"Ohga, could you come see me for a second?" Suddenly receiving a call from Morita, Norio Ohga rushed to his office. Morita quickly cut to the chase: "We've received a proposal from CBS to create a joint venture record company together. What do you think?"

"Let's do it." Ohga had no objections. He had always believed that Sony should have a record company under its corporate umbrella in the future, a challenge he knew the company would need to face sooner or later. He had even explicitly proposed several times that Sony needed to have a record company, "since Sony's audio devices will always need something to play on them." Morita understood his wishes well. "I'll leave the details for the joint venture up to you," he told Ohga. The two confirmed the basics of the deal as they began preparing for negotiations.

Sony's opportunity to expand into the music industry came when the Japanese government began the liberalization of foreign investment into the Japanese market in 1967. After pressure from the United States and several European countries, certain restrictions on foreign capital investment in Japan were lifted in phases starting in July 1967, with phase one differentiating foreign investment limits on specified industries to either "up to 50 percent" or "up to 100 percent." Record companies were among the industries designated as "up to 50 percent" foreign investment, and CBS, America's largest broadcasting network, immediately took this opportunity to enter the Japanese music market.

That summer, Harvey Schein, then-President of CBS International, visited Japan with a mission: to find a business partner for CBS. Yet despite conducting negotiations with several record companies, he only ever received replies that his offers were "under consideration" in response. "Yes or no, which is it? Is this how they do business in Japan?" he thought, frustrated.

Since CBS made extensive use of Sony devices in its broadcasting equipment, Schein also made sure to pay a visit in October to the Sony Headquarters in Shinagawa, where he asked Morita for advice. Lending an ear to Schein's business plans and struggles, Morita then casually asked him, "well how about you partner with us?" Schein could not help but be astounded at the speed and directness of Morita's offer. The unending discussions which he spent all those visits to so many different companies conducting had been solved - just by meeting with Morita for little more than half an hour.

Negotiations with Sony went smoother than CBS could have hoped for. The agreement forming the joint venture was signed in December of the same year, and the approval application was soon delivered to the Ministry of International Trade and Industry (current day Ministry of Economy, Trade and Industry). But the name of the new company was something neither side could agree on just yet, with CBS arguing that the company should obviously be called "CBS Sony Records," while Sony cited the fact that the company's primary market was Japan as grounds for naming it "Sony CBS Records." With neither side willing to relent, in the end the name was left to alphabetical order, and CBS Sony Records was established the following year in March 1968. The company was the first joint venture in Japan to take advantage of the new foreign investment liberalization policies since they were enacted, with a starting capital of 720 million yen.

The collaboration between a major hardware company and a major software company sent shockwaves throughout the record industry in Japan. This joint venture would become the future Sony Group's first step towards its unified corporate strategy of creating synergy between hardware and software, and ultimately a symbol of the diversity that Sony embodies in the 21st century.

Although Morita was to take on the role of President for CBS Sony Records while jointly acting as Vice President of Sony, the actual management was assigned to Ohga, then one of Sony's directors. Ohga soon transitioned fully to CBS Sony Records, inviting Toshio Ozawa and other talented employees dispatched to other companies to join him, creating a starting team of not even ten people. Of these soon-to-be core members of the newly founded company, not a single one had worked in the record industry before.

"The greatest factor for determining a new company's future is the people." Ohga had actually purposely selected people with no prior experience in the field with this belief in mind. Ozawa in particular was a complete stranger to the music industry, only owning ten or so records himself. To enter the Japanese music market, dominated by record companies long established since before World War II, Ohga knew they would need new and groundbreaking ideas.

Under Ohga's direction, Ozawa began drafting the management principles for CBS Sony Records:

1. A Unique Corporate Culture
2. Pride in the Brand
3. Human-Focused Management
4. International Management
5. Maximal Returns

The third point in particular states, "CBS Sony Records regards making good use of its employees and the company as a whole as the most important managing principle for the company...a company's foundation is its people."

