UNIVERSAL'S EMI BID HEADING FOR PHASE TWO OF EC INVESTIGATION
Universal's bid to buy EMI is heading into a full second phase investigation at the European level, according to sources cited by the Financial Times. This will come as a surprise to more or less no one, given the complexities of the proposed deal, though the FT also claims that "the European Commission this week privately expressed its serious doubts over the impact on competition from the purchase of EMI".

As much previously reported, the British music major is set to be split for sale by current owners, US-bank Citigroup, with Universal taking the record labels and a consortium led by Sony/ATV buying the music publishing assets. Both deals would increase the size and influence of what are already the two biggest music groups in the world, leading to opposition from both the independent sector and the two bidders' smaller major label rival Warner Music. That opposition is significant because both deals require competition regulator approval from both the US's FTC and the European Commission.

The European investigation into both is running a couple of months behind FTC efforts, with Universal and Sony only submitting their formal applications within the last month. In theory the EC could give either deal the all clear in a one phase one month investigation, but that never seemed likely. The FT confirms that interested parties have raised various concerns about the Universal deal with the EC, but that the major has so far chosen not to propose remedies to allay any fears in a bid to get a quick resolution. Presumably aware a second phase investigation was almost inevitable, it's likely Universal didn't want to start making any concessions to critics this early in the proceedings.

The EC will make an announcement about its intentions re the Universal deal on 23 Mar, and the Sony bid on 2 Apr. Both Universal and Sony, officially at least, remain convinced they will ultimately get approval for their deals without remedies, albeit after a rigorous second phase investigation that could run into the summer. But the indies and Warner still remain confident they can severely hinder the two mega majors' expansion ambitions via the regulatory process.

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CHANNEL ISLANDERS' BID TO SAVE LVCR FAILS
The High Court in London has dismissed a legal challenge by Jersey and Guernsey to the UK government's plans to end the use of Low Value Consignment Relief on the Channel Islands.

As much previously reported, it is LVCR which means that mail-order set ups based in the English Channel, like those of Play.com and The Hut Group, can sell products priced under £15 back to the UK without charging VAT, giving them a 20% advantage over mainland-based businesses operating mail-order or high street enterprises.

Although the VAT dodge was employed in various sectors, its use was particularly prolific in entertainment retail, where start ups entered the mail-order CD and DVD market with a cost cutting strategy aided by the tax break. The bigger mainland operators, including HMV, subsequently relocated their mail-order operations to the Channel Islands, but smaller independent retailers couldn't afford to, while a price war online forced prices to drop on the high street too, where 15-20% of the money charged had to be handed over to the VAT man.

The independent retailers campaigned for years about what they believed was an abuse of the tax relief system that was unfairly distorting the market, and making it impossible for independent retailers to compete in a marketplace where profit margins were already pretty tight. Both the last Labour government and political types on the Channel Islands paid lip service to the campaigners, but in the main did little, while the UK Inland Revenue turned a blind eye to the whole thing, and the offshore etailers stuck to the line that they were based on Jersey and Guernsey for the sea air not the competitive advantage the tax break delivered.

But the campaigners got more organised, formed a body called RAVAS, and proved the rampant use of the relief system was a breach of European tax rules. The coalition government pledged to act, and last year George Osborne announced he would withdraw the tax relief from Channel Island based companies. Most of those firms - based there for the sea air remember - suddenly decided a move to Switzerland sounded like a good idea. Also outside the EU (the criteria for benefiting from LVCR), the tax break would still apply there. And of course there's all that nice mountain air.

Of course as mail-order businesses flee the Channel Islands once the tax break goes that puts a lot of local people out of work, which in part motivated Jersey and Guernsey's legal efforts to force a u-turn. They argued Osborne's move was discriminatory against the Channel Islands, and anyway wouldn't benefit either mainland retailers in the UK or the British tax payer, because the offshore etailers would just move to other non-EU bases. Some in the UK - including HMV boss Simon Fox - have also expressed concerns Osborne's decision to only block LVCR for the Channel Islands will just move the problem elsewhere.

