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Re: [ARSCLIST] Sony, BMG and the health of the music biz
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