Sony are buying out Bertelsmann’s share of their SonyBMG joint venture for $1.2bn (that’s roughly two MySpace’s). These are clearly challenging times for the music industry but this is as much about Bertelsmann’s efforts to refocus its strategy, steadily unraveling the media megalith created during the cross-media-synergy years of former CEO Thomas Middlehoff. At the time Middlehoff was playing by the rules of the Zeitgeist. The likes of Universal and Warner all bought into the concept of needing to own everything from the pipe, through the programmer to the content originator. Current CEO Hartmut Ostrowski has distinctly more modest aims:
“we’re not striving to become the world’s largest media company.”
Bertelsmann is focusing on doing well in a few core areas, music is not one of them.
Sony is buying at a time when the music industry is at a low (a marked contrast to when Terra Firma acquired EMI) with at least a year or two more of decline ahead. So they’re buying for the future. Music is just as important to people as it ever was, and we’re consuming at least as much as we’ve ever done before, if not more. The challenge for record labels is how to build a new business around diverse consumption patterns rather than simply relying on selling little shiny discs. It’s an entirely achievable aim that will take time, but Sony are betting on being able to pull it off. (And don’t read much into their claims of cross-division synergy by the way, it’s not something they’ve exactly excelled at in the past.)