Independents Speak Out Against Proposed Sony/BMG Merger

(CelebrityAccess News Service) — Leading independents spoke out recently against the proposed Sony/BMG merger on behalf of European music companies, artists and consumers. The charge was led by Michel Lambot (Impala president and co-chairman of PIAS Group/Vital), Patrick Zelnik (Impala vice president and president of Naïve), Horst Weidenmüller (Impala board member and CEO of !K7) and Martin Mills (Impala board member and chair of Beggars Group).

They had four main messages:

1. The merger would make it significantly easier for all the majors to abuse the marketplace, dominate retailers, reduce artist rosters, undermine competitors and control all routes to the consumer;

2. This would have disastrous consequences across the whole sector from record companies to publishers to artists, performers, employees, managers, retailers, composers, writers, collecting societies and, of course, consumers;

3. Demand for music has never been higher and the industry should respond imaginatively to increase competition rather than to increase concentration; and

4. The EU will have no choice but to block the merger following its market assessment in 2000 and evidence of the majors’ increased grip on the market since then.

The independents have asked Impala to confirm their objections to the merger in a written submission to the European Commission. The companies are also providing commercial information to the Commission in response to individual questionnaires sent by the merger case team. Impala members met the case team on January 12 to discuss their concerns. The independents helped the Commission assess the market in 2000 in the context of the failed Warner/EMI merger.

“Everyone says the majors have fucked the market by force-feeding consumers homogenized crap and trying to make them buy CDs when what they really want is downloads," said Lambot. "You know what? I don’t care what the majors sell or how. I know I can compete on my music alone and I don’t want to be excluded from the mainstream market. The consumer can buy what he wants. Let the market decide. The problem with the merger is simple. It will make it harder for me to get to the market in the first place and if I can’t get to the market how can the consumer decide if he wants to buy my music?”

“The EU won’t fall for the parties spinning the line about how bad things have become since the last time the majors attempted to merge in 2000," Mills said "If the majors are in difficulties how come they had 95% share of the album charts in Europe in 2002? This is up more than 15 points since 2000. We also have to look more closely at the supply side. Product banality and low value are issues that will be exacerbated by more concentration and anyway, if size isn’t helping Universal, why would it help Sony BMG?”

Weidenmüller added: “The independents have no power to react to the majors’ dominance and neither do the retailers. The merger would help the majors’ cement their grip on the market and reduce consumer choice. The current trend of the majors is to reduce national music repertoire and focus on their own international artists. Universal Germany has dropped 50% of its German artists in 2003. This trend will only be compounded as the merger will force even more reductions in artist rosters. This is a disaster for consumers and of course national cultures. It will consign diversity to the backwater when it should be in the open market.”

“Concentration is the main reason for the current crisis and further concentration will make it even worth," said Zelnik. "The small players will be further marginalized and access to radio playlists, television programs and retail shelves will become impossible. Music diversity and consumer choice will be the ultimate victims of the process.”

IMPALA was established in April 2000 to help independent record companies and music publishers represent their own agenda and organize themselves in the face of increasing concentration in the music sector dominated by five majors.

The independents are world leaders in terms of R&D and discovering new music and artists. Despite this, they face increasingly complex barriers to trade and severe market access problems. Their market share is in decline and fluctuates widely from territory to territory. Although specific strong markets such as the UK pull the independents’ share across Europe up to 20.8%, this does not reflect market reality in the majority of European territories, where the share of the independents is considerably lower.

IMPALA has over 2000 members including the top independents: !K7 (Germany), Beggars Group (UK), Epitaph (US/NL), Playground, MNW, Gazelle (Sweden), Naïve (France), Edel Music (Germany), PIAS Group (Belgium), V2 Music Group (UK), Wagram (France) as well as national trade associations from Norway (FONO), France (UPFI), the UK (AIM), Germany (VUT) and Sweden (SOM). –Bob Grossweiner and Jane Cohen