10 ms·

EMI music is sold to Universal. We're down to three major labels.

212 points by AndrewDucker 15y ago

AndrewDucker 15y ago
The question is, is this recession-based consolidation, or is it part of an inevitable decline of the music industry as the idea of "major labels" goes away?
- mgunes 15y ago
  Neither; it's capitalism as usual.
  - jwallaceparker 15y ago
    >> Neither; it's capitalism as usual. Can you elaborate? I don't understand what you're trying to say.
    - mgunes 15y ago
      Sorry for the brevity. Another commenter pretty much summed up what I intended to convey: http://news.ycombinator.com/item?id=3225388 http://news.ycombinator.com/item?id=3225388
- ortatherox 15y ago
  I'd be more worried in the idea that there is no competition in label's market at the largest scale. Supposedly label contracts aren't exactly very artist friendly already, and I can't imagine as an upcoming artist it's going to get any better. On the otherhand, there are now a million indie labels, and lots of success stories from people using the internet.
  - jwallaceparker 15y ago
    >> On the otherhand, there are now a million indie labels, and lots of success stories from people using the internet. Exactly. As long as there is free competition among labels (i.e. music producers) there will be continually lower prices (i.e. better contracts) for musicians. And the "million indie labels" have brought much more competition. I would say overall it is a great time to be a recording artist.
    - billpatrianakos 15y ago
      As you can see by my previous reply, I'm kind of cynical on this. I agree with what you just said, jwallaceparker, but I'm looking at the other side of the same coin.
    - ethank 15y ago
      I would like to see the quantified evidence of an Internet band making it through full ascension without ever touching one of the big 4/3. It is REALLY hard to find. It's a great time to be a recording artist and be self sufficient. If you want to be the next U2 (or if you are U2) it's rather difficult and will remain so. People speak about disruption. This industry is ripe for it, but it won't happen until a lot of the past is weeded out through attrition and better players take hold. It'll take an inversion in corporate structures. Right now its too easy to never sign a band and just mine catalog for a long, long time. Hence the value in publishing assets, and the value in mechanical for catalog.
  - billpatrianakos 15y ago
    Competition is good and the web is also great but I think too many indie labels pollutes the market with crap and eventually indie labels will be known for selling crap records, gimmicky records, or weird artists not because they're good but just for the sake of weirdness and novelty. I also think the Internet is overhyped in terms of letting indie artists get heard. It makes a great news story but it's still incredibly rare, possibly even rarer than getting major label contract. I'd say more competition at high levels is good, there's too much at the smaller level, and the web makes it easy for any schmuck to release music no one cares about. There has to be a better way! When I was younger I used to be one of the schmucks releasing music no one cared about online so I'm allowed to say that haha.
    - mitjak 15y ago
      Why are you assuming small labels want to grow bigger? Many indie labels are owned by or have contracts with larger labels to provide wider avenues of distribution. Alongside with those, there are plenty of small labels and small artists, verging on your "schmucks" definition, that are perfectly content with their sales and the size of the fan base they have. These are small artists and small labels who often record music because they love to do it, and they chose to do it in whatever way is most comfortable for them. Not everyone in the music industry is in it for the profit.
jfoutz 15y ago
2 billion doesn't sound like a lot of money to me. Apple could use, say, a third of its cash and own the entire music industry outright? not that the labels would ever sell, but still. amazing how tiny that industry is given how much noise it makes.
- masklinn 15y ago
  > 2 billion A bit above $4bn total, according to the article: "recorded music unit" goes to Universal for $1.9bn (£1.2bn), "music publishing unit" goes to a consortium led by Sony for above $2bn. EMI had been bought by its (now insolvent) owner in 2007 for $4.2bn, although it was apparently widely overpriced. > Apple could use, say, a third of its cash and own the entire music industry outright? Maybe less than that, a third of their cash reserves would be what these days, $26bn? The regulatory agencies would also have to agree, of course.
  - nknight 15y ago
    No point. Apple has been contributing to the death of the big labels for years, both through iTunes, which artists big and small can use, and by putting high-quality hardware and software suitable for production into the hands of the little guy. The business models are fundamentally opposed, and Apple's is winning. Buying the big labels wouldn't change that, it'd just be throwing a bunch of money at shareholders who hung on too long.
- deleted 15y ago
  [deleted]
- mwsherman 15y ago
  I am not sure what their incentives would be. Certain, they don't want the labels as businesses, which can only shrink. Their back catalogues have value, but Apple could just license them ad hoc.
