Ashley Battye considers the possible ramifications of Universal Music's proposed EMI takeover.
What will you be doing on the 8th of August this year? Maybe you will be gawking at a toothless Ukrainian woman at the female hockey Olympic semi-final? Or attending the potentially mind-blowing Department of Human Services Unusual Incident Management training course? If you happen to be a teacher, then maybe you'll be taking part in the professional development extravaganza EdmodoCon? Or, if you're a complete and utter moron, you may be heading off to see psychic medium John Edward in Wisconsin? Yep, August 8th promises to be another wonderful day on planet earth.
I must admit that a place on an unusual incident management course does sound very tempting, but I'm afraid I will have to pass on that because I, along with the three other people interested in the inner workings of recording and publishing companies will be spending this day on our laptops and smartphones finding out the outcome of the European Commission's investigation into whether Universal Music Group's proposed takeover of EMI breaks competition rules and has a detrimental effect on consumers.
Now, I am aware that by mentioning such tedious things as competition rules, the European Commission and consumer interests I've got many of you yawning and deciding whether to navigate way from this website and onto one that has pornography. But trust me; if you love music, this is very, very important indeed.
First of all, we must all agree that stealing music is wrong and that those who break the law should be given a proper punishment such as having their liver removed or being made to work at B&Q for a week, because a slap on the wrist or a small fine are about as much of a deterrent as adding 1p to the price of a Happy Meal to stop the feckless and the gormless from taking their ugly children to McDonalds.
This lack of a deterrent has allowed a bunch of people who either don't care about or are too stupid to understand how artists, writers and producers earn a living to illegally download music from one of the thousands of piracy websites, which has had a devastating effect on music sales and the income generated by record and publishing companies.
Back in 2007, private equity firm Terra Firma bought EMI with money it had borrowed from financial conglomerate Citigroup. By the beginning of 2009 however, the downturn in music sales and the global financial crisis had taken their toll on EMI, and Terra Firma were forced to admit that they couldn't repay the debt and the company went into the hands of Citigroup, who subsequently agreed to sell it to Universal. This is where the European Commission comes in.
For as long as I can remember, the music industry has been dominated by the big four - Universal, Sony, EMI and Warner. In fact, in 2011 the four companies commanded 74.8% of revenue market share in music sales and 67.4% of revenue market share in publishing. These figures were down on the previous year but this had very little to do with consumers consciously going to independent labels, and a lot to do with Adele's massive success (Adele is signed to independent label XL Recordings). So if the big four does become the big three, it effectively creates a monopoly with three companies controlling almost three quarters of the industry, and this potentially harms consumers by giving them less choice.
The European Commission is the executive body of the European Union, and let's face it, the EU has a lot to deal with at the moment with each European citizen effectively in around £4trillion of debt because some yank couldn't afford his mortgage repayments, and Governments insistent on bashing the wealth creating, job providing, public service subsidising rich because lazy trade unionists, sponging university students and the undeserving poor are making a big song and dance about spending cuts. So why is the Commission spending it's time and resources on what most people would consider and an unimportant issue of the entertainment industry?
Well, let's just think about this for a second.
When I get paid I deduct my bills, my shopping budget and my savings and see what's left for the fun things in life, and I bet you do the same. We spend this disposable income on a wide variety of things, but I don't know one person who doesn't buy music, buy DVDs, go to the cinema, and buy a bit of alcohol to drink whilst watching TV. All of these things to some degree involve music. Have you ever watched a movie with no music in it? A few years ago I took part in a study in which we were asked to watch a film - as I recall it was a horror film - firstly with music, and then without, and I can say with some conviction and clean trousers that without the screechy violins the ghosts and monsters lost virtually all of their scariness, and that music is thoroughly imbedded into the fabric of recreation that makes our existence enjoyable.
This proposed sale of EMI to Universal has divided the music industry. Some are arguing that the move will put EMI back into the hands of people who understand music and that this can only be a good thing, whereas others are pointing out that major record companies are always looking for a quick return on their investments and don't let genuine talent develop, and that this takeover is going to further reduce the quality of music in the mainstream.
I can see the merit in both of these arguments. As a firm believer in the free market system, I cannot understand why the European Commission is considering blocking what is essentially a natural progression in a capitalist economy. But on the other hand, the utilities industry for example is dominated by just six companies, and unless you're happy to sit in the dark eating twigs, your only option is to pay these deceiving, money grabbing b******s what they want.
EMI was founded back in 1931, and it saddens me to know that a label which has had the Beatles, Iron Maiden, Pink Floyd and a whole host of other great artists on its books over the years has gone through such turmoil. So whatever the outcome of the European Commission's investigation, I just hope that this episode won't be looked back upon as a step towards collapse for what is, at the moment, a deeply troubled and fragile industry.