Music Industry Execs Debate UMG-EMI Deal In Washington
June 22, 2012
On Thursday afternoon, a number of top-level music industry executives defended and debated the proposed Universal Music-EMI deal in front of a Senate subcommittee. UMG Chairman Lucian Grainge, EMICEO Roger Faxon and Live Nation/Front Line Management head Irving Azoff were in attendance to speak in support of the sale, while industry figures including Warner Music Group's Edgar Bronfman, Jr. were on hand to testify against the proposed merger.
According to the New York Times, Sen. Herb Kohl (D-WI) asked if the music industry is similar to other businesses and therefore should be concerned about shrinking market competition. Kohl said, "In almost all industries, reducing the number of competitors from four to three expands the market power of the remaining companies and increases the risk of higher prices. Why shouldn’t these same principles apply to the music business?"
Grainge argued that an expanded UMG would not give it a greater advantage in the marketplace because a record label's strengths lie in the quality of its artist roster and music. "The thought that we would constrict our artists who we’ve invested in and construct the investment we make in EMI to dissolve the market would be commercial suicide," Grainge said.
Azoff argued that "the power today rests with consumers, not record labels," according to The Hill, adding that "with services like iTunes, CD Baby, Top Spin, Reverb Nation, Pro Tools, Facebook, Spotify - you name it - artists can do everything themselves on their own very professionally."
Meanwhile, the merger's opponents claimed the deal is solely to expand Universal's power over the marketplace. Beggars Group founder Martin Mills said UMG is seeking "the power to dominate Internet services and impose their demands upon them, the power to leverage a disproportionately onerous deal, the power to squeeze out the competition," according to the NY Times.
WMG's Bronfman also argued that "Granting this merger, grants to Universal the ability to decide what digital services live and what dies and how much they decide to pay."