buddylw 15y ago
We will be at zero soon enough.
- newobj 15y ago
  Right. And all of their billions of dollars of assets will blow away like dust in the wind I suppose?
  - TruthElixirX 15y ago
    No, those assets will be freed up to go to more productive ventures.
  - aw3c2 15y ago
    Most of those assets would be in the public domain anyways if it wasn't for those industries to lobby for copyright extension again and again.
seltzered_ 15y ago
In my world, concert festivals & blogs have replace the need for major labels marketing role, and itunes / amazon / cdbaby have replaced their manufacturing / distribution role. That said, I've seen friends of friends at iTunes start micro-labels that seem to focus more on online & concert only efforts. I'd be more concerned about consolidation if it was the 90's again. Update: Yes, you guys are right. I'm spoiled - I live in Austin "live music capital of the world" and have mostly non-pop taste in music.
- untog 15y ago
  In my world, concert festivals & blogs have replace the need for major labels marketing role In your world perhaps, but a lot of concert festivals and blogs have heavy involvement from major labels in promoting content. It might look like these blogs discover bands out of nowhere, but I promise you they are forwarded a ton of content from labels.
- ethank 15y ago
  In your world, but pop-radio and top-40 still drive a majority of music sales.
tejaswiy 15y ago
Does this mean we finally get Pink Floyd and the Beatles on Spotify?
- tptacek 15y ago
  My understanding of the Beatles situation is that it isn't label-driven. I'd love someone to clarify that.
  - billpatrianakos 15y ago
    I think the Beatles situation has to do with Michael Jackson having owned the Beatles catalogue for a time then Paul Mcartney bought it back (I think?). I'd start your search with that in mind. Also, the Beatles are on Apple Records which was/is their own label (but still under the umbrella of another label, possibly Columbia, I think). My broad strokes are correct but the details are questionable. I'm a big Beatles fan so I had to take a stab at answering your question. Keep those facts in mind on your search for answers.
    - dpark 15y ago
      Pretty sure McCartney was never able to purchase the catalog from Jackson.
    - Hari_Seldon 15y ago
      AFAIK. Michael Jackson owned the publishing rights to the Beatles songs, not the Beatles recordings. Basically the sheet music rights, royalties when Beatles songs are played on a jukebox or the radio or someone does a cover version of a Beatles tune. It's a complicated arrangement, When in 1989 Paul McCartney wanted to print the lyrics to Eleanor Rigby and other songs for a tour, he discovered he'd have to pay a fee to Michael Jackson.
  - zandorg 15y ago
    Soon after Apple (Computer) set up business, the Beatles' record label (Apple) asked Apple to change their business name. They didn't, so Apple (Computer) signed a contract with Apple to never enter the music industry. They broke this twice. Once in the 80s when they released music hardware, and in the 2000's when they founded iTunes. The Beatles weren't pleased about this contract breaking, so they denied permission to distribute the Beatles on iTunes. http://en.wikipedia.org/wiki/Apple_Corps_v_Apple_Computer http://en.wikipedia.org/wiki/Apple_Corps_v_Apple_Computer
billpatrianakos 15y ago
Micro-labels are cool and online services like Rdio and Spotify are great but is there anyone out there doing anything in this space besides these players? It seems like this industry is prime for disruption and I'm not talking about the kind of disruption the current startups are doing. I see a ton of startups focusing on getting music to the consumer but what about startups that focus on grooming new talent for the big time? We've got YouTube, SoundCloud and the like that make getting heard easy but the onus is on the music maker to spread the word. No one will listen to your song on these sites unless they're being promoted. It would be cool to have a new kind of "major" label that gets you exposure in a way the majors do but without totally screwing over the artists. Most musical acts make burger-flipper salaries and do tons of exhausting work because the deals they sign are heavily favored toward the label. Or maybe like a universal label like BankSimple (now Simple) but for music labels. On second read, I think this sounds vague and kind of naive. Oh well. Is anyone doing anything like this that I don't know of or has it been thought of and found to be a bad idea?
- stfu 15y ago
  I think you have some interesting ideas there. Majors see themselves nowadays only as some vehicle to bring local success towards a global stage. There is still A&R'ing going on, but it is far less long-term oriented. What the record industry should take as an example is in my view other brand-centric business, such as sportswear or luxury goods companies. But the main problem is going to be there is that the industry is too much fixed within their pricing strategies. The main problem started in my opinion already by selling all (CD) Albums for roughly the same amount of money. They try to break through this now by different premium strategies, but when prices are fixed by and large the market has very little dynamic and potential to change.
