audioslave
Audioslave
Audioslave was an American rock supergroup that formed in Los Angeles, California in 2001. It consisted of former Soundgarden lead singer/rhythm guitarist Chris Cornell and the former instrumentalists of Rage Against the Machine: Tom Morello , Tim Commerford and Brad Wilk...

, and mainly Jessica Simpson
Jessica Simpson
Jessica Ann Simpson is an American recording artist, actress, television personality, and fashion designer whose rise to fame began in 1999. Since that time, Simpson has achieved many recording milestones, starred in several television shows, movies, and commercials, launched a line of hair and...

.

Epic Records
Epic Records
Epic Records is an American record label, owned by Sony Music Entertainment. Though it was originally conceived as a jazz imprint, it has since expanded to represent various genres. L.A...

, 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 .

October and November

A controversy over digital rights management
Digital rights management
Digital rights management is a class of access control technologies that are used by hardware manufacturers, publishers, copyright holders and individuals with the intent to limit the use of digital content and devices after sale. DRM is any technology that inhibits uses of digital content that...

 (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
Product recall
A product recall is a request to return to the maker a batch or an entire production run of a product, usually due to the discovery of safety issues. The recall is an effort to limit liability for corporate negligence and to improve or avoid damage to publicity...

 all affected CDs.

November 16 - US-CERT, the United States Computer Emergency Readiness Team, part of the United States Department of Homeland Security
United States Department of Homeland Security
The United States Department of Homeland Security is a cabinet department of the United States federal government, created in response to the September 11 attacks, and with the primary responsibilities of protecting the territory of the United States and protectorates from and responding to...

, issued an advisory on Extended Copy Protection
Extended Copy Protection
Extended Copy Protection is a software package developed by the British company First 4 Internet, and sold as a copy protection or digital rights management scheme for Compact Discs...

 DRM, citing the XCP use of rootkit
Rootkit
A rootkit is software that enables continued privileged access to a computer while actively hiding its presence from administrators by subverting standard operating system functionality or other applications...

 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." http://www.us-cert.gov/current/current_activity.html#xcpdrm In its "Top Flops of '05" issue, the enterprise newsweekly eWeek
EWeek
eWeek is a weekly computing business magazine published by Ziff Davis Enterprise.The magazine consists of a print publication and web site covering enterprise topics and is targeted at IT professionals rather than hobbyists.-Audience:The eWeek audience is actively involved in buying enterprise...

 had to create a new category for the "Sony BMG root-kit fiasco." Peter Coffee
Peter Coffee
Peter Coffee is best known for his longtime role as a commentator for Ziff Davis, where he was most recently Technology Editor for eWEEK until his departure for salesforce.com in January 2007...

, of eWeek
EWeek
eWeek is a weekly computing business magazine published by Ziff Davis Enterprise.The magazine consists of a print publication and web site covering enterprise topics and is targeted at IT professionals rather than hobbyists.-Audience:The eWeek audience is actively involved in buying enterprise...

 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
EWeek
eWeek is a weekly computing business magazine published by Ziff Davis Enterprise.The magazine consists of a print publication and web site covering enterprise topics and is targeted at IT professionals rather than hobbyists.-Audience:The eWeek audience is actively involved in buying enterprise...

 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
Kazaa
Kazaa Media Desktop started as a peer-to-peer file sharing application using the FastTrack protocol licensed by Joltid Ltd. and operated as Kazaa by Sharman Networks...

 file-sharing network.

2008

The Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...

 sued Sony BMG for collecting and displaying personal data of 30,000 minors without parental consent via its websites since 2004, violating the Federal Trade Commission Act
Federal Trade Commission Act
The Federal Trade Commission Act of 1914 started the Federal Trade Commission , a bipartisan body of five members appointed by the president of the United States for seven-year terms. This commission was authorized to issue “cease and desist” orders to large corporations to curb unfair trade...

 and the Children's Online Privacy Protection Act
Children's Online Privacy Protection Act
The Children's Online Privacy Protection Act of 1998 is a United States federal law, located at .The act, effective April 21, 2000, applies to the online collection of personal information by persons or entities under U.S. jurisdiction from children under 13 years of age...

. Sony did not restrict minor
Minor
Minor means "not important", and in Latin "smaller". It may also refer to:* an underage child, see Minor * Academic minor, a secondary focus of a Bachelor's degree, the primary focus being an academic major-Mathematics:...

 children's participation in its websites. Sony paid a $1 million fine.

See also

  • Sony Music Entertainment
    Sony Music Entertainment
    Sony Music Entertainment ' is the second-largest global recorded music company of the "big four" record companies and is controlled by Sony Corporation of America, the United States subsidiary of Japan's Sony Corporation....

  • Bertelsmann Music Group
  • Big Four
    World music market
    The music industry or music business sells compositions, recordings and performances of music. Among the many individuals and organizations that operate within the industry are the musicians who compose and perform the music; the companies and professionals who create and sell recorded music The...

  • Sony Music Entertainment Japan
    Sony Music Entertainment Japan
    is Sony's music arm in Japan. SMEJ is directly owned by Sony Corporation and independent from the United States-based Sony Music Entertainment due to its strength in the Japanese music industry....

    , which was not part of Sony BMG, distributed Japanese Music
    Music of Japan
    The music of Japan includes a wide array of performers in distinct styles both traditional and modern. The word for music in Japanese is 音楽 , combining the kanji 音 with the kanji 楽...

     in the US through Columbia or Epic, since around March 2007 when previous distributor, Tofu Records
    Tofu Records
    was a US record label of Sony Music Entertainment Japan that was launched in 2003 to distribute Japanese Sony artists in the United States, and that closed in 2007. Their first signed artist was T.M.Revolution, and they used the anime fandom community to spread the word. T.M.Revolution's U.S...

    , was closed down
  • List of record labels
  • List of Sony Music Entertainment labels
  • List of Sony Music Entertainment artists
  • Columbia House
    Columbia House
    The Columbia House brand was introduced in the early 1970s by the Columbia Records division of CBS, Inc. as an umbrella for its mail-order music clubs, the primary incarnation of which was the Columbia Record Club, established in 1955. It had a significant market presence in the 1980s and early...


External links

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