Sony BMG faces the music

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Lots more to this story

A few other points that should be mentioned here:

First, Sony knew about the vulnerability their malware created for nearly a month and decided not to go public with it. They only finally reacted after a blogger broke the story and the press ran with it:
http://www.businessweek.com/technology/content/nov2005/tc20051129_938966.htm
Sony BMG is in a catfight with a well-known computer-security outfit that became aware of the software problem on Sept. 30 and notified the music company on Oct. 4 -- nearly a month before the issue blew up

The state of New York is also considering filing a lawsuit:
http://businessweek.com/technology/content/nov2005/tc20051128_573560.htm

The artists upon whose cds these rootkits were used are the real ones suffering here, watching their careers go down the drain:
http://businessweek.com/technology/content/nov2005/tc20051122_343542.htm
GROWING OUTRAGE. Overnight, Get Right with the Man dropped to No. 1,392 on Amazon's music rankings. By Nov. 22 -- after the news made headlines and Sony was deep into damage control, pulling some 4.7 million copy-protected disks from the market -- Get Right with the Man was even further from Amazon's Top 40, plummeting to No. 25,802.

DROP IN SALES. In the beginning, it was cyber libertarians and outspoken consumer groups leading the charge against digital rights management (DRM). But the Sony rootkit debacle has brought the issue home even to digilliterates -- including many of the artists themselves.

"We're really upset about this," says Patrick Jordan, director of marketing for Red Light Management, which represents Trey Anastasio, former front man to jam band Phish. Anastasio's latest solo album, Shine, was released Nov. 1, just as news of Sony's rootkit was worming its way onto Internet blogs and listservs. "I'm expecting a decrease in sales," Jordan adds.

Indeed, Shine debuted with 15,000 sales its first week. But by week two, when the rootkit fiasco was in full swing, sales had plummeted to 7,000. Weekly numbers will be released Nov. 23, and Jordan is bracing for the worst. "It's been damaging, and certainly we're going to discuss that with the label," he says.

http://businessweek.com/technology/content/nov2005/tc20051128_573560.htm
SALES DRAG. Meanwhile, the rootkit blunder continues to inspire consumer outrage and affect sales of artists who produced the affected CDs. The ranking of Van Zant's Get Right with the Man CD plummeted on Amazon.com's (AMZN) bestseller list in the wake of Sony BMG snafu (see BW 11/22/05, "Sony's Escalating 'Spyware' Fiasco".

And when Sony BMG started pulling CDs, it didn't have enough replacements lined up, says Ross Schilling, of Van Zant's Nashville-based manager, Vector Management.

Sony BMG had promised the CD would be swapped out with non-rootkit CDs. Instead, the rootkit CDs simply were pulled, Schilling says. "It's obviously very bothersome," he says.

"HARMING THE ARTIST." That means Van Zant's CD and others were not on the shelves for the busiest shopping weekend of the year. Sony BMG has told Van Zant to expect a 50% to 80% decrease in sales when the new numbers come out on Nov. 30. That's in a week that should have seen a 50% to 80% increase in sales. The week of Nov. 9 to 16, Van Zant's sales actually jumped a point, a spurt Schilling attributes to exposure from the Country Music Awards.

Now that retailers are pulling the CD, there's potential for a 50,000- to 60,000-unit loss, Schilling says. "I believe they [Sony] went in with good intentions, but it turned into an unprecedented situation," Schilling says. "It certainly is harming the artist.... There's going to have to be some commitment made on Sony's side to their artists." To say nothing of the assurances Sony BMG may need to make to consumers and a couple of states' attorneys general.

Posted by: tic swayback   Posted on: 11/30/05 You are currently: a Guest | Members login | Terms of Use

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