- brandall10 15y ago
  Earbits seems to be doing something along these lines, at least as far as putting radio promotion more into the artists hands.
- kabir_h 15y ago
  It's not a bad idea, but there are two major drawbacks: 1) it's not that profitable. Companies that have tried some variant of this include tunecore and rcrdlbl but both dropped the bits that weren't profitable. 2) imagine startups are like bands; the founders will always do a better job making noise than a hired PR agency. Labels introduce politics and want to see success line their pockets, not the artist's. They will always recommend charging for music, rather than giving it away to reach a larger audience.
Achshar 15y ago
I like how title makes it look like it is a relief to have one less label to deal with.
- thwarted 15y ago
  Yeah, that stood out to me too. Consolidation like this is one less to deal with, and it gets rid collusion between parties that should be independent, but fewer parties means less competition and fewer choices of vendor.
- mmatants 15y ago
  I actually interpreted the title as having the exact opposite emotion - the frustration that there are only three oligarchs in this entire business now.
  - mitjak 15y ago
    It was frustrating to me personally. Of the 4 sharks, EMI was the most forward thinking one, at least to a degree a major label can be. If commenters recall, they were the first to jump onboard with iTunes, and explore other digital delivery avenues. They also tended to sign promising artists that graduated from smaller labels. A lot of artists and fans considered EMI the "biggest indie label".
    - ethank 15y ago
      EMI has been a shell of its former self for years though. No real new signings, and only Coldplay. They had a progressive streak when they hired some digital natives, but they left out of frustration quickly.
tptacek 15y ago
Apologies in advance for glibness, but, who cares? Record labels are irrelevant. The capital costs of producing and (more importantly) distributing popular music have fallen through the floor. The heavily-promoted music products people think of when they think of EMI or Warner are in large part contrivances that exist primarily to perpetuate EMI and Warner. The future barely even belongs to independent labels like Matador. Eventually, the Internet and commerce are going to figure out how to let any artist effectively be their own "label", outsourcing every function served by a label today to some Internet startup. This is one reason why "buying the whole music industry" would be a stupid decision by Apple. We're always staring so intently at the next 12 months, but if you move your gaze upwards just a few fractions of an inch you can see that none of this stuff is going to matter. Labels are a bad investment.
- ethank 15y ago
  This is a common argument among those that have never worked at or with a label. Matador for instance is distributed by ADA, who, guess what, is owned by Warner Music Group. The music business is much, much more complicated and convoluted than any glib comments like "who cares?" can summarize.
  - tptacek 15y ago
    So what? Exactly what does ADA do that gives them a competitive advantage that will hold over the next 10 or even 5 years? Their expertise at merchandising? Because really, isn't ADA's core value proposition "getting CDs into the racks at Best Buy"? Who gives a shit what's in the racks at Best Buy? We really think people are going to be buying music at Best Buy 5 years from now? No they won't.
    - ethank 15y ago
      No, ADA also ships to indie retail world wide, manages relationships with about 70 DSP's, plus the rights of those relationships (i.e., some get the full record, some have to bundle, some only take AIFF files, etc). TuneCore or The Orchard or CD Baby sort of do the same thing, but without international reach and without all the DSP relationships. Stuff doesn't just magically show up on iTunes, Spotify, Rdio, MOG and god knows how many other places (including promos to radio, etc). It also doesn't automagically show up with cutouts and exclusive tracks depending on the retailer. Also who do you think manages publishing catalogs for bands like Radiohead (Warner) or Arcade Fire (EMI)? Best Buy will likely eliminate music from their planograms by next year. So will Target and Wallmart at some point. They mostly have. That doesn't mean that an upstart can disrupt the space. There are huge market barriers to entry.
mwsherman 15y ago
The traditional idea of a “label” is going away. The existence of that particular line of business is an accident of history. Not a bad thing, but dependent of a set of circumstances (including medium and distribution) that existed for, say, 50 years. There will still be a role for managing and promoting talent, but it will look more like marketing and less like distribution. It will have less dependence on intellectual property in the form of recordings (which are easy to reproduce) and more in the form of brands (which are hard to reproduce). In startup parlance, the “moat” will be the artist’s brand, not the recording.
- dylangs1030 15y ago
  Right, this is the music industry adjusting to the freedom of information, one massive merger at a time. If they keep focusing on distribution, they'll keep losing money with piracy. I doubt music will ever be totally free, but they should at least focus more on shifting the market to branding and merchandise rather than fight an idealist war where no one commits piracy despite the ease.
