Sony BMG

Last updated

Sony BMG Music Entertainment
TypeJoint venture (Delaware general partnership)
IndustryMusic and entertainment
Successors
FoundedMarch 4, 2004;17 years ago (2004-03-04)
DefunctOctober 1, 2008;12 years ago (2008-10-01)
Fate Bertelsmann's share acquired by Sony
Headquarters,
United States
Key people
David Gordon: chairman Sound & Vision
OwnersEach of 50% owned by:
Website "http://sonybmg.com/". Archived from the original on January 1, 2006.

Sony BMG Music Entertainment was an American record company owned as a 50–50 joint venture between Sony Corporation of America and Bertelsmann Music Group. The venture's successor, the revived Sony Music, is wholly owned by Sony, following their buyout of the remaining 50% held by Bertelsmann. BMG was instead rebuilt as BMG Rights Management on the basis of 200 remaining artists.

Contents

History

Sony BMG Music Entertainment began as the result of a 50–50 joint venture between Sony Music (part of Sony) and Bertelsmann Music Group (part of Bertelsmann) completed on March 4, 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, Mchenry 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 would be cut as a result, saving Sony BMG approximately $350 million annually.

The company's chief executive officer (CEO) was 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.

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

On August 5, 2008 Sony Corporation agreed to buy Bertelsmann AG's 50 percent stake in the music company for $1.2 billion to get full control. The music company was renamed Sony Music Entertainment and became a unit of Sony Corporation of America. [1] This allowed Sony the rights to artists on the current and historic BMG roster and allowed Sony Corporation to better integrate its functions with its PlayStation 3 and upcoming new media initiatives. As part of the buyout, Bertelsmann kept the rights to master recordings by 200 artists, which formed the basis for a second version of BMG.

Sony and Bertelsmann last teamed up in 2013, in a failed bid to acquire Parlophone from Universal Music Group. BMG would administer the label's back catalogue, while its current artists would sign with Sony. [2] While Sony BMG failed to win Parlophone (which ultimately went to Warner Music Group), BMG acquired Mute Records' back catalogue and licensed Depeche Mode and the catalogue of The Echo Label to Sony. [3]

Controversies

Payola fine

In July 2005, Sony BMG was fined $10 million 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, 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. [4]

Rootkit scandal

On 31 October 2005, a scandal erupted over digital rights management (DRM) software produced and shipped by Sony BMG that automatically installed itself on people's computers and made them more vulnerable to computer viruses. The scandal and attendant controversy about the practice of software auto-installation spawned several lawsuits. Sony BMG eventually recalled all of the affected CDs.

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, saying that a Sony-provided uninstallation option also introduced computer system vulnerabilities.

US-CERT advised, "Do not install software from sources that you do not expect to contain software, such as an audio CD." [5] 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

Kazaa file-sharing lawsuit

In October 2007, Sony BMG, alongside other large music firms, successfully sued Jammie Thomas for making 24 songs available for download on the Kazaa file-sharing network. Thomas, who made US$36,000 a year, was ordered to pay US$222,000 in damages. Thomas had allegedly shared 1702 files in total; the court upholding the award called it an "aggravated case of willful infringement". [6]

Children's online privacy violations

In 2008, the Federal Trade Commission 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 and the Children's Online Privacy Protection Act. Sony did not restrict minor children's participation in its websites. Sony paid a $1 million fine. [7]

See also

Related Research Articles

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Bertelsmann Music Group Record label company

Bertelsmann Music Group (BMG) was a division of German media company Bertelsmann before its completion of sale of the majority of its assets to Sony Corporation of America on 1 October 2008. Although it was established in 1987, the music company was formed as RCA/Ariola International in 1985 as a joint venture to combine the music label activities of RCA Corporation's RCA Records division and Bertelsmann's Ariola Records and its associated labels which include Arista Records. It consisted of the BMG Music Publishing company, the world's third largest music publisher and the world's largest independent music publisher, and the 50% share of the joint venture with Sony Music, which established the German American Sony BMG from 2004 to 2008.

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Extended Copy Protection

Extended Copy Protection (XCP) is a software package developed by the British company First 4 Internet and sold as a copy protection or digital rights management (DRM) scheme for Compact Discs. It was used on some CDs distributed by Sony BMG and sparked the 2005 Sony BMG CD copy protection scandal; in that context it is also known as the Sony rootkit.

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Sony BMG copy protection rootkit scandal Sony BMGs implementation of copy protection measures

A scandal erupted in 2005 regarding Sony BMG's implementation of copy protection measures on about 22 million CDs. When inserted into a computer, the CDs installed one of two pieces of software which provided a form of digital rights management (DRM) by modifying the operating system to interfere with CD copying. Neither program could easily be uninstalled, and they created vulnerabilities that were exploited by unrelated malware. One of the programs would install and "phone home" with reports on the user's private listening habits - even if the user refused its end-user license agreement (EULA), while the other was not mentioned in the EULA at all. Both programs contained code from several pieces of copylefted free software in an apparent infringement of copyright, and configured the operating system to hide the software's existence, leading to both programs being classified as rootkits.

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References

  1. Thiel, Simon (August 5, 2008). "Sony Buys Bertelsmann Sony BMG Stake for $1.2 Billion". Bloomberg L.P. Retrieved August 5, 2008.
  2. "Sony and BMG have number for Parlophone". nypost.com. January 7, 2013.
  3. "INTL: BMG Appoints Distribution And Marketing Partners For Sanctuary And Mute Catalogues". bmg.com. June 25, 2013.
  4. Archived January 11, 2006, at the Wayback Machine
  5. "Current Activity | US-CERT". Us-cert.gov. Retrieved June 22, 2014.
  6. Jeffrey, Don (September 11, 2012). "Minnesota Song Downloader Must Pay $222,000, Court Says". Bloomberg L.P. Retrieved August 9, 2016.
  7. "Sony sued for collecting data on children under 13 – San Jose Mercury News". Mercurynews.com. December 10, 2008. Retrieved June 22, 2014.