IMPALA and mayor record company mergers.

The Commission has opened a phase II investigation into the Sony-BMG merger, which de facto has been implemented for a while now. IMPALA, the organisation representing independent music labels has announced it will continue to oppose the deal save for significant measures in place to counter the impact on competition. For more details I urge you to read the post on the Antitrust Hotch Potch.

On the other side of the Atlantic Warner seems to have somehow been able to reassure IMPALA that their envisaged acquisition of EMI will not drastically harm competition, as IMPALA has openly expressed to support the takeover following an agreement. No doubt, IMPALA has been able to negotiate a fair deal for the independents. The press release on their website enthousiastically announces that following a successfull acquisition Warner has committed to:

“(i) behavioural undertakings to ensure competition and broad licensing;

(ii) recorded music divestitures to reduce market share and enhance the competitive scale of the independent music sector; and

(iii) substantial assistance to build the capacity of the independent music sector through industry bodies and the recently announced Merlin initiative”

Firstly, the first two principles made me chuckle a bit. How the consolidation of two mayor players -save for divestitures of assets which were probably the incentive to merge in the first place- within an oligopolistic market would entice competition or reduce market shares completely escapes me.

Secondly, I dare question the integrity of IMPALA. The “enhancement of the competitive scale of the independents” and the “substantial assistance” part basicly suggests Warner has bought IMPALA’s support, or is it me being cynical?

In any case, I wonder where the future for independent labels lies. According to the press release, the independents are a vital component in the music market, promoting new artists. Then, won’t they become obsolete middlemen in an increasingly digitized industry where young artists promote their work via myspace or personal websites?

~ by kristofn on March 7, 2007.