When Sony turns to content

The key message in Sony's decision to appoint Sir Howard Stringer, the British chairman of the company's U.S. operations—specifically the movie studios and recording labels—as the first non-Japanese to run the company is that the future lies in content, not electronics.

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After the consumer electronics division at Sony said it will miss its revenue goals for the second year in the face of rising competition from Korean and Chinese manufacturers, CEO Nobuyuki Idei, the legendary inventor of the Walkman portable audio player, and his right-hand, Kunitake Ando, president of Sony, were shown the door by the board Sunday. Ken Kutaragi, the leader of Sony's Playstation business, will give up his board seat to focus on the gaming division and former Executive Deputy President Ryoji Chubachi will take over the consumer electronics division, attempting to revive the television and audio manufacturing business.

Stringer, a former CBS executive who also led a short-lived Bell operating company interactive television venture, led Sony's $4.8 billion acquisition of Metro-Goldwyn-Mayer in September 2004. The deal, which added MGM's huge library of classic films to Sony Pictures' burgeoning movie and television production business, positioned Sony to capitalize on one of the only growing part of its business. Except for the gaming division, Sony's production company was the fastest-growing part of the company and delivered the largest share of operating revenue.

In short, the Sony that rose to global prominence has placed its bet on content and after cutting costs within its electronics division will leave much of the market to low-cost competitors. Sony's electronics will likely be concentrated on the higher-end, cutting-edge technologies it can invent and exploit until manufacturers in the rest of Asia drive prices down.

This places content at the very forefront of Sony's efforts. But here's what we know about content today: The most compelling new programming and music is coming from the edge of the network. While Stringer's movie deals are creating gains for Sony, the music business actually fell more than 60 percent—the independent labels and garage bands distributing music through sharing systems, like Weed  are taking listeners to new places. Sony's Idei is famous for passing on a deal to join Apple Computer's wildly successful iTunes online music business, because it would have cannibalized the Walkman business.

Why are we thinking about this at Outhink? Simply this: Producers with the ability to tap talent anywhere on the globe are the answer Sony needs, and a tool like SpinXpress, which allows people to work privately and quickly, is the foundation for the virtual creative network that will produce the films, television programs and music that can be assembled at garage costs (with studio flourish applied judiciously and easily, because the producer or director has access to those resources through the network).

Here, though, is the rub, and also why we think we're on the right track with SpinXpress. Great works of art are not the result of committee work, they are guided and shaped in private—even when that "private" workspace includes hundreds of people—as far from the incessant attention paid to celebrities as these people can get. SpinXpress creates those private spaces where risks can be taken, mistakes made and lessons learned before the final production is shown to the world. We're working on an array of features and functionality that make the expensive resources of the studio system available on the fly, with accountability and processes that make the people providing the money for creative work comfortable, too.