Sony Music + BMG
The European Union gave its blessing to the Sony Music/BMG merger, eliminating the last obstacle to the conversion of the Big Five into the Big Four. Most surprising is that the deal was approved without conditions, so that the new company gives nothing up in return for reducing competition. The new company will have over 25% share of the music market.
The merger, which could start happening as soon as August, will doubtless involve major losses in terms of jobs, labels, and artists. The industry is still being hit hard by a combination of indifference and piracy. Even the success of downloading services like iPod and an aggressive attempt to prosecute pirates has barely stemmed the tide. The big recording companies are hurting bad, with almost 8% loss in CD sales in 2003.
Reuters quotes the European Competition Commission's report as saying: "The Commission had to conclude ... that the evidence found was not sufficient to demonstrate in a successful way that coordinated pricing behavior existed in the past and that a reduction from five to four major recording companies would not yet create a collectively held dominant position in the national markets for recorded music in the future."
Martin Mills, the CEO of independent label Beggar's Banquet, strongly disagreed ""This merger is not about economic necessity in a changing market, as BMG's stellar figures demonstrate, it is about the desire to dominate and to control the outlets at media and retail level." (BBC News, "Indie labels unhappy with merger", 7/20/2004)
What, one wonders, are the limits of concentration? That may be tested again and soon. Rumors are strong now that Warner Music (12%) and EMI (13%) will have to merge to keep up with the new conglomerate and Universal Music Group (23%).
5:09:39 PM 
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