However, RAVAS says those fears have been exaggerated. While it's true some Channel Island mail-order companies are looking into other non-EU bases, the costs of relocating to, say, Switzerland are high, and having a base beyond the borders of the European Union poses all sorts of new logistical challenges, the big advantage of Jersey and Guernsey being their closeness to the UK, geographically, politically and commercially. And besides, if all the mail-order firms start using LVCR in another location, that will also amount to an abuse, and Osborne would arguably be obliged to shut off the tax relief there also. So a move to Switzerland could be a big upfront investment for short term benefit.

Either way, Judge John Mitting yesterday dismissed the Channel Islanders' case, giving Osborne the all clear to end LVCR for Jersey and Guernsey from next month. The Islands may, of course, appeal, though that won't stop the phasing out of the tax relief in the meantime. A spokesman for the government of Guernsey yesterday told reporters: "The various departments of the States Of Guernsey have been working hard to address the issues surrounding the removal of LVCR and further statements on this matter will be made once we have had an opportunity to examine this afternoon's outcome in detail".

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TEMPTATIONS JOIN DIGITAL ROYALTY DISPUTE PARTY
Another day another digital royalties lawsuit in America. The Temptations are the latest artists to sue Universal Music for a bigger cut of the download pie.

As much previously reported, major labels treat downloads as record sales, whereas many veteran artists - whose record contracts don't mention downloading - say that download arrangements with iTunes et al are licensing deals. It's an important distinction because artists usually get a considerably bigger share of licensing income. Eminem collaborators FBT Productions successfully sued Universal over the issue, and now a coach load of aging pop stars are filing similar litigation, against Universal and other majors. Universal insists the ruling in the FBT case only applies to the producers' specific contract, and does not set a precedent that can be applied to all pre-iTunes recording agreements. But the artists suing do not agree.

In The Temptations lawsuit, which involves both original and later members of the group, including Otis Williams and Ron Tyson, the plaintiffs argue: "UMG's standard recording agreements are, in every material way, the same as those at issue in FBT Productions'. Accordingly, plaintiffs here allege that the digital download income received by UMG from digital content providers are based on 'licenses' and not 'sales', as those terms are defined in UMG's standard recording agreements with these providers. Just as in FBT Productions' [case], UMG has not properly accounted for the appropriate amount of royalties owed to plaintiffs".

As previously reported, Sony Music, which was first hit with an action on this issue in 2006, as well as being at the receiving end of more recent litigation post the FBT ruling, has put together a settlement proposal that is now pending court approval. The settlement would offer affected artists an extra cash pay out now and a 3% increase on what they are currently receiving from download sales. Given artists routinely receive 25-35% more from licensing revenue than record sales under conventional record contracts, it remains to be seen if either the courts or artists accept that deal.

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GLORIA GAYNOR JOINS REVERSION RIGHTS DEBATE AT SXSW
Talking of potentially devastating (for the majors) copyright law shenanigans, a panel at South By Southwest this week has focused on the other big US music rights debate of the moment - reversion rights.

As previously reported, this dates from a bit of late 1970s American copyright legislation, so has been a long time coming, though the impact of it only fully kicks in next year, so it's something that's been discussed in label and legal circles with increased frequency and urgency of late.

The 1978 law says that if a creator assigns copyrights protected under the US system to another party - so a songwriter hands over their copyrights to a music publisher in return for an upfront advance, investment and administration support, and an ongoing royalty - after 35 years the rights revert to the original creator. This enables the songwriter to reassert control over their works, or to negotiate new terms with either their existing publisher, or an alternative rights company.

Because of the way the 1978 rule applied to retrospective copyrights, it's only really in 2013 that this measure starts to make a big impact, and the American music publishing sector has been preparing accordingly for sometime. But what about the record labels?

The 1978 law doesn't mention sound recordings, and labels insist that the reversion right does not apply to master recordings, because labels are in essence the creator - in that they commission the work - and the artists are simply engaged on a "work for hire" basis, depriving them of creator rights.

That's not a radically controversial interpretation of American copyright law, though things are sufficiently grey in this domain that some artists reckon they do have creator rights over their master recordings, and everyone expects this one to be fought out in court when one of those artists sues. If said artists were to win, it would have a big impact on the majors, who could lose control of their incredibly valuable pre-1978 catalogues.

