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Sony BMG

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Sony BMG Music Entertainment
Company typeJoint venture
Industry
  • Music
  • Entertainment
Predecessors
FoundedAugust 6, 2004;19 years ago(2004-08-06)
DefunctOctober 1, 2008;15 years ago(2008-10-01)
FateBertelsmann's share acquired by Sony
Successors
Headquarters,
U.S.
Key people
David Gordon (chairman, Sound & Vision)
OwnersEach of 50% owned by:
Website"http://sonybmg /".Archived fromthe originalon January 1, 2006.

Sony BMG Music Entertainmentwas an Americanrecord companyowned as a 50–50joint venturebetweenSony Corporation of AmericaandBertelsmann.The venture's successor, the revivedSony Music,is wholly owned bySony,following their buyout of the remaining 50% held byBertelsmann.BMG was instead rebuilt asBMG Rights Managementon the basis of 200 remaining artists.

History

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Sony BMG Music Entertainment began as the result of a merger betweenSony Music(part ofSony) andBertelsmann Music Group(part ofBertelsmann) completed on August 6, 2004. It was one of theBig Fourmusic companies and includes ownership and distribution ofrecording labelssuch asArista Records,Columbia Records,Epic Records,J Records,Mchenry Records,Jive Records,RCA Victor Records,RCA Records,Legacy Recordings,Sonic Wave Americaand 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 toNielsen SoundScan.This, and Lack's negotiation of what some called an "ill-conceived" deal withBruce Springsteenled 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[citation needed].

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 asecond version of BMG.

Sony and Bertelsmann last teamed up in 2013, in a failed bid to acquireParlophonefromUniversal 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 toWarner Music Group), BMG acquiredMute Records' back catalogue and licensedDepeche Modeand the catalogue ofThe Echo Labelto Sony.[3]

Controversies

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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

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

On November 16, 2005,US-CERT,theUnited States Computer Emergency Readiness Team,part of theUnited States Department of Homeland Security,issued an advisory onExtended Copy ProtectionDRM, citing the XCP use ofrootkittechnology 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 newsweeklyeWeekhad 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

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In October 2007, Sony BMG, alongside other large music firms, successfully suedJammie Thomasfor making 24 songs available for download on theKazaafile-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

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In 2008, theFederal Trade Commissionsued Sony BMG for collecting and displaying personal data of 30,000 minors without parental consent via its websites since 2004, violating theFederal Trade Commission Actand theChildren'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

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References

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  1. ^Thiel, Simon (August 5, 2008)."Sony Buys Bertelsmann Sony BMG Stake for $1.2 Billion".Bloomberg L.P.Archivedfrom the original on October 9, 2007.RetrievedAugust 5,2008.
  2. ^"Sony and BMG have number for Parlophone".nypost.January 7, 2013.Archivedfrom the original on September 23, 2017.RetrievedDecember 20,2017.
  3. ^"INTL: BMG Appoints Distribution And Marketing Partners For Sanctuary And Mute Catalogues".bmg.June 25, 2013.Archivedfrom the original on September 23, 2017.RetrievedSeptember 22,2017.
  4. ^"SONY SETTLES PAYOLA INVESTIGATION".Archived fromthe originalon January 11, 2006.
  5. ^"Current Activity | US-CERT".Us-cert.gov.Archivedfrom the original on February 29, 2012.RetrievedJune 22,2014.
  6. ^Jeffrey, Don (September 11, 2012)."Minnesota Song Downloader Must Pay $222,000, Court Says".Bloomberg L.P.Archivedfrom the original on January 23, 2018.RetrievedAugust 9,2016.
  7. ^"Sony sued for collecting data on children under 13 – San Jose Mercury News".Mercurynews.December 10, 2008.Archivedfrom the original on March 3, 2016.RetrievedJune 22,2014.
  • Leonard, Devin (November 28, 2005). "Music Lessons."Fortune,pp. 31–32.
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