Universal-EMI Merger Could Create Super-Major Dictator

Photo by David Paul Ohmer

Major labels have always held a lot of power in the music industry. In the past the main reason was the shear power of their distribution. In the digital era the playing field has been leveled to the point that an un-represented musician could theoretically create the same quality of music (on a laptop vs. a multimillion dollar studio) and distribute it just as easily (online and brick & mortar). At least, that is what Universal Music Group and EMI are arguing. The two companies sat in front of a Senate subcommittee hearing on Thursday making their case that by consolidating their two groups of record labels they are not in a position to dictate the market, as their competitors claim.

Fifteen years ago there were six major record labels completely independent of each other. Now there are four. This merger would make Universal-EMI larger than both it's competitors combined. The argument against the merger is that the newly formed Super-Major label would basically dictate terms with digital distributors such as Spotify & iTunes, agencies, and promoters. In a completely ironic show of support, Irving Azoff of Live Nation Entertainment spoke in favor of the merger. Even Sean Parker (Napster / Spotify) spoke out in favor of the merger.  

Martin Mills of Beggars Group said that the merger will give the newly formed company "The power to dominate Internet services and impose their demands upon them, the power to leverage a disproportionately onerous deal, the power to squeeze out the competition." 

iTunes has a catalog of over 20 million tracks. In it's infancy, Spotify could not even consider competing with iTunes without having a catalog of similar size. If a new company tried to come about after this merger they would meet a stone wall with no bargaining chips when they try to acquire the rights to nearly 40% of the songs in the world with one organization. An organization with that much leverage would force a deal that would never be financially viable for a new tech company. This is one very possible example of how this deal could stunt the growth of the industry as a whole. The fact that Irving Azoff is present at the hearings is a very obvious example of another.  

Form your own decision on the matter, but I would imagine that a community that favors Everybody's Records over Walgreens is probably on the same page here. This is certainly worth keeping an eye on, as it will have a huge impact on our business as a whole.. Whether you are a musician or a consumer.