see end...
----- Original Message -----
From: "Tom Fine" <tflists@xxxxxxxxxxxxxxxxxxx>
As widely reported, Sony bought out BMG and now owns 100% of what used to be Columbia and RCA
back in the days. The Wall Street Journal reported a few interesting things. The whole shebang
was valued at $1.8 billion, which is a remarkably low market cap for a large chunk of the world's
commercial recorded legacy. BMG got a relatively small payment and got to keep the joint
venture's cash on the books, half of which they owned already anyway. WSJ reports Sony's strategy
is to once again try to use software (ie music) to try and sell hardware (music playing gear or
"synergies" with video gear or whatever. Given their terrible track record with this strategy, it
will be interesting see where this goes. But, on the plus side, Sony has a record of tolerating
low profits and losses in its movie unit in order to sell DVD players, large-screen TV's
professional video gear, etc. It also was able to leverage its movie studio as a big muscle in
the Blu-Ray victory. Also on the plus side, perhaps, I've read several reports that Sony is
looking anew at SACD and may try the format once again. For classical fans, there may be a
downside but I've heard nothing factual on this. The RCA Living Stereo SACD reissues were a pet
project, reportedly, of the family that controls BMG. Indeed, owning the Living Stereo catalog
was said to be a factor in BMG's decision to purchase RCA's music business. Another downside is
that under the joint-venture, the reissue programs were stalled or gutted and indeed first RCA's
studio complex and then Sony's shut down. I'm not clear if there is a unified library/archive for
this company, or if part or all of that has been outsourced. One friend of mine described Sony as
"the bizarro Apple, never able to hit the mark in recent years." Stockholders have been restless
and it will be interesting to see how much pressure the company comes under to wring profits out
of the music business. Sony, being a technology company, may be positioned well to transition
away from manufactured CD's into a download-centric world, but bizarro has been their MO with
everything from digital music players to an online store -- they don't seem to get any of this.
There are also frequently rumors floating around about Sony and Apple, although nothing has ever
come of any of that.
One interesting trend is that if music-owning entities continue to shed value and market cap, the
day will come where the content (ie the archives and the active contracts) will be attractive to
a Microsoft, Google or Apple. Under such a scenario, I doubt the buyer company would stay in the
manufactured-CD business for most titles and would probably be net-savvy enough to "get it" and
succeed at online sales, if they bought the catalog at a low enough price. I would say
value-bleeding would need to continue apace a few years before this becomes viable, although a
cash-rich company like Google could overpay to take a gamble sooner. CD sales will soon be 50% of
the peak years.
One significant problem this merger created is the fact that merging CBS with BMG left
the resulting firm in control of ALL extant pre-1919 recordings...and virtually all
pre-1935 recordings of any significance (Edison excepted in both cases)! Here in
Canada, given the fact that the newly-revised copyright law DIDN'T (not what I
expected...?!) extend the current 50-year term for sound recordings, all recordings
cut in 1956 or before are now in the public domain; however, in the US of A, where
NO recordings become p.d. until 1/1/2067...it is a different story...
Steven C. Barr