Sticking to this management principle, Ohga decided that "a new company needs new talent. More so than just experience, we need to get together people with passion in order to embark on this journey as a new business." Thus, a massive newspaper recruitment campaign began in the spring of 1968. Exceptional for its time, the campaign boldly proclaimed that no considerations would be taken towards an applicant's nationality, age, gender, educational background, or physical disabilities. Nearly seven thousand applications came flooding in, from which eighty music lovers were carefully selected, joining the company's first cadre of employees. Unchained by the industry's norms and old habits, the new record company took its first blazing step into the future.

When considering how to grow the fledgling company across Japan, Ohga was adamant in his belief that "the record business must be done by people focusing on recording 24/7," stating firmly that "a record company's business and a hardware company's business are different beasts." Wishing to let the employees they hired and trained stand on their own rather than deferring to a parent company, Ohga thus made the decision to have CBS Sony Records take on its own business operations.

On the day before the business was to begin operations, standing before the employees finishing their training, Ohga spoke: "Everyone, I want you to do your best out there starting tomorrow."

"We'll be the leading record company in Japan in ten years." Ohga's unflinching courage from day one would go on to reshape the record business landscape.

August 1968 marked the company's first release, distributed across Japan through seven sales offices in Tokyo, Osaka, Nagoya, Fukuoka, Sapporo, Sendai, and Hiroshima. Although it was the industry norm at the time to limit new releases first only to the largest cities and expand outwards from there, Ohga's insistence led the company to start sales nationwide right from the outset.

Beset by fierce competition since its founding day, the new company would face hardship after hardship at first, but a certain song came to the company's aid in its early days: Simon & Garfunkel's "The Sound of Silence," notably used in the 1967 film The Graduate. Demand was so high that records had to be pressed and sent out for delivery nearly constantly, and more record retailers were contracting with CBS Sony by the day.

After CBS Sony Records became the ninth largest record company in Japan and officially registered with the Recording Industry Association of Japan in October 1968, the record industry as a whole entered a boom period. This industry boom was brought about by new sales avenues created by electronics stores, bookstores, and publishing companies entering the market, as well as new methods of promotion via television and radio.
Both domestic and overseas music, for instance, were frequently promoted directly by record companies themselves, who would take a record directly to radio stations and negotiate to have them played on air. CBS Sony Records specifically targeted late-night DJ stations, recommending songs that were expected to sell well, ultimately leading to the record's - and CBS Sony's - success. A number of hits, including "Mr. Monday" by The Original Caste, benefitted from these promotion efforts.

The domestic music department also devoted significant effort to both developing and recruiting its own stars. In the company's second year in 1969, singer Carmen Maki went on stage at the 20th annual NHK Kohaku Utagassen (Red-and-White Year-End Song Festival), leading to her hit song reaching one million copies sold, CBS Sony's first. In the same year, Japanese singer Peter (Shinnosuke Ikehata) debuted and received the Best New Artist award at the Japan Record Awards. In just two years, CBS Sony had several high-profile awards in its hands.

Then, just the next year in 1970, Akira Nishikino debuted as "Sony's Knight of Enka", and once again took the Best New Artist award at the Japan Record Awards. This gave CBS Sony a two-year winning streak, becoming a source of excitement and pride for the company's employees.

The 1970s were also when the idol genre came into full form in Japan, with Saori Minami debuting in June 1971 and receiving one of that year's New Artist Awards. In October of the same year, "Sony's Snow White" Mari Amachi debuted and proceeded to release No. 1 hits in quick succession, becoming a frontrunner of the idol boom.

Following this trend, CBS Sony began investing in training and promoting new female idols, creating star after star. In April 1973 came Miyoko Asada's debut, while Momoe Yamaguchi debuted in May 1974. In September of the same year, popular TV personalities Ran, Miki, and Suu formed the trio "Candies."

On the flip side, male idol Hiromi Go debuted in August 1972, cementing the beginning of the male idol industry. By expanding the market for pop music through strategically targeting younger generations, CBS Sony had a great deal of success in the domestic Japanese music market.

