Show Hide image

6 reasons rival music firms hate the EMI-Universal deal

The case against.

Universal Music, the world's biggest music firm by market share, is to become even larger in a £1.2bn takeover of EMI. The deal was today approved by the European Commission, on the condition that Universal sells off some of its key labels, including Parlophone (of Pink Floyd, Kylie Minogue and Blur fame).

The deal, which was officially proposed in November, has been under investigation over competition laws, but the commission has said its new ruling has dealt with the problems.

But not everyone is happy. Here are some of the main arguments coming from rival music labels:

1. The merged company would create an entity that dominates the whole market. This means that labels involved with it will be able to ruthlessly enforce their dominant position. The market will be increasingly skewed in their favour, and become unfair.

2. With two companies merged, artists will have one fewer place to market themselves. Taste across the industry will become more homogenised, and quirkier artists will find it hard to get a look-in.

3. According to one music industry spokesperson, Universal is already seen as a highly aggressive company, and the deal will only heighten its power.

4.  New artists will suffer. Universal will be able to make the biggest promises to emerging artists, but within the company they will be small fish in a big pond, which will make it difficult to get noticed.

5. As the dominant company, retailers will have to dance to Universal's tune, and will inevitably charge higher prices, driving companies like HMV out of business.

6. The argument that Universal have saved EMI through the takeover is largely false: with clients like Coldplay and Tinie Tempah, EMI is in a healthier state than it has been for several years.

The takeover is still awaiting a final nod from the US Federal Trade Commission.

Martha Gill writes the weekly Irrational Animals column. You can follow her on Twitter here: @Martha_Gill.