PARIS — At an outdoor theater in Berlin that has played host to U2, R.E.M. and the Rolling Stones, Sony Music Entertainment plans to stage a very different kind of show next month.
Before an expected sellout crowd of 22,000, three men, dressed in red, white and blue jumpsuits, will bound onto stage. But instead of belting out a rock anthem, they will take turns reading from a children’s detective novel in the “Three Investigators” mystery series.
The books have a cult following in Germany and smaller shows in other German cities, feeding on Generation X nostalgia for the series, sold more than 100,000 tickets last autumn. That provides welcome revenue for Sony Music, which, like other music companies, is scrambling to make up for falling compact disc sales. As it does so, it is broadening the definition of a record company, embracing businesses that sometimes have only a tenuous connection to music.
“Three years ago I said, look, we are dying, we have to go into new businesses,” Rolf Schmidt-Holtz, chief executive of Sony Music, said in an interview. Now he is highlighting the business potential of such initiatives in an effort to quiet internal critics who see Mr. Schmidt-Holtz, who has a background in television and magazines, as insufficiently focused on music.
Company insiders, who did not want to be identified because Sony Corp. does not publish financial information for Sony Music, say that in the current fiscal year, businesses that did not exist when Mr. Schmidt-Holtz took over as chief executive in 2006 are expected to generate more than $300 million in revenue and more than $40 million in profit. That would be about one-tenth of Sony Music’s total revenue and more than one-quarter of its overall earnings.
Some former executives of Sony Music say the push into new areas began well before Mr. Schmidt-Holtz arrived. And Sony Music is not alone among the four major record companies in moving beyond its traditional business of prowling nightclubs to hunt for talent, luring artists into recording studios and producing compact discs. The others — Universal Music Group, Warner Music Group and EMI — are also taking steps in the same direction.
Three years ago, Universal acquired Sanctuary Group, a British music company whose specialties include the merchandising of T-shirts, a business that the major labels had generally outsourced. EMI announced recently the latest in a series of restructurings, saying it was turning itself into a “comprehensive rights management company that can take full advantage of all global opportunities in all markets for music,” though it provided few details of what it had in mind. Record labels also increasingly manage artists’ live tours and other aspects of their careers.
“Because the music industry has gone through such a bad time, if anyone stumbles across areas for new revenue, they will all explore it,” said Simon Dyson, editor of Music & Copyright, a trade publication.
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