Speaking for the labels at a SxSW debate on this issue, lawyer Eric German said "just because you performed on a song does not mean you own it", while Ken Abdo, arguing for the other side, said that the "work for hire" principle meant artists were basically employees of the record label, but that "artists don't believe that recording contracts are the same [as employment contracts]". Abdo added that he expected the majors to try and negotiate new royalty agreements with its major artists from the sixties and seventies to avoid a big precedent-setting square off in court.

But winning the quotable quote competition during the debate was Ms Gloria Gaynor, who's biggest hit 'I Will Survive' was released in 1978, so its writers will benefit from the reversion right next year, but what about as the recording artiste? Arguing that recording artists should also benefit from the reversion principle, according to Billboard she told the debate: "The reason this record continues to be popular is because I'm going to over 80 countries to promote it ... even indentured slaves get let go sooner or later". So that's a new one, the major record companies, even less ethical than the slave owners.

Expect this debate to heat up Stateside over the coming year.

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ARE THE SWEDES PLANNING A PIRATE BAY SWOOP?
The Swedish authorities may be preparing to swoop on the current incarnation of The Pirate Bay, according to reports. It wouldn't be the first time the authorities in Sweden have tried to take the Bay offline by seizing its servers, but it didn't work five years ago, and this time the people running the rogue file-sharing site are seemingly better prepared.

The original founders and funder of the Bay were, of course, found liable for criminal copyright infringement by the Swedish courts for their involvement in the file-sharing enabling search engine, and those rulings now stand after the country's Supreme Court refused to hear an appeal earlier this year. But those four men insist they no longer have any links to TPB, and the site continues to operate.

After the US authorities swooped on MegaUpload in January, disconnecting that file-sharing network's servers and seizing its domain names, The Pirate Bay made a Swedish URL its primary web address, rather than the .org tag it had traditionally used, because it would be harder for the American's to take control of a .se domain. Meanwhile, Bay operators argue that their recent move to providing links to magnet rather than BitTorrent files means the size of the data they sit on is now much smaller, making it easier to move it to multiple other servers if the main TPB computers were seized.

Nevertheless, Sweden's Prosecution Authority are reportedly investigating what can be done about the piracy enabling venture, and according to the BBC have approached the company through which thepiratebay.se is registered to try to identify the individuals currently running the site.

A spokesman for that company, which is called Binero, told the Beeb the firm had received a letter from prosecutors requesting information, adding: "It said an investigation is being conducted, but there was no specific mention which crime was being investigated nor which law was applicable in this case apart from a general Swedish law which is a general requirement of any citizen to help the police with their questions. We do try to protect our customers' integrity, so in this case we have chosen not to answer all of the questions, but rather just forward onto them public information".

It remains to be seen what action the Swedish authorities take this time, and whether it works in any way. Meanwhile efforts continue in the UK to force internet service providers to block access to The Pirate Bay, meaning more casual users (who are, in theory, less likely to research ways to circumvent such blocks) would no longer have access to the search service.

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CHURCH ALLOWED TO SUE PEOPLE OVER DRUNK PROPOSAL CLAIMS
Charlotte Church may no longer be pursuing her legal action against News International regards past phone hacking, but she is set to go to court in a libel dispute with the Mirror Group over an article that appeared in The People newspaper. Though, actually, this one will probably now be settled out of court too.

The Sunday tabloid claimed last November that the singer had proposed to her boyfriend while somewhat the worse for wear in a karaoke bar in Cardiff. So pissed was Church, in fact, according to the article, that she had to be "physically helped out of the pub". The tab then quoted an eye witness as saying "we helped her to the taxi afterwards". But the singer and her partner were, in fact, miles away from the Cardiff bar that night, with Church performing at a concert.

The Mirror Group conceded the story was made up nonsense, but asked that Church's libel claim be dismissed on the basis that being pissed and/or proposing in public - or both - were not sufficiently embarrassing things to be accused of for there to be a case for defamation.

But Church's lawyer did not agree. According to The Guardian, David Sherborne told the court: "The effect and impact on the claimant [of this story] is not trivial. She is a 26 year old mother of two children and a professional singer. This was not a positive story about Charlotte Church ... the message that is clearly conveyed to the reader, and the meaning that he or she could take, [was] that in proposing to her boyfriend [Church] made ... a very public and embarrassing spectacle of herself".

