CNET: Sony Music Woes Extend To Digital Sales
February 11, 2009 at 5:23 AM (PT)
The struggling music units of SONY CORP. and BERTELSMANN AG merged in 2004 so that a combined company could better fend off illegal file sharing and shrinking CD sales, writes CNET NEWS. The new recording company, named SONY BMG, was expected to wield the kind of resources that could challenge UNIVERSAL MUSIC GROUP as the largest of the four top labels. SONY BMG would own a chunk of U.S. music sales almost as big as UNIVERSAL's.
SONY is trying to regroup after buying out BERTELSMANN late last year. It remains the second-largest recording company and currently has the No. 1 album in the country: BRUCE SPRINGSTEEN's "Working on a Dream." SONY MUSIC could also become the first major to renew its music licensing agreement with YOUTUBE, according to sources close to the deal.
As for SONY MUSIC's digital efforts, the news isn't any less gloomy. The company's market share of digital album and song sales has plunged from 28.6% at the time of the merger to 22.5%.
On the technology side of the house, insiders say SONY has struggled to recover from the Rootkit scandal. In 2005, SONY attempted to quietly place copy-prevention software on CDs. The technology, however, opened security holes on a person's hard drive when a CD was loaded into a computer. The software made the PC vulnerable to malware.
SONY was sued by several parties and was widely attacked by the public and press.