Thursday 28 June 2012, 12:06 | By

Universal spin allegedly delays IFPI report

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A global report on the state of the record industry, due for publication by the International Federation Of The Phonographic Industry this month, looks likely to be delayed until the autumn, with allegations in the New York Post that the delay has been caused by a disagreement between the major record companies over a section on the rising importance of independent digital distributors and companies that enable artists to sell direct to fans.

According to the Post, it is Universal Music that wants a section focusing on the rise of companies like TuneCore and The Orchard – which help smaller rights owners and self-releasing artists distribute their recordings – in a bid show that it is possible to launch artists in the digital age without access to a major label’s marketing and distribution networks.

The mega-major is, of course, keen to play down its own dominance in the record industry as it tries to secure regulator approval in Europe and the US for its proposal to buy the EMI record company, a move that will make it even more dominant.

At the Congressional hearing on the proposed deal last week, Universal chief Lucian Grainge and EMI boss Roger Faxon were very keen to stress that, in the digital age, the power of the traditional major players has decreased significantly in the face of new competition from digital start-ups, and companies that enable artists to release and sell music themselves.

Meanwhile, speaking in support of the deal, Live Nation chief and artist manager Irving Azoff told the Washington political types: “I have no doubt labels add value, but you just don’t have to have one in a world where an artist can deliver an album to fans themselves”.

But, perhaps unsurprisingly, the other majors, which have to sign off on the IFPI report, are objecting to the inclusion of those statements, believing Universal only wants them included to help smooth over its EMI ambitions. One source told the Post: “[With Universal's proposed amendments] this report suddenly doesn’t make sense – it’s really unfair”.

By “other majors”, we can presumably assume it is Warner Music that is objecting. The EMI record company also has an interest in its merger with Universal. And while Sony Corp might not really want a report doing the rounds that tells its investors its position in the recorded music market is weakening, Sony has refrained from commenting on Universal’s bid to buy the EMI record labels, because it is leading the consortium that needs regulator approval to buy the EMI music publishing business.

Warner, however, has been lobbying hard against the Universal/EMI deal, with its former CEO Edgar Bronfman Jr, still a board member, speaking out against the acquisition on Capitol Hill last week. Some might, of course, accuse Warner of opposing Universal’s latest acquisition because it too bid to buy the EMI labels and lost (and some, of course, includes Azoff, who said exactly that last week). But Warner would argue that it, like the independent sector, has genuine concerns about a combined Universal/EMI with 40% market share of the global recorded music market.

According to the Post, with Universal adamant that the “oh, aren’t The Orchard doing well?” line goes in, and Warner refusing to sign off the report if it does, IFPI chief Frances Moore has ruled the document should be delayed until the autumn. By then the Universal/EMI deal may well have been approved, and the major will no longer be portraying itself as a castrated has-been. Needless to say, neither the IFPI or any of the majors have commented on the Post’s allegations.

Of course, as some have previously noted, while it’s true that The Orchard and one of its main competitors, INgrooves, have become forces to be reckoned with in the digital distribution space (and beyond) working with indies and artists direct, the former is part owned by Sony Music and the latter Universal Music. So while they may not have any control over their new rivals, they share in their success.

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