Sony and BMG are going to merge… the letter of intent is signed

and they vie Universal (the largest) – which will look a little smaller as this deal brings together No. 2, No. 5 music companies.

Plans are to form a jointly owned Music Company to be called Sony BMG. The company will be 50 % owned by Bertelsmann and 50 % owned by Sony.

A joint venture of BMG and Sony Music Entertainment will combine their recorded music businesses but will not include the companies' music publishing, physical distribution and manufacturing businesses.

Rolf Schmidt-Holtz, currently Chairman and Chief Executive Officer of BMG, would serve as Chairman of the Board of the new joint venture.

By then they might have the power to create copy-protected CDs that are not "play-protected" at all or some other innovations that might let them gain more ground back in music sales… who knows? But maybe they want to use their power for some real innovative music sales model… I'll keep an eye on that…