  - ethank 15y ago
    Piracy is actually lower now on the list of how people get music for free. Number 1 is YouTube. Ad supported streaming and radio are also up there. Piracy has been falling as a primary mover of free music for quite a while now. The shifting of the market to branding and merch has been going on as long as I've been in the industry. I was a big part of it at Warner for a while, in our direct-to-fan initiatives. The problem is where money in these companies is invested. They need to be technology oriented entities, but don't want to be. Apple cleaned the clock on that, and they let them.
    - deleted 15y ago
      [deleted]
    - maximusprime 15y ago
      AFAIK Youtube has deals with the labels so that they get a cut of advertising revenue for any music video. Also for anyone that uploads cover versions etc. I wouldn't be surprised if that income is quite substantial.
deleted 15y ago
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EREFUNDO 15y ago
Unregulated markets do lead to monopoly. Why? Because it is the very nature of competition. There will be a winner (or a few) and most will either be acquired or they will die out. With monopoly comes political power and this leads to crony capitalism. Then the monopoly can now dictate prices and influence both legislation and government regulation. The idea that companies will compete in perpetuity and benefit consumers as a result is flawed. Competition will not last, someone will win.
- mitjak 15y ago
  I'd argue otherwise, in any other case, but since a label's success solely depends on the success of its artists, which isn't always predictable, and considering the shrinking number of artists wishing to be signed onto a major label, there's a possibility of the music labels consolidating even more. Then again, by the time they do, they just might stop mattering altogether. I keep hoping for self-implosion, anyhow.
  - EREFUNDO 15y ago
    I think the innovations in social media and file sharing will help artists become more independent and distribute their work directly to consumers. The trick is finding a way to monetize this efficiently and minimize the risk of people just getting it for free. Maybe adding advertising per download would be a viable option, I think there are some start-ups that are already doing that.
- jwallaceparker 15y ago
  > Unregulated markets do lead to monopoly. Can you give an example of a company that achieved and maintained monopoly control of a free market? > With monopoly comes political power and this leads to crony capitalism. I think it's actually the opposite: monopoly is born out of crony capitalism and political power. The only monopolies I'm aware of (railroad, telecom, power) are government granted monopolies. Anyway, I'd be curious if there are any free market monopolies because I've never heard of any.
  - 15y ago
droz 15y ago
Record labels can be useful. For example, take Mo'Wax from back in the day. Under James Lavelle they cultivated an impressive collection of up and coming artists in the electronica scene. Finding similar artists became a breeze by browsing through their artist roster. Similar things can be said about Breakin' Bread and Metalheadz Problem is that record labels became to large and too broad. Their only real purpose to create revenue instead of giving exposure to artists.
- minikomi 15y ago
  I think that netlabels have to start being as selective and driven as real labels.. Look at Jahtari, they have a good, clear "image" and are very consistent.
gravitronic 15y ago
Without the sales to support such a large "industry" of lawyers and business people, and without the need for many of their services (marketing and distribution, at least), are major labels not irrelevant? With dwindling sales they seem willing to further exploit their one resource, the artist. Artists on twitter are talking about getting monthly cheques for ~7 cents from Spotify. Guess who made that contract? I feel like we're about to hit a new low for professional career musicians. Their existing structure is falling apart (and it should) but the replacement is not quite ready. Today's professional musicians have to tour constantly to be profitable enough to survive, not to mention constantly churning out new tracks to remain relevant. It's a tough gig. Signing to a major label is not a great move financially (cue the albini essay), they're in dire straits and will exploit you for every dollar you can generate, leaving you with little but debt. I hope that in the future, the fat will be trimmed from the industry (good riddance) but a sustainable model will be created where the artists and minimal management make healthy livings without being run ragged just because they devoted their lives to making music.
- tomg 15y ago
  > Today's professional musicians have to tour constantly to be profitable enough to survive, not to mention constantly churning out new tracks to remain relevant. I think this is just the nature of the beast, so to speak. Due to the large number of musicians, the very, very low cost of recording a track, and the global, nearly free distribution channel of the Internet, the value of a pre-recorded piece of music is practically $0. However, going to a show, seeing a real performance, feeling the music, etc etc, is still worth $10 a ticket to me, even for music that isn't particularly good. You can't copy/paste that experience on to someone else's iPod.
