Creators and mergers in the music business

There are some big changes afoot in the music industry at the moment. Universal Music Group are trying to buy the recorded music part of EMI for $1.9 billion (see this and this for some coverage).

Opinions have been varied and robust (see the American Assn. of Independent Music statement, for example). The UK Government yesterday expressed a sort-of opinion on the matter, with Secretary of State Jeremy Hunt saying: “As far as the specific deal is concerned, that is a matter for the competition authorities and is being looked at in Europe”. Critics have said that it could concentrate power in the music industry, shrinking opportunities for access to the market. According to the Wall Street Journal, Martin Mills, chief executive of independent music group Beggars Group, said the deal ‘would give Universal an unfair advantage in signing artists and gaining access to distribution, retail and media’. 

We’ve been monitoring this because we’re interested in how the new landscape could or should affect musicians and their relationship with the big players in the business. Whatever the outcome of the attempt by Universal Music Group to buy EMI, it seems important that regulators consider the likely impacts on citizens not just in their role as consumers, but also as creators and performers both now and in the future. Digital technology brings opportunities to all of us to participate in culture and in markets. Allowing the incumbent businesses simply to divide up the market between them in a new way doesn’t seem like a great stimulation to innovation.

So we’ve noted with interest the Featured Artists Coalition suggestion that artists involved should be given the chance to buy back their rights from record labels on fair terms. Those artists would then be free to re-enter the market in new ways and with business models far better adapted to the digital world. FAC say:

“This is an historic opportunity to create a more sustainable music industry – a future music industry more meaningfully described as a collection of individual artist businesses rather than specific sectors like records, publishing and live.”

Here’s their open letter to the Financial Times from 19th July in full:

“Sir, The views of Patrick Zelnik (“A Universal EMI merger could rescue the music business”, Comment, July 17) were as welcome as they were needed. His analysis was incisive, but his solution stopped one step short of perfect.

Divestments in the wake of mergers should first offer copyrights, at market rates, to the artists who created them. To sell them to other corporations, whether large or small, is just a perpetuation of an old business model, which has seen the recorded music business halve in value over 10 years. During that time, the technological revolution has displaced the old music business players. We do not need to repeat the mistakes of the past.

It would be good to have music business people rather than financiers owning and running music companies again. It would be even better to have artists owning their work and entering into partner relationships with service-providing major and independent record companies with all the finance and expertise an artist needs to develop their own business.

Top management at Universal has already concurred with this view. The concept of “turning the taps on” so that music catalogues are much more readily available to users, and copyright ownership is not an impediment to new services, would help build the artist-centric new music business that will benefit creators, investors and consumers.

Ed O’Brien, Radiohead
Nick Mason, Pink Floyd
Sandie Shaw

The Featured Artists’ Coalition”

It seems like this proposed acquisition gives regulators a unique opportunity to think in these terms – about the position of the creator in digital markets – as they consider ways to protect against over-concentration in music markets. ORG supports this suggestion from FAC, and urges regulators in the UK, Europe, and elsewhere, as a matter of principle to put artists and citizens at the centre of their response.