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Does a music-label merger threaten the music biz?

Would a major label merger change how we buy music?
Would a major label merger change how we buy music?
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Capitol Hill is ready to step into the fight over whether Universal Music Group should be allowed to buy a big portion of fellow music giant EMI.

Last November, Universal and Sony negotiated to split EMI. Universal would get the recorded music division -- including the likes of Katy Perry and its rich catalogs including The Beatles and Pink Floyd -- for $1.9 billion. Sony would get the publishing assets -- copyrights for songwriting and composition -- for $2.2 billion. The proposed mergers would shrink major labels down from four big players to three. The odd man out is Warner Music Group which dropped out of the bidding war and now opposed the deal.

But Warner isn't the only stakeholder worried about it all. Consumer groups and some antitrust experts say Universal would have too much control over the cost of music -- especially problematic during a time of rapid innovation. Dr. Mark Cooper of the Consumer Federation of America argues that “[a]ccess to current and catalog albums is essential to the success of any new business model. One company controlling over 40 percent of the marquee content would have the power to undermine alternatives it did not like.” Cooper sent a protest letter to the Senate Committee on Antitrust, Competition Policy and Consumer Protection. It will hold hearings soon to determine if the deal would run afoul of antitrust laws. Other antitrust experts say the massive changes to the music landscape mean major labels simply don't have the power that would lead to noncompetive conditions for the market.


What does the future hold for the major labels? Do they need to consolidate to remain competitive in the face of music piracy? Would the cost of music rise? Would they stymie growth and creation of streaming sites such as Pandora and Spotify?


Casey Rae, Deputy Director, Future of Music Coalition, an artists’ advocacy group.

C. Evan Stewart, attorney who practices antitrust law; Partner with Zuckerman, Spaeder law firm based in New York.