Sony Music Entertainment and Sony/ATV Music Publishing are now ready to perform as one unit under Sony Music Group, effective from 1st August. Rob Stringer will be heading Sony Music Group as the Chairman while remaining the CEO of Sony Music Entertainment.
Kenichiro Yoshida, President/CEO, Sony Corporation revealed the news in an internal memo addressed to his colleagues. Sony Music Entertainment and Sony ATV were previously separate entities with respective leaders until the need for a merger arrived. Sony/ATV was owned as a joint venture with other equity stakeholders, until November 2018. Sony Corp. then acquired the 70% it didn’t own in a deal valued at $4.75 billion.
Is Sony Music Entertainment following a trend or is it a strategic move?
The conjoining of Sony Music Entertainment and Sony/ATV Music Publishing makes us reflect on the other trendsetters Warner and Universal who have already merged their recording and publishing divisions and the reasons for it.
Warner Records and Warner/Chappell Music recorded music and publishing division function under the umbrella of Warner Music Group. Warner Music Group is now under the direction of CEO Stephen Cooper. Similarly, Universal Music Publishing Group and Universal Music Group Recordings Inc. operate as Universal Music Group, led by Chairman and CEO Sir Lucian Grainge.
The news of Sony consolidating its recordings and publishing into a single company invites a questionable circumstance. What is the need for the big three of the recorded music industry to cease functioning as separate entities? Also, both the companies despite coming together shall be retaining their individualities. It makes us doubt if this move means restructuring operations and boosting transparency between the two companies resulting in bigger gains.
Recording and publishing are separate rights which are often too complicated for musicians to comprehend. The existing restrictions cause lopsided payments to owners of recording IPs. Additionally, with streaming platforms paying disproportionate amounts to record labels makes revenue flow bumpy.
This association might be a method of creating a smooth influx of revenue to the same corporate bank account.
Yoshida, therefore, in his memo, clarifies the need for this union,
“The rise of streaming services alongside other changes in the market has transformed our music business and created more opportunities for growth than ever before. As a result, we felt it was particularly important at this juncture for Sony to take proactive steps to sustain its leadership position in the music industry by accelerating the collaboration and value creation between our world-class recorded music and music publishing businesses to strengthen our value to artists, songwriters and business partners.”
Sony Music Entertainment Japan shall remain a separate entity reporting to Kenichiro Yoshida. He shall be retaining his position of the President and CEO. He hopes that the new Sony Music Group and Sony Music Entertainment Japan will continuously work towards the spirit of One Sony.
For the fiscal year ending March 31st, 2019, Sony Music brought in ¥427 billion ($3.8 billion) in recorded music revenue. This figure represents an 8.6% drop year-over-year. Sony attributed the poor results to a change in accounting and declining physical sales.
Read the full memo.
As part of Sony’s business goals to increase collaborations across its entertainment units, be closer to creators and unlock more strategic opportunities, I’d like to inform you that effective August 1, we are bringing together Sony’s recorded music and music publishing businesses outside of Japan to create a new Sony Music Group. I have asked Rob Stringer to take on the role of Chairman of this new Group, in addition to his current duty as CEO of Sony Music Entertainment.
The purpose of this new Group is to further strengthen and solidify Sony’s position as a leader in the music industry and create new value for the company. This unification will help us foster a higher level of collaboration between our recorded music and music publishing businesses while respecting and maintaining the independence and unique culture of each organization. Under this new structure, Jon Platt, Chairman and CEO of Sony/ATV Music Publishing, will report to Rob. Jon will retain the authority and responsibility he currently has with respect to the operation of the music publishing business.
The rise of streaming services alongside other changes in the market has transformed our music business and created more opportunities for growth than ever before. As a result, we felt it was particularly important at this juncture for Sony to take proactive steps to sustain its leadership position in the music industry by accelerating the collaboration and value creation between our world-class recorded music and music publishing businesses to strengthen our value to artists, songwriters and business partners.
While Sony Music Entertainment Japan will remain a separate entity, reporting to me, I would like for the new Sony Music Group and SMEJ to continue and further strengthen their collaboration in the spirit of One Sony.
It’s been 51 years since Sony entered the music business through a joint venture of CBS Sony Records in 1968. And, with the acquisition of EMI Music Publishing in 2018, Sony has become an even stronger music company.
I have the utmost respect and trust in Rob and Jon who are outstanding leaders with enormous industry expertise and have the strong support of their employees, artists and songwriters. Working together, and with your help, I am confident they will lead Sony Music Group to a new level of success, remaining the world’s most artist and songwriter-friendly music company, and further strengthening and securing our legacy for the future.
President and CEO