This is Celia Hirschman with On the Beat for KCRW.
It got to be tough to be Sony Music right now. The last couple of months have been downright brutal for them. Since Sony joined forces with the German publisher Bertelsmann Music Group, otherwise known as BMG, both companies appear, at least on paper, to be working through their stylistic differences. But in reality, it's a very different story. Someone should have advised them that during the early stages of a corporate merger, it's always advantageous to keep the negative press to a minimum.
First Sony resigned the American legend Bruce Springsteen for $50 million. Though many thought this was a coup for the company, their BMG partners didn't share the enthusiasm. BMG felt Springsteen's age, coupled with his dwindling annual sales would make this re-signing an upside down equation. In fact, following the renegotiation, BMG publicly criticized Sony chairman Andrew Lack for making the deal, and demanded that he be removed.
But, would you want to be the executive that lost one of the biggest American icons to another record label?
I think BMG's behavior reeks of typical insider power grabs, which the record business is well known for. The Why can't we just get along philosophy of business partnership rarely exists in the cut-throat music business, where the mainstay is to eat or be eaten. Whether Andrew Lack survives this sophomoric game with BMG, only time will tell.
Now, Sony has a much bigger problem on its hands. It turns out, in an effort to stop consumers from sharing music files with their buddies, Sony has planted a copyright protection software surreptitiously on 49 of their most popular new CD titles. Whenever a consumer downloads that CD onto their hard-drive computer, the protection software automatically is installed, though they'd never know. The only reason consumers now know is because a computer software architect named Mark Russinovich uncovered the software and announced his findings on his popular website. The press picked up the story, and suddenly the world has discovered a whole new vocabulary to learn. Words like malware, rootkit, and spyware, are words used to describe the nefarious protection software.
Critics argue that the software transmits without warning details about what music is playing, and creates a bridge for destructive hackers to add Trojan horses to their hard drives.
Sony has learned a very expensive lesson. There's something far more destructive then two chairmen fighting over power, and that's a loss of faith from the consumers that are still buying records. Almost two weeks after the discovery of the malware and following the announcement of a class-action lawsuit by consumers, Sony has begun a recall of the offending discs.
I work in a business that's barely holding onto the CD format with all the downloading and file sharing that exists. The music industry needs to reward consumers who purchase music in record stores, not penalize them. Sony is finally taking some action to remedy the situation and that's good news. Unfortunately, it took a lot of negative press to encourage them. Waiting for the public to blow the whistle on you is not a strong business plan. Sony should have been far more respectful of their consuming audience. Lose them and you've lost the plot. I don't know when exactly the record business lost the point of their existence, but they have, and they need to get on track.
This is Celia Hirschman with On the Beat on KCRW.