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and developing urban talent on behalf of the
company’s labels and divisions. This group has
recently worked with such top artists as Lil’ Flip,
Jagged Edge and Bow Wow. The music business
also remains committed to fostering local acts
throughout the world and bringing these artists
to the international stage. Such Sony artists as
La Oreja de Van Gogh (Spain), Delta Goodrem
(Australia), Jay Chou (Taiwan) and Garou
(Canada) are achieving international acclaim.
Additionally, SMEI has intensified its efforts
to make Sony content available through a
broad array of emerging distribution platforms,
including legal digital services in the U.S. and
Europe, as well as various mobile phone
services. The music company has established
distribution agreements with a wide range of
online services and is currently working with
partners to make master ringtone versions of
its most popular hit tracks available for sale to
mobile phone customers. Currently, SMEI offers
master ringtones for sale in more than 15
countries, including the United States, the United
Kingdom, France, Belgium, Spain, Portugal,
Italy, Sweden, Hungary, Australia, Germany,
the Netherlands, Norway, Taiwan, New
Zealand and Hong Kong, with more partners
and territories being added each quarter.
SMEI is also continuing its work with the
Recording Industry Association of America
(RIAA) and the International Federation of the
Phonographic Industry (IFPI) on the industry’s
anti-piracy efforts, and has led the industry in
the development of an innovative initiative
known as the Campus Action Network
(CAN). CAN is designed to help colleges and
universities across the country launch legal
online music services and combat illegal filesharing
on campus.
SMEJ has long maintained a leadership
position in the Japanese music industry
through its recording, music publishing, artist
management and other related businesses. In
the fiscal year ended March 31, 2004, although
the Japanese market experienced an overall
double-digit decline in sales, SMEJ posted
higher sales and earnings. Releases from such
leading artists as CHEMISTRY, Mika Nakashima,
ORANGE RANGE and SOUL’d OUT helped
bolster SMEJ’s record business. SMEJ’s network
service business is continuing its growth, primarily
through the strength of the Chaku-Uta ®
mobile phone master ringtone download
service, which is expected to be a major
contributor to revenues moving forward.
SMEJ plays a pivotal role within the music
industry by helping protect copyrights. In an
effort to stem the industry-wide problem of
unauthorized copying of CDs, SMEJ is distributing
CDs with a unique technology to control
copying, known as Labelgate CD 2.
Taking the music library to mobile
phone users
Ringtone sales have become a burgeoning market
for the music industry and a promising new
revenue stream for SMEI. Sony Music currently
offers fans clips of actual song recordings, known
as master ringtones, as well as monophonic and
polyphonic ringtones, digital voice ringers recorded
by celebrities, prepaid cards, sound effects, wallpaper
images, song dedications, mobile karaoke
and imaging services. SMEI has been collaborating
with wireless service partners around the
world to sell the ringtones of its most popular hit
tracks. SMEI was also the first major music company
to offer master ringtones in the U.S. through a
partnership with Sprint, one of the leading U.S.
wireless carriers. Through its Sony Music Mobile
Group, the music company supplies mobile
products and services in more than 15 countries
and develops a number of unique product
lines. Among them are Sony Music Box, a next
generation on-handset content browsing service;
RUNpics, a leading mobile imaging service; and
Front Row by Sony Music, a downloadable
service featuring news and previews of music,
artists and releases.
The Chaku-Uta ® mobile phone
ringtone download service
In Japan, the rising popularity of third-generation
mobile phones is sparking rapid growth in demand
for SMEJ’s Chaku-Uta ® , which allows users to use
a CD passage as a ringtone. These downloads
have grown into a ¥10 billion market just one
year after the rollout of this service. To become
the first in the world to launch a service of this
type, SMEJ drew mainly on the resources of Label
Mobile Inc., a company formed with four other
major record companies. Today, Chaku-Uta ® is the
largest ringtone service in the industry.
PICTURES BUSINESS
Vision and creativity enable Sony to
build a leadership position for the
digital future
SPE Chairman and CEO Michael Lynton and
his talented team are strengthening the
motion picture, television and digital divisions
through a disciplined approach to content
development and by enhancing the value of
Sony Pictures’ vast library of films and television
programs. Emerging new formats and distribution
channels also continue to serve as a
catalyst for SPE to explore and develop
unique business opportunities.
Under SPE Motion Picture Group Chairman
Amy Pascal, the motion picture group has
continued its strong performance by releasing a
broad portfolio of films via multiple distribution
labels including Columbia Pictures, Screen Gems
and Sony Pictures Classics, as well as Revolution
Studios. For the second consecutive year, SPE
has generated ticket sales in excess of $1 billion
in each of the U.S. and international markets.
Success in the fiscal year ended March 31, 2004
was fueled by releases such as Bad Boys II,
S.W.A.T., Anger Management, Something’s
Gotta Give and 50 First Dates. With a slate led
by the much anticipated summer 2004 release
50