Music production is one of the most lucrative businesses. It involves several activities from production, recording, distribution to sales. Music production requires professional expertise; most of the musicians do not have the expertise to do this. This is where record label companies come in.
A record label is a trademark company that records produces, distributes, sells, and promotes musicians. It also protects music copyright, scouts and develops new talents. Record labeling is one of the most lucrative businesses with stiff completion between record labels to win musicians’ signatures. This paper will discuss one of the most successful record labels Sony BMG Music Entertainment.
The formation of Sony BMG Music Entertainment was born out of the 2004 perilous merger between Sony Corporation of America and BMG Music Group. It became the second largest music recording company; universal was the first. Ownership was on 50-50 basis. Sony Corporation of America is a subsidiary of Sony Corporation, a Japanese investment giant, ownership held by several trustee accounts and Japanese banks (Anaswerbag para. 4).
It is the world leader in the production distribution and supply of electronic goods especially in sound, audio visual, communication and information technology (Sony Corporation of America para 1). It also has stakes in the financial sector and owns Sony Life Insurance Co., Sony Bank Inc., Sony Assurance Inc. and Sony Financial Investment Inc.
Sony BMG had other interest apart from music. It ventured into selling classic photos of famous personalities. The company acquired these photos from a gallery previously owned by Columbia Records, a company Sony Corp. took over in 1988 (Pompeo para 1). Sony Corp and BMG merger did not capture the expect market share and its fortune dwindled considerably culminating in BMG selling its stake to Sony Corp of America to form Sony Music Entertainment (SME) .
Illegal online music piracy threatened the music industry so much. As a result, SME sort to distribute music online via secure mobile phone technology. Together with Dada, they formed Dada Entertainment, each owning 50% share, to distributed music content via mobile phone platform; Dada was to provide the application technology while SME provided the music (Lawrence and McDaniel 99).
Similar partnership with Warner Music Group and a Chinese digital technology firm Access China created online music distribution platforms for mobile phone customers. It is currently working with Mobile Roadie to develop personalized mobile phone applications that will offer interactive services for musicians and their fans (Sony Music para. 3)
Financially it experienced a 16% drop in 2009 revenue, despite a 5% increase in its market share from 2008 (Peoples para 2). This was an impressive performance bearing in mind the challenges of dwindling returns occasioned by illegal online music piracy.
SME matches forward undeterred by the challenges it has faced in the past. Its management, lead by Rolf Schmidt Holtz, its hardworking Chief Executive Officer, has appreciated the need to embrace innovative ways to distribute content globally. This has lead to collaboration with software companies for online distribution. It also owns a photo gallery that sells classic photos of famous personalities to improve its financial outlook.
The expected Sony BMG challenge Universal Entertainment success in distribution of music content did not materialize. Analyst suggested that BMG Group was affecting Sony BMG performance and hence advised BMG Group to surrender its 50% stake to Sony Corp. of America.
Works Cited
Anaswerbag. “Who owns Sony Corporation?” 2010. Web.
Lawrence, Gitman and McDaniel, Carl. The future of business essentials. Ohio: Southwestern Cengage Learning. 2009. Print
Peoples, Glenn. “Sony Music Revenue, Income Slips.” Biillboard. May 2009. 3 Jan 2011. Web.
Pompeo, Joe. “Sony to Sell off Iconic Photo Archive in the Face of Industry Slump” The commercial observer. May 29, 2008. Web
Sony music. “Sony Music Entertainment to Develop Dynamic Artist Apps Using Innovative Mobile Roadie Platform.” 2011. 3 Jan, 2011 https://www.sonymusic.com/
Sony Corporation of America. “Overview.” 2011. 3 Jan 2011 https://www.sony.com/en_us/SCA/index.html