Judge Michael Tugendhat agreed with Team Church that there was a sufficiently strong case here for the singer's libel action to proceed to court. The judge said that The People's report was "capable of bearing the meaning attributed to it [by the claimants] and that is capable of being defamatory".

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MERCURY PRIZE MOVES TO NOVEMBER
Organisers of the Mercury Prize have announced that this year's event will shift in the calendar, so that the rant-inducing shortlist will be announced in September, with the overall prize presented in November. Previously the shortlist was announced in July and the gong handed over in September.

Confirming the change, award spokesman Dan Ford said: "By announcing the Barclaycard Mercury Prize 'Albums Of The Year' after the summer, we will be able to generate more interest in the shortlisted artists than ever before, building momentum in the run up to the awards show and beyond".

The move means that the eligibility period for the next edition of the prize will run from last July to this coming September. Labels will be able to put their releases forward for consideration between 6 Jun and 12 Jul, and should register at mercuryprize.com for information of how all that will work.

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TOM AND DOUGIE MCFLY TO WRITE CHILDREN'S BOOK ABOUT DIARRHEIC XMAS DINOSAUR
McFly's Tom Fletcher and Dougie Poynter are to script a seasonal children's picture book entitled 'The Dinosaur That Pooped Christmas', publisher Random House has announced.

Fletcher outlines the concept: "It's about a boy who gets a dinosaur for Christmas which goes on an unstoppable festive eating rampage until Christmas is gone. The only way to get Christmas back is for the dinosaur to poop it out".

So, a sort of reptilian/faecal interpretation of 'The Grinch' meets 'The Very Hungry Caterpillar' then. Charmed, I'm sure.

Adding a wish that the book will be "the first of many", Tom continues: "I think it's easy to see that this book comes from Dougie's fascination with dinosaurs, my love for Christmas and a shared obsession with poop".

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GUILLEMOTS ANNOUNCE TWIN VILLAGE UNDERGROUND SHOWS
Guillemots will take to the stage at Village Underground in East London two nights in a row later this month. The band will play acoustic sets by candlelight both nights, running through a mixture of old and new songs. The performances will also feature appearances from singer-songwriters Robyn Hitchcock, Thomas Feiner and Mary Epworth, cellist Oliver Coates, and poets John Hegley and Luke Wright.

Frontman Fyfe Dangerfield says of the shows: "This is something we've wanted to do for ages and Village Underground's the perfect place to do it, the room just has an aura to it as soon as you walk in. I love the idea of gigs like this where there's nothing to hide behind. It's that bit more personal and dynamic for everyone".

The shows will take place on 30 and 31 Mar.

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BRIAN JONESTOWN MASSACRE TO TOUR UK
The Brian Jonestown Massacre have revealed several United Kingdom-based dates as part of a forthcoming world tour.

The neo-psych ensemble, perhaps most notorious for their doings in candid 2004 documentary 'Dig!', have arranged said tour in aid of brand new studio album 'Aufheben'. Recorded in band figurehead Anton Newcombe's German studio, the LP features guests including Spiritualized's Will Carruthers, Dimmer's Constantine Karlis and original BJM cohort Matt Hollywood.

Listen to album track 'I Want To Hold Your Other Hand' here:

soundcloud.com/cargorecords/05-i-wanna-hold-your-other/s-HFbh6

Taking place in the wake of a booking at Scotland's T In The Park on 6 Jul, the band's British dates are as follows:

7 Jul: London, Shepherds Bush Empire
8 Jul: Manchester, Ritz Ballroom
9 Jul: Birmingham, Academy 2

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FESTIVAL LINE-UP UPDATE

BEACHED, Manchester, Castlefield Basin, 2 Jun: Forming the Beached line-up so far are artists including Los Campesinos!, The Whip, Instra:Mental, Zed Bias and Total Garage, with more yet to be announced. www.beachedfestival.com

BUSHMILLS LIVE, Bushmills Old Distillery, North Antrim, Northern Ireland, 20-21: Billed as a festival blend of whiskey and live music, Bushmills Live will see in its inaugural instance in the company of countrymen (and festival headliners) Snow Patrol, with For Vance and Iain Archer making up the remainder of the bill as it stands at the moment. www.facebook.com/Bushmills1608

