Company Background and Management
Sony Music Entertainment is a music publishing company run by the Sony Corporation (Bloomberg Business). According to the Sony Music Entertainment Facebook page, there have been several important milestones in the history of the company. The original company was founded in 1888, and was known as the American Record Corporation. Then in 1934, the company acquired Columbia Records. Four short years later, CBS bought ARC, and a few years after founded Epic Records. In 1968, the company was owned 50-50 by CBS and Sony. The name then changed to CBS/Sony Records, Inc. It was not until twenty years after this that Sony owned the entire company. In 2004, the company took on the name that it is still known by today: Sony Music Entertainment (Sony Music Entertainment, 2008).
Run by CEO Douglas P. Morris and Vice President/CFO Kevin Kelleher, Sony Music Entertainment, or SME for short, is responsible for publishing many different genre-specific labels. The company’s headquarters is located on Madison Avenue in New York City, New York. In addition to its headquarters, Sony Music Entertainment has additional offices in over forty countries across the world (Bloomberg Business). According to Sony Music Entertainment’s LinkedIn profile, it boasts between 1,000 and 5,000 employees, not even taking into account the number of employees that work under each of its twelve main subsidiary music labels and in its offices across the globe (Sony Music Entertainment).
Besides its many employees, Sony Music Entertainment owns and controls numerous labels, as well as the assets affiliated with each different label. According to the company’s website, Sony Music Entertainment owns twelve pre-eminent labels (2013). The most popular of these labels are Columbia Records, RCA Records, and Epic Records. In addition to these well-known labels, SME owns several genre-specific labels. These genre-driven labels are Arista Nashville, RCA Records Nashville, Columbia Nashville, Legacy Recordings, Sony Music Latin, Masterworks, Vested in Culture, RCA Inspiration, and Provident Label Group. A few of the genres of music that these labels specialize in are country, Latin, classical, and gospel/Christian music (Sony Music Entertainment, 2008).
Sony Music Entertainment and its subsidiaries sign and produce for some of the most prominent musical artists in the world today. For example, artists like Adele, Beyoncé, AC/DC, Bruce Springsteen, Daft Punk, the late David Bowie, Hozier, One Direction and Pink Floyd are all signed with Columbia Records (Columbia Records, 2016). RCA Records signs many big names as well, including Britney Spears, Dave Matthews Band, Kings of Leon, Miley Cyrus and Shakira, just to name a few (RCA Records, 2016). The third most prominent label owned by Sony Music Entertainment, Epic Records, also signs many huge stars in the music industry. Mariah Carey, Fifth Harmony, the late Michael Jackson, and Meghan Trainor are a few of the most famous musical artists signed with this particular label (Epic Records, 2016).
As predominantly a music production company, Sony Music Entertainment is responsible for finding, recruiting, and recording the work of talented artists in the music industry. The company is large, and has many different labels spanning many different genres. This fact alone makes it very difficult to compete with Sony Music Entertainment. Though difficult, it is not impossible. One of SME’s largest competitors in the music industry is Universal Music Group. According to UMG’s website, it is the world’s leading music company, having many subsidiary labels in more than 60 different countries. Universal Music Group, though not as large as Sony Music Entertainment, is the top selling music label (2016). UMG signs some of the most popular artists in the music industry today, such as Maroon 5, Jay-Z, Kanye West, and Rihanna. In addition to these current artists, Universal Music Group owns the rights to old classics such as Nirvana, The Temptations, Fats Domino, Amy Winehouse, and even The Beatles (Universal Music Group, 2015). With artists spanning so many genres and generations, it comes as no surprise that UMG is Sony Music Entertainment’s biggest competitor.
Though the competition in the music industry is stiff, SME still manages to make a huge profit from producing music. Sony Music Entertainment, as both a record company and owner of recording labels, makes profit mainly by selling the records it produces. In addition to selling the actual records, the company makes money collecting royalties whenever an artist’s album is played on the radio, on TV, or in a movie (Recording Connection, 2016). In this day and age, the company now also receives these royalties when said artist’s songs are streamed online on music streaming websites such as Pandora or Spotify.
Sony Music Entertainment receives the majority of these royalties, since according to Recording Connection, artists generally receive about 10% and the composers and publishers receive 30%. This leaves approximately 60% of royalties for the production company. Not only this, but SME makes money off of everything that each artist it represents does, including merchandise. Any and all products that promote one of SME’s artists is something that the company makes a profit from, including T-shirts, posters, etc. (2016). Sony Music Entertainment not only makes an incredible profit from music production, but has a huge influence on the music industry as a whole.
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