Monday, November 14, 2011

The Big 4 Become The Big 3...Maybe

Abbey Road Studios Door image from Bobby Owsinski's Music 3.0 blog
Citibank finally found a buyer for EMI and it wasn't Warner Bros, like everyone expected. The venerable company was sold to two companies, in fact - Universal Music and Sony Music. Universal bought the recorded music assets (basically the record company) for $1.9 billion, while Sony purchased the much more lucrative publishing assets for $2.2 billion.

But before the ink is dry on the agreements there's trouble brewing for this deal. European regulators (who are much more aggressive than their American counterparts) have already signaled that they will do whatever they can to block the deal, believing that Universal is already too big and adding another huge piece of the music industry will be just way too much of a monopoly.

The interesting part of the deal is that Sony didn't supply all the money and instead used a network of partners that include an Abu Dhabi investment fund, Blackstone, Guggenheim Partners, UBS Investment Bank and several others. Sony will manage the business under its Sony ATV publishing business, which already owns or administers the publishing rights to 750,000 songs, including The Beatles catalog. What they would gain from EMI is a catalog that contains 1.4 million titles including standards like "Over the Rainbow," and Singing in the Rain."

So let's say that the deal does eventually go through. What are the potential ramifications for the musician and consumer? Like with all purchases of this type, there is some good along with some bad, so here are a few things just off the top of my head.
  • Universal becomes far bigger than the next biggest major, which is Sony. They'll be able to dictate to the rest of the business because of their sheer size, for better or worse.
  • A new digital music company will find it easier to get licenses because there will be one fewer major to deal with.
  • Artists will have one less label to go to if they wish to be on a major.
  • What's going to happen to the legendary Abbey Road studios and Capitol building and studios? Will they be sold or run differently? I don't know about you, but this scares me the most.
  • How much is it going to sting the UK business community that their only major record label (EMI) was purchased by a French company (Vivendi, which owns Universal)?
While many will decry this sale, there are those artists that applaud it. Mick Jagger, whose dislike of former EMI owner Guy Hands is well-known, said that he "particularly welcomed" the new owners.
"This is a very positive development and I particularly welcome the fact that EMI will once again be owned by people who really do have music in their blood," he said in a Guardian article.

Now the rest of us can just sit back and wait to see if the deal actually happens.
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