EASTERN ELECTRICS FESTIVAL, secret location, London, 4 Aug: London promoters Eastern Electrics graduate from club night to festival hosts, confirming Julio Bashmore, Joy Orbison, techno type Nina Kraviz, house specialist Maceo Plex and funk producer Tensnake amidst the initial missive for EEF's first ever edition. www.easternelectricsfestival.com

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HOLD STEADY VOCALIST CREATES BESPOKE BEER
Elbow, The Rifles, and even Hanson have all made previous announcements regarding selling their own especial brand of ale. So, who's next to join the ever so slightly slurry band-brewed beer market? Why, Craig Finn of American alt-rock sorts The Hold Steady, of course, who has collaborated - as did The Rifles - with bespoke booze manufacturers Signature Brew.

Ironically, given the links between alcohol misuse and coronary disease, it borrows its name ('Clear Heart') from the title of Finn's solo album 'Clear Heart, Full Eyes'.

Says Craig: "When I set out to make this beer, I was going for something with a clear taste and full flavour. Instead I got a pretty decent buzz. We had a great time creating this beer and I hope you enjoy it as much as I do".

Described as containing "a melody of bitterness and citrus notes", it's due to be stocked online and at selected outlets, but also at Finn's headlining date at the London-based Hoxton Bar & Kitchen on 29 Mar. Enjoy!

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HMV RESPONDS TO MAMA SALE SPECUALTION, SORT OF
HMV put out a statement to the London Stock Exchange yesterday in response to this week's speculation about the sale of the retailer's live division, the MAMA Group. As previously reported, the Independent said earlier this week that the sale of MAMA had now entered its second stage, after first round bids were submitted earlier this month. The paper added that AEG Live had been asked to make a second refined bid, while it was thought the Academy Music Group and Oakley Capital had also made first round offers.

HMV's statement to the markets did a good job of saying nothing, though it did confirm that what it called a 'strategic review' (aka the sale) was ongoing, but that no one outcome was more likely than another just yet. Or in HMV's words: "HMV Group plc notes the recent press speculation regarding the strategic review of the HMV Live business. HMV can confirm that this review remains ongoing and that a number of parties have indicated an interest in acquiring the business. At this stage, there can be no certainty that any transaction will be concluded and a further announcement will be made as and when appropriate".

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SEAN PARKER ADMITS TRANSPARENCY NEEDED IN SPOTIFY'S PAYMENT SYSTEM
Spotify board member Sean Parker yesterday blamed artists' record deals for those frequent complaints about low royalty payments being paid by the streaming service (ie the labels were getting OK royalties, but only passing a fraction onto their acts) - though that doesn't explain why some record labels have also complained about the money they receive.

He also admitted that the streaming firm needed to make it clearer how money is shared out amongst licensees, though of course sharing that kind of information is often blocked by NDAs in licensing deals.

Speaking at SxSW - where he was being interviewed alongside his Napster co-founder Shawn Fanning about a new documentary chronicling the rise and fall of the P2P service - Parker said, according to Wired: "There's blood in the water for labels. Spotify has to remain neutral; the biggest contribution we can make is transparency".

He also said that Spotify's much discussed partnership with Facebook (which it's assumed Parker had a part in creating, given his links to the social network) wasn't working out quite as well as he had hoped; well not yet. Although the tie up with the social networking giant has certainly delivered a lot of exposure for the music service, especially in the US, Parker said "there's too much happening in the Facebook arena, and not enough in Spotify".

As well as all that, Parker apparently added that he believes that Spotify will overtake iTunes in terms of the revenue it generates for the music industry within two years, which possibly shows him up to be some sort of insane fantasist. Or possibly just someone who won't let common sense get in the way of a great voxpop.

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DEEZER AVAILABLE THROUGHOUT EUROPE
Deezer is now available in "all European countries", according to the company, having launched in Eastern Europe yesterday. By its count, that's 46 countries in total, though everywhere I look puts the number of European states at between 47 and 50. This shortfall's going to make it difficult to launch in the 200+ countries Deezer plans to hit by June this year (according to a previous press release), given that some of those already only exist in the company's imagination.

Deezer founder Daniel Marhely told CMU yesterday: "We are thrilled today to launch Deezer in Eastern Europe and to play a key role in the music revolution. This is a very exciting key turning point for Deezer following four years of an extraordinary success made of passion".