  - gravitronic 15y ago
    Your comment summarizes where we are today, but maybe there's other solutions in the future? Right now we have basically the two mentioned modes of contact with the artist: listening to their released music and seeing them perform live. Already big concerts have been adding revenue streams with things like VIP tickets or a chance to meet the artist, but what about more streams in the online domain? David Lynch is a bit of a pioneer in this space, from what I gather his website has a paid-subscription model where you get access to a ton of his work from finished pieces to random things he does through the day. If some of my favorite artists had networks like this I would consider subscribing. If you really want to change the game, first change the vocabulary and context and the game will change itself.
greyish_water 15y ago
Why do we cringe at the idea of single-digit numbers of record labels, movie studios, or publishers, but not at search engines, operating system vendors, etc?
deleted 15y ago
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wavephorm 15y ago
There is no really good reason that a "music recording industry" needs to exist any longer. Before vinyl records people would pay money to see a live musical performance. Operas, musicals, concerts, a live event people can go to and enjoy. The concept of paying money to listen to a pre-recorded performance is a relatively new phenomenon. It only made sense during the short time window when the ability to copy pre-recorded music was expensive. Now that the cost of digital music reproduction is zero, there is no legitimate way for this industry to continue, and there is no real reason for it to continue other than if it is legislated to continue.
- TylerE 15y ago
  Ironically, vinyl is the one segment of the industry that well. It's been growing double-digits percentage wise every year for at least the last 6-7 years. In 2010, vinyl sales were actually higher than in 1991, the last year the majors were distributing most releases on vinyl. 2011 looks like it could be up as much as 25% over 2010. Why is this? Well, at least for me, it's a much better value proposition, despite being substationally more expensive. Full size art, much better sound quality, etc.
taylorlb 15y ago
The buzz/concern about the merger is semi-premature. Universal will be fighting for years in order to pass regulatory in the EU. IMPALA, who tied up the Sony/BMG merger for 3 years, is dead set on blocking the UNI/EMI merger: http://www.musicweek.com/story.asp?sectioncode=1&storycode=1047449&c=1 http://www.musicweek.com/story.asp?sectioncode=1&storyco... Who knows what the industry will look like in 3 years. UNI might even decide to bail on the deal by then. EDIT: changed the link to a non-paywall one
guard-of-terra 15y ago
This is sad because Universal was the most beefy of them four. It was something like 1:1:2:3 (e/w/s/u) weighted by catalog ("impressions"). Now it would be like 1:2:4 Universal controls the more than half of said impressions, speaking of western mainstream music. (Luckily, they also seem to be the sanest of all four)
rsanchez1 15y ago
I would say this is a bad move that reduces competition, but the Big Four have been acting like a Big One for a while, conspiring together against us normal folk who like music.
tkiley 15y ago
Wow. I knew the labels' economic relevance was declining, but I'm amazed that one of the four key "factories" in the commercial music industry just changed hands for $1.9 billion - less than half of Dropbox's recent valuation.
- tobylane 15y ago
  That's been mentioned a few times, someone even said four big tech companies (e,g. Apple Google Facebook and Microsoft) should just buy one each and cross-licence, the customers would love that.
skanuj 15y ago
With their cash piles, I think Apple, MS and Google should buy 1 of each.
mkramlich 15y ago
In a world where the web exists, YouTube, all these video and audio sharing websites and tools, I'm not sure the notion of a major music company is needed anymore. Make music, record it, put it out there, be findable, if it's any good, people will like it, share it, trade it and generally find out about it. At most, artists may want to sign up with some company to help promote themselves, but as a general rule, quality will win out in the end. May just take time. On the other hand, if you get lucky you can go viral quickly. Just have a monetization channel active and ready. And there are tons of self-service ones now, not just for the music itself but for related products/media like posters, t-shirts, etc.
code_duck 15y ago
Excellent! I'm looking forward to that becoming one, then zero.
mrweasel 15y ago
What I find a bit strange is that if this where any other business, where one of the major players bought up one of the others, then this deal would need to be approved by the US, EU an perhaps others. Aren't the politicians concerned with competition in the entertainment industry?
aphexairlines 15y ago
I wonder how this influences the RIAA's influence on governments.
timinman 15y ago
... and one ring to RULE THEM ALL!!!!

