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ARSCLIST  August 2008

ARSCLIST August 2008

Subject:

Re: Sony, BMG and the health of the music biz

From:

"Steven C. Barr" <[log in to unmask]>

Reply-To:

Association for Recorded Sound Discussion List <[log in to unmask]>

Date:

Fri, 8 Aug 2008 00:20:41 -0400

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see end...
----- Original Message ----- 
From: "Tom Fine" <[log in to unmask]>
> 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 

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