The company's CEO Axel Dauchez added: "We're extremely excited to be launching Deezer here in these countries. With easy access everywhere music fans will be able to enjoy music anywhere they like, at any time, and be able to share their music with their friends, easily and legally. Our team of experts will help users make musical discoveries that matter to them. Deezer is set to make music more accessible than ever before in Europe".

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MTV ANNOUNCES TOPSPIN PARTNERSHIP
MTV has used SxSW to confirm a new alliance with direct-to-fan firm Topspin which will result in the music telly network launching a new online network (in the US initially) called Artists.MTV, which will enable artists to sell stuff direct to the broadcaster's online audience utilising Topspin's technology and fulfilment services.

Confirming the new Topspin partnership, MTV's Van Toffler told a South By launch event, according to Hypebot: "We are creating the artist platform in part to give back to the artists on whom we built our business". The new site is due to go live in June.

While Topspin chief Ian Rogers told Billboard: "It is great for us. But I think it is generally great for artists. MTV has a fire hose, but they can't use if for every artist, obviously. But it does actually scale because first of all they've got great SEO. That does scale for every artist on the platform. And they use mostly unsigned bands for [song placements] their shows. They're completing the loop now from driving traffic from those shows to the web".

Topspin is already involved in an initiative to let artists sell merch via their YouTube channels, and such partnerships presumably help the company compete against others in the direct-to-fan space, because as part of its package it can offer access to sizable mainstream audiences via web partners.

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RIHANNA COMMENTS ON "INNOCENT" CHRIS BROWN COLLABORATION
Now, Rihanna choosing to feature Chris Brown as guest MC on a remix of her 'Talk That Talk' track 'Birthday Cake' may have seemed an inexplicable move to many, it being barely three years since he, the R&B singer's then boyfriend, severely beat and hospitalised her.

Rihanna, however, has for the first time voiced her views in defence of the collaboration, telling US radio host Ryan Seacrest that she "reached out to him about doing 'Birthday Cake' because [he was] the only person that made sense to do the record. Just as a musician, despite everything else".

Having also appeared on a recent rework of Chris Brown's 'Turn Up The Music, she adds: "I thought about rappers and the hottest R&B artist right now is Chris Brown, so I wanted him on the track and in return, he said: 'Why don't you do the remix on my track?' We did the two records so our fans could come together, there shouldn't be a divide. It's all music and it's innocent".

Of course it's only because fans and the music industry at large has seemingly forgiven Brown for his violent assault on Rihanna that he can claim to be "the hottest R&B artist right now". But many think that fans and especially the industry have been far too quick to forgive, not least because Brown has shown himself to still have anger issues, and those people rightly wonder whether Rihanna joining in with the public forgiving so soon doesn't send out a bad message to those who commit domestic violence, whatever her private personal feelings on the matter, and however good at singing and selling records her ex may be.

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CMU BEEF OF THE WEEK #102: COURTNEY LOVE V THE MUPPETS
This story qualified for the Beef Of The Week the moment we hard of it via the guys at TMZ. Really, all you need to know is that Courtney Love has lashed out at The Muppets. I mean, really, what else do you want to know? Oh, except that Love said last week that The Muppets had "raped" the memory of Kurt Cobain.

But what did The Muppets do to elicit such a strong reaction? Well, they covered 'Smells Like Teen Spirit' in a barbers shop quartet style in their latest movie. Although they did it in a slightly tongue in cheek manner - during the scene in question Jack Black shouts at said quartet that they're "ruining one of the greatest songs of all time". I quite like it.

Black's disdain is as a character in a film though. Courtney Love is a real person, despite what you might believe. She also claims that the song was used in the film without her permission, which has only added to her anger. Not that anyone needed to seek her permission. The use of the track was approved by Primary Wave Music, a company founded in 2006 when it bought Love's 50% stake in the publishing rights in Cobain's catalogue. Permission was then also sought from Cobain's former Nirvana bandmates, Krist Novoselic and Dave Grohl, and Grohl also appears in the film.

So, basically everything's fine and everyone's happy. Except Courtney. Oh well. Here's a clip of the track, which you can listen to in full on Spotify here.

www.tmz.com/videos/0_u8drytn2

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