212 points by AndrewDucker 15y ago

The question is, is this recession-based consolidation, or is it part of an inevitable decline of the music industry as the idea of "major labels" goes away?

mgunes 15y ago
Neither; it's capitalism as usual.
- jwallaceparker 15y ago
  >> Neither; it's capitalism as usual. Can you elaborate? I don't understand what you're trying to say.
  - mgunes 15y ago
    Sorry for the brevity. Another commenter pretty much summed up what I intended to convey: http://news.ycombinator.com/item?id=3225388 http://news.ycombinator.com/item?id=3225388
ortatherox 15y ago
I'd be more worried in the idea that there is no competition in label's market at the largest scale. Supposedly label contracts aren't exactly very artist friendly already, and I can't imagine as an upcoming artist it's going to get any better. On the otherhand, there are now a million indie labels, and lots of success stories from people using the internet.
- jwallaceparker 15y ago
  >> On the otherhand, there are now a million indie labels, and lots of success stories from people using the internet. Exactly. As long as there is free competition among labels (i.e. music producers) there will be continually lower prices (i.e. better contracts) for musicians. And the "million indie labels" have brought much more competition. I would say overall it is a great time to be a recording artist.
  - billpatrianakos 15y ago
    As you can see by my previous reply, I'm kind of cynical on this. I agree with what you just said, jwallaceparker, but I'm looking at the other side of the same coin.
  - ethank 15y ago
    I would like to see the quantified evidence of an Internet band making it through full ascension without ever touching one of the big 4/3. It is REALLY hard to find. It's a great time to be a recording artist and be self sufficient. If you want to be the next U2 (or if you are U2) it's rather difficult and will remain so. People speak about disruption. This industry is ripe for it, but it won't happen until a lot of the past is weeded out through attrition and better players take hold. It'll take an inversion in corporate structures. Right now its too easy to never sign a band and just mine catalog for a long, long time. Hence the value in publishing assets, and the value in mechanical for catalog.
- billpatrianakos 15y ago
  Competition is good and the web is also great but I think too many indie labels pollutes the market with crap and eventually indie labels will be known for selling crap records, gimmicky records, or weird artists not because they're good but just for the sake of weirdness and novelty. I also think the Internet is overhyped in terms of letting indie artists get heard. It makes a great news story but it's still incredibly rare, possibly even rarer than getting major label contract. I'd say more competition at high levels is good, there's too much at the smaller level, and the web makes it easy for any schmuck to release music no one cares about. There has to be a better way! When I was younger I used to be one of the schmucks releasing music no one cared about online so I'm allowed to say that haha.
  - mitjak 15y ago
    Why are you assuming small labels want to grow bigger? Many indie labels are owned by or have contracts with larger labels to provide wider avenues of distribution. Alongside with those, there are plenty of small labels and small artists, verging on your "schmucks" definition, that are perfectly content with their sales and the size of the fan base they have. These are small artists and small labels who often record music because they love to do it, and they chose to do it in whatever way is most comfortable for them. Not everyone in the music industry is in it for the profit.

