The two companies have struck a deal in principle to create a combined group that will rival Universal Music, the world's largest recording label, in size. The new group will account for a quarter of legitmate recording sales around the world.
The big recording labels are in a mood to join forces to combat the explosion of music piracy, which has slashed their revenues and profits. Increasingly music fans download their tracks for free over the internet. And, in parts of Asia bootleg CDs account for 90 percent or more of all music sold.
The deal between Sony and BMG is described for the moment as non-binding, with the details to be finalised within a few weeks.