Entertainment and electronics divisions clash
Sony Corp. of America is stumbling over its own big feet.
The media behemoth is the umbrella for both Sony Music Entertainment and Sony Electronics and their increasingly conflicted copyright policies.
Copyright has always been a point of friction between content and consumer electronics companies. Entertainment companies want to hold anyone and everyone liable for copyright infringement so they can protect their traditional distribution channels. Electronics manufacturers want to be free to introduce new products without fear of lawsuits for abetting copyright infringement.
In the Internet age, these conflicts have come to the forefront because of the rapid pace of innovation.
"Are you going to give in to the paranoia of the record labels, or are you going to sell as many units as you can by building a more consumer-friendly product?" asked Aram Sinnreich, a senior analyst at Jupiter Research. "Its not a new issue for Sony, but its one to which the Internet distribution medium gives a new poignancy."
For now, the two pieces of Sony seem to be waging a battle against each other over such issues as Napsters file-swapping service. So far, Sony Music is winning most of the skirmishes, an outcome that may not be desirable for Sony Corp., given that Sony Electronics earns more than twice as much as the entertainment subsidiaries, including the movie and television divisions.
Sony Music passed a request for comment for this article on to Sony Corp., whose spokespeople declined to comment. Separately, Sony Electronics also declined to comment.
The recent conflicts revisit a high-profile lawsuit involving Sony Corp., which was filed in 1976 and decided by the U.S. Supreme Court in 1984. Sony Corp., then only an electronics company, was sued by the movie industry for selling and marketing a device that facilitated piracy. That device was the Sony Betamax VCR.
Sony Corp. won that case, and set an important precedent for the consumer electronics industry. Legal experts summarized the ruling as saying that supporting a climate for creating innovative technologies is so important that, in many cases, it should outweigh intellectual property owners concerns about piracy.
"Commerce would indeed be hampered if manufacturers of staple items were held liable as contributory infringers whenever they constructively knew that some purchasers on some occasions would use their product for . . . infringement," the trial court said in its ruling, which was later upheld by the Supreme Court.
Now, more than 15 years later, two divisions of Sony Corp. are on different sides of a lawsuit over another new technology that facilitates piracy. In the lawsuit against Napster, Sony Music is a vociferous plaintiff, while Sony Electronics is a member of a trade association that filed a friend of the court brief on Napsters behalf.
The Consumer Electronics Association is up in arms over Judge Marilyn Patels initial injunction ruling, issued last July. That ruling said that Napster is more of a service than a device, and thus is not protected by the Betamax precedent. Electronics companies are concerned that this distinction puts the manufacturers of new devices such as the hard-disk recorders that come with services from companies like TiVo at risk for lawsuits. Sony Electronics manufactures TiVo hard-disk recorders.
Sony Music, on the other hand, seems quite pleased with Patels decision. Score: Sony Music, 1; Sony Electronics, 0.
Meanwhile, Sony Electronics power to innovate seems to be reined in by Sonys entertainment division. The Sony Memory Stick Walkman, a digital music player introduced last year, bombed in the market, primarily because of various copyright protection features that were onerous for consumers. Users of the player must go through an unwieldy check-in/check-out process to transfer songs from a computer to the device. Only three copies of a given song can be checked out at a time, and songs must be checked in to the same computer from which they were checked out.
Score: Sony Music, 2; Sony Electronics, 0.