Sony BMG's Costly Silence
The label was alerted to the secret, virus-vulnerable software on its CDs long before the scandal broke. Trouble is, it didn't act immediately to alert consumers — For Sony BMG Music Entertainment, it has become a public-relations nightmare — and it shows no signs of abating.
Context & Ripple Effects
Sony BMG's copy-protection problem has been building all month: on November 2 CNET reported that the company would patch its copy-protected CD after security researchers found the discs secretly installed software, and a day later Freedom to Tinker flagged that SonyBMG and vendor First4Internet pushed a 'mysterious' software update whose purpose and safety were unclear.
What Business Week adds today, November 29, is the governance failure behind the technical mess — the label knew the hidden software was virus-vulnerable before the scandal broke and sat on warning consumers anyway. The story has now drawn New York Attorney General Eliot Spitzer into the fray, which converts a PR headache into a legal one.
First-order effects
- Sony BMG now faces an active inquiry by New York AG Eliot Spitzer on top of mounting public criticism, because it had advance warning of the vulnerability and failed to promptly alert buyers of affected CDs.
- Consumers who played the infected discs remain exposed to malware that exploits the hidden software, keeping the exchange-and-patch burden squarely on the label during the holiday selling season.
Second-order effects
- Rival labels weighing copy-protected CDs must now price in vendor risk: First4Internet's rootkit-style protection has become a liability case study that makes stealth DRM commercially radioactive.
- CD retailers and artists on the roster face returns, exchanges and reputational drag tied to titles carrying the compromised software, pressuring Sony BMG toward recalls and litigation exposure.
Third-order effects
- If the pattern holds, copy protection shifts from invisible enforcement to disclosed, opt-in mechanisms — with state attorneys general positioning themselves as the de facto regulators of consumer-software disclosure in physical media.
The trend: Music-industry copy protection is colliding with consumer-security accountability, as labels learn that hidden DRM software carries legal and brand costs that outweigh piracy losses.