The Association Of Independent Music yesterday urged its members to approach their MPs about the proposed sale of EMI to Universal Music and a consortium led by Sony/ATV.
As much previously reported, the traditionally British-owned major is to be split by its current owners, US bank Citigroup, into its two constituent parts, recordings and publishing, and sold to Universal Music and Sony/ATV respectively. Universal is the biggest music company in the world already, while Sony/ATV’s co-owner Sony Corp, when all of its music interests are combined, is already the second biggest operator in the sector. Meanwhile the two deals will mean that Warner Music, the third remaining major label, is dwarfed by its two rivals.
Pan-European trade body IMPALA, to which AIM is affiliated, announced even before the deals were done that it would oppose any EMI transactions involving Universal and Sony, both of which must be approved by regulators in the US and Europe. IMPALA argues that further consolidation in the music industry is bad news for the wider creative sector, and especially small and middle sized enterprises which will find it even harder to compete with ever bigger major players. IMPALA has a track record here, of course, have attempted – ultimately unsuccessfully, though with some successes along the way – to block previous major music company mergers between Sony and BMG, and Universal and BMG.
Although competition regulators in the European Commission, rather than in individual EU countries, will consider the proposed EMI sale, AIM wants bosses at the labels it represents to contact their representatives in the Westminster parliament, and to ask their MPs to call on the UK government to also review the implications of Universal and Sony becoming ever more dominant. It’s not clear what impact British MPs or ministers could have on the regulatory process, though the letter writing campaign might boost political and public concern about the takeovers, which could theoretically influence the powers that be.
AIM has provided its members with a suggested letter to send to their MPs, which notes the importance of the independent sector in discovering and developing new musical talent, and says that indie firms are already operating in a tricky market because of the dominance of the small number of major players. It says: “Independents can and do launch and support talent, and win market share in an already distorted market, but market distortion must not be allowed to become even greater”.
The letter also notes that third major Warner will become much smaller than its two main rivals as a result of the EMI deals (almost implying that, despite past opposition to the move, the indie sector would have preferred an EMI/Warner merger to the deals now on the table), and cites IMPALA’s argument that if European regulators back these deals they would be going against the guidelines they themselves set when reviewing the aforementioned merger of the Universal and BMG publishing companies back in 2006.
The AIM letter concludes by re-quoting comments made by the boss of the Beggars Group, Martin Mills, when the original EMI deals were announced, that “this looks like breath-taking arrogance. It’s hard to imagine this acquisition being approved, given Universal’s existing dominance in an over-concentrated market. Even greater dominance would be bad news for almost everyone involved in the art and business of music”.
AIM’s campaign comes in the week that Warner Music hired the services of a US legal firm that specialises in anti-trust lobbying. As previously reported, that has led to speculation that it too may oppose the EMI deals as the regulatory investigations get underway.