jfoutz 15y ago

2 billion doesn't sound like a lot of money to me. Apple could use, say, a third of its cash and own the entire music industry outright? not that the labels would ever sell, but still. amazing how tiny that industry is given how much noise it makes.

masklinn 15y ago
> 2 billion A bit above $4bn total, according to the article: "recorded music unit" goes to Universal for $1.9bn (£1.2bn), "music publishing unit" goes to a consortium led by Sony for above $2bn. EMI had been bought by its (now insolvent) owner in 2007 for $4.2bn, although it was apparently widely overpriced. > Apple could use, say, a third of its cash and own the entire music industry outright? Maybe less than that, a third of their cash reserves would be what these days, $26bn? The regulatory agencies would also have to agree, of course.
- nknight 15y ago
  No point. Apple has been contributing to the death of the big labels for years, both through iTunes, which artists big and small can use, and by putting high-quality hardware and software suitable for production into the hands of the little guy. The business models are fundamentally opposed, and Apple's is winning. Buying the big labels wouldn't change that, it'd just be throwing a bunch of money at shareholders who hung on too long.
deleted 15y ago
[deleted]
mwsherman 15y ago
I am not sure what their incentives would be. Certain, they don't want the labels as businesses, which can only shrink. Their back catalogues have value, but Apple could just license them ad hoc.

buddylw 15y ago

We will be at zero soon enough.

newobj 15y ago
Right. And all of their billions of dollars of assets will blow away like dust in the wind I suppose?
- TruthElixirX 15y ago
  No, those assets will be freed up to go to more productive ventures.
- aw3c2 15y ago
  Most of those assets would be in the public domain anyways if it wasn't for those industries to lobby for copyright extension again and again.

seltzered_ 15y ago

In my world, concert festivals & blogs have replace the need for major labels marketing role, and itunes / amazon / cdbaby have replaced their manufacturing / distribution role. That said, I've seen friends of friends at iTunes start micro-labels that seem to focus more on online & concert only efforts. I'd be more concerned about consolidation if it was the 90's again. Update: Yes, you guys are right. I'm spoiled - I live in Austin "live music capital of the world" and have mostly non-pop taste in music.

untog 15y ago
In my world, concert festivals & blogs have replace the need for major labels marketing role In your world perhaps, but a lot of concert festivals and blogs have heavy involvement from major labels in promoting content. It might look like these blogs discover bands out of nowhere, but I promise you they are forwarded a ton of content from labels.
ethank 15y ago
In your world, but pop-radio and top-40 still drive a majority of music sales.

tejaswiy 15y ago

Does this mean we finally get Pink Floyd and the Beatles on Spotify?

tptacek 15y ago
My understanding of the Beatles situation is that it isn't label-driven. I'd love someone to clarify that.
- billpatrianakos 15y ago
  I think the Beatles situation has to do with Michael Jackson having owned the Beatles catalogue for a time then Paul Mcartney bought it back (I think?). I'd start your search with that in mind. Also, the Beatles are on Apple Records which was/is their own label (but still under the umbrella of another label, possibly Columbia, I think). My broad strokes are correct but the details are questionable. I'm a big Beatles fan so I had to take a stab at answering your question. Keep those facts in mind on your search for answers.
  - dpark 15y ago
    Pretty sure McCartney was never able to purchase the catalog from Jackson.
  - Hari_Seldon 15y ago
    AFAIK. Michael Jackson owned the publishing rights to the Beatles songs, not the Beatles recordings. Basically the sheet music rights, royalties when Beatles songs are played on a jukebox or the radio or someone does a cover version of a Beatles tune. It's a complicated arrangement, When in 1989 Paul McCartney wanted to print the lyrics to Eleanor Rigby and other songs for a tour, he discovered he'd have to pay a fee to Michael Jackson.
- zandorg 15y ago
  Soon after Apple (Computer) set up business, the Beatles' record label (Apple) asked Apple to change their business name. They didn't, so Apple (Computer) signed a contract with Apple to never enter the music industry. They broke this twice. Once in the 80s when they released music hardware, and in the 2000's when they founded iTunes. The Beatles weren't pleased about this contract breaking, so they denied permission to distribute the Beatles on iTunes. http://en.wikipedia.org/wiki/Apple_Corps_v_Apple_Computer http://en.wikipedia.org/wiki/Apple_Corps_v_Apple_Computer

