Now that Sony Corp. and Bertelsmann have broken off their troubled relationship, known as Sony BMG, the Japanese company hopes to harmonize its consumer electronics and its music, a duo that has been badly out of sync.
The music business combination four years ago made Sony BMG the world's No. 2 record label, generating savings and preempting other industry consolidation.
But the venture's cost-cutting didn't keep pace with falling CD sales, and the two companies' digital strategies didn't mesh.
So they called it quits and Sony bought out its partner for $900 million in a deal that closed Oct. 1.
Selling its 50% stake will let Bertelsmann refocus on its growing TV, magazine and book-publishing businesses.
Full ownership of the music venture, meanwhile, gives Sony control of a medium it can use to drive electronics sales, just as it is using wholly owned Sony Pictures to help sell the Bravia line of TVs. The new company is called Sony Music Entertainment Inc.
"It's nice to see Sony at least trying to line up some of their content efforts with their hardware," said Michael Gartenberg, vice president of global strategy for Jupiter Media. "Up until now, the left hand never seemed to know what the right hand was doing."
The music venture was so dissonant that it often helped Sony competitors.
In one case, Bertelsmann insisted the venture shop music videos to Microsoft Corp.'s Xbox 360 instead of Sony's PlayStation 3 gaming unit "to make sure it's a fair deal" for Bertelsmann, said a Sony executive who asked not to be identified because those negotiations were private.
As a result, PlayStation 3 customers have to do without music videos from Sony BMG.
In another case, Sony BMG was the last major record label to join the PlayNow Arena online music store from Sony Ericsson -- Sony's mobile phone venture. PlayNow launched in August in Scandinavia.
Sony BMG has been "by far the toughest agreement to get in place," said Victor Fredell, Sony Ericsson's content acquisition manager of music.
Fredell blamed the 50-50 ownership of Sony BMG, which meant neither company had a clear upper hand.
"They were just different in their approach to the business," said Jay Cooper, a music attorney whose clients include Sheryl Crow. "I think they managed to put together a strong company but unfortunately they had two different kinds of philosophies."
