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Trying to Make it in Music? Why Artists Should Oppose the UMG-EMI Merger

June 26, 2012 , ,

It is hard enough to land a job in a profession that accepts applications. So imagine chasing a career that depends on getting discovered. This is the reality for artists who aspire to sign a record deal with a major label. The four major record labels – Sony, EMI, Warner, and Universal (or UMG) – do not typically accept unsolicited submissions from artists. And to make matters worse, if UMG is successful in its bid to acquire EMI, artists could face an even steeper climb to success.

At a Senate subcommittee hearing last Thursday, UMG and EMI executives looked to defend their proposed merger while Warner, independent labels, and Public Knowledge opposed the move. Subcommittee chair Senator Herb Kohl asked: “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?” 

To be fair, there was probably no winning response to this question. In the business world, more players equals more competition, which generally equals better prices and offerings for consumers. And the music business is just that: a business.

However, in response to this question – and countless others – UMG CEO Lucian Grainge leaned on artists as he sought to cast the merger in a benevolent light. “We are absolutely committed to giving the artist as many opportunities to get their music to as many consumers and fans as we can,” said Grainge. It quickly became difficult to count the number of times a label executive used the word “artist.”

Of course no artists testified at the hearing. Thus, as an artist signed to a record label in a former life, I felt compelled to chime in. For starters, it should be uncontroversial to state that a UMG-EMI merger is not in the best interests of artists. After all, an artist hoping to get picked up by one of the major labels has better odds in a world with four than three. Yet this is hardly the most compelling concern for artists (in reality, the odds of scoring a major label deal are fairly bleak in either world).

Public Knowledge president Gigi B. Sohn warned of the more potent danger: “If one or two major labels obtain enough influence to stifle the development of new digital music services, those services never will be able to gain traction in the marketplace, and potential competitors will fail, not on their merits, but based on the service’s inability to strike a deal with an inordinately powerful supplier.”

For many artists, inking a record deal with a label is no longer the initial goal. Affordable digital production tools are enabling artists to independently produce high-quality recordings, and innovative online music services are making it possible for artists to independently reach audiences. 

Yet even with these technological advantages, only a small minority of independent artists have managed to consistently crack the “Billboard Top 100” without the backing of a major label. In 2010, the major labels accounted for nearly 90% of all recorded music sales in the United States. 

Still, the importance of innovative digital music services to the artist community can hardly be overstated. Without these services, “getting discovered” can require almost as much luck as skill. (Recall that in the pre-digital era, even The Beatles were denied a record deal their first time out.) However, popular digital music platforms like iTunes and Spotify, combined with innovative online distribution services like TuneCore and CDBaby, continue to tilt the balance in favor of skill for artists trying to get discovered in the digital age.

Thus, artists should find it disconcerting that these services might never have made it to market had a single label wielded enough market power to “determine what digital services live and what digital services die,” as Warner director Edgar Bronfman Jr. suggested would become the reality if UMG acquires EMI.

In a perfect world, the only barrier to an artist’s success would be talent. Further, there can be little doubt that innovative online music services are gradually paving the way to that world. Thus, by sounding the alarm on the potential threat to digital innovation at Thursday’s hearing, Public Knowledge not only represented consumers – it represented artists as well.