Just as CBS Sony Records celebrated its three-year anniversary in March 1971, another new company was created: the CBS Sony Family Club, a mail-order sales company fully funded by CBS Sony Records. Record shop customers consisted mostly of teens or people in their twenties, creating storefronts where older customers, typically busy and short on time to browse records, would feel out of place. The CBS Sony Family Club was thus created in an effort to expand the record store's latent customer base. Although CBS Sony Records was a comparative latecomer to the market, it had already begun to make moves to conduct sales directly to customers soon after its formation.

"Growing the scope of our business ten times as large means ten times as many people who can enjoy working with us. This new company has been an amazing blank canvas for us to work on, and we want to share this with as many people as we can." After the unbelievable pace at which the new company firmly established itself, Ohga and Ozawa's aspirations would lead them to begin establishing subsidiaries atop the foundation of CBS Sony Records, starting with the CBS Sony Family Club. This was the beginning of the company's partitioned corporate structure.

Seeking to further expand its corporate umbrella, CBS Sony Records would remove "Records" from its name and become CBS Sony in 1973, when it marked its fifth anniversary. Soon enough, the company's music publishing arm was split off into April Music, fittingly in April 1974. In August of the same year, the factory in Shizuoka that formed the company's production division was also split from the main company, creating CBS Sony Records Inc. By May 1976, the organization had five group companies which spanned from planning to music production, record production, and sales. This vertically integrated structure ultimately enabled CBS Sony to become among the industry's highest-selling record companies.

Following the company's tenth anniversary, however, a founding party was held for an entirely different record company in August 1978 - that of EPIC Sony. Although this too was a company funded by CBS Sony, the goal for EPIC Sony was to act as a direct competitor to CBS Sony. Worried that employees would become complacent as the company expanded, Ohga decided to create new competition for the company themselves. By possessing two record companies, the group could increase its overall market share as well, he reasoned.

His reasoning was sound. That year, the group's combined sales numbers were at the top of the industry - making good on Ohga's bold claim a decade earlier that they would become the record company for all of Japan. CBS Sony's fortunes would continue, as in 1979 the next year, Judy Ongg would become the group's first winner of the Grand Prix of Japan Record Award. The group would also record its highest sales figures yet that year, becoming "the leading record company in Japan" in both name and reality.

Following the successful growth strategy used to establish EPIC Sony, Ohga would continue down the path of partitioning the business and reinventing the industry. Character merchandise company Sony Creative Products and publishing company CBS Sony Publishing, established in 1978 and 1979 respectively, would further expand CBS Sony's business reach under Ozawa, who succeeded Ohga as President in 1980. In 1983, fifteen years after the company's initial founding, CBS Sony would officially be renamed CBS Sony Group.

Marking the company's twentieth year in 1988, however, the group would drastically shift course. Pivoting from its partitioned structure, the group would begin acquiring its group companies as wholly owned subsidiaries as well as merging portions of its business. The main goals for these shifts were to improve management efficiency for the company as a whole, as well as to prepare for the company's listing on the stock market. The many roots CBS Sony Group had spent all those years spreading had now joined together to form one solid pillar, beginning its journey to become a consolidated entertainment company.

Ohga would frequently tell employees that "the day earnings are first distributed is when a company becomes a teen; the day it goes public is when it becomes an adult." Going public was, in effect, a company's coming-of-age - a truly momentous occasion which signified to the market that a company had established itself under solid leadership and had high hopes for its shares' value as an investment.

Undergoing four long years of inquiries, hearings, and factory inspections, Ohga's wishes finally came true. In April 1991, CBS Sony Inc. changed its name to Sony Music Entertainment (Japan) Inc., and in November 1991, the company's stocks were listed on the Tokyo Stock Exchange's Second Section. The initial offering price was set at 6800 yen, and 122.4 billion yen was acquired through the listing. Considered a massive sum at the time of the listing, market representatives compared it to "a whale diving into a pond." Although the company's stock price sank at the very beginning, the stock would rise above its initial price one year later, beginning its steady growth into the future.