billpatrianakos 15y ago

Micro-labels are cool and online services like Rdio and Spotify are great but is there anyone out there doing anything in this space besides these players? It seems like this industry is prime for disruption and I'm not talking about the kind of disruption the current startups are doing. I see a ton of startups focusing on getting music to the consumer but what about startups that focus on grooming new talent for the big time? We've got YouTube, SoundCloud and the like that make getting heard easy but the onus is on the music maker to spread the word. No one will listen to your song on these sites unless they're being promoted. It would be cool to have a new kind of "major" label that gets you exposure in a way the majors do but without totally screwing over the artists. Most musical acts make burger-flipper salaries and do tons of exhausting work because the deals they sign are heavily favored toward the label. Or maybe like a universal label like BankSimple (now Simple) but for music labels. On second read, I think this sounds vague and kind of naive. Oh well. Is anyone doing anything like this that I don't know of or has it been thought of and found to be a bad idea?

stfu 15y ago
I think you have some interesting ideas there. Majors see themselves nowadays only as some vehicle to bring local success towards a global stage. There is still A&R'ing going on, but it is far less long-term oriented. What the record industry should take as an example is in my view other brand-centric business, such as sportswear or luxury goods companies. But the main problem is going to be there is that the industry is too much fixed within their pricing strategies. The main problem started in my opinion already by selling all (CD) Albums for roughly the same amount of money. They try to break through this now by different premium strategies, but when prices are fixed by and large the market has very little dynamic and potential to change.
brandall10 15y ago
Earbits seems to be doing something along these lines, at least as far as putting radio promotion more into the artists hands.
kabir_h 15y ago
It's not a bad idea, but there are two major drawbacks: 1) it's not that profitable. Companies that have tried some variant of this include tunecore and rcrdlbl but both dropped the bits that weren't profitable. 2) imagine startups are like bands; the founders will always do a better job making noise than a hired PR agency. Labels introduce politics and want to see success line their pockets, not the artist's. They will always recommend charging for music, rather than giving it away to reach a larger audience.

Achshar 15y ago

I like how title makes it look like it is a relief to have one less label to deal with.

thwarted 15y ago
Yeah, that stood out to me too. Consolidation like this is one less to deal with, and it gets rid collusion between parties that should be independent, but fewer parties means less competition and fewer choices of vendor.
mmatants 15y ago
I actually interpreted the title as having the exact opposite emotion - the frustration that there are only three oligarchs in this entire business now.
- mitjak 15y ago
  It was frustrating to me personally. Of the 4 sharks, EMI was the most forward thinking one, at least to a degree a major label can be. If commenters recall, they were the first to jump onboard with iTunes, and explore other digital delivery avenues. They also tended to sign promising artists that graduated from smaller labels. A lot of artists and fans considered EMI the "biggest indie label".
  - ethank 15y ago
    EMI has been a shell of its former self for years though. No real new signings, and only Coldplay. They had a progressive streak when they hired some digital natives, but they left out of frustration quickly.

tptacek 15y ago

Apologies in advance for glibness, but, who cares? Record labels are irrelevant. The capital costs of producing and (more importantly) distributing popular music have fallen through the floor. The heavily-promoted music products people think of when they think of EMI or Warner are in large part contrivances that exist primarily to perpetuate EMI and Warner. The future barely even belongs to independent labels like Matador. Eventually, the Internet and commerce are going to figure out how to let any artist effectively be their own "label", outsourcing every function served by a label today to some Internet startup. This is one reason why "buying the whole music industry" would be a stupid decision by Apple. We're always staring so intently at the next 12 months, but if you move your gaze upwards just a few fractions of an inch you can see that none of this stuff is going to matter. Labels are a bad investment.

ethank 15y ago
This is a common argument among those that have never worked at or with a label. Matador for instance is distributed by ADA, who, guess what, is owned by Warner Music Group. The music business is much, much more complicated and convoluted than any glib comments like "who cares?" can summarize.
- tptacek 15y ago
  So what? Exactly what does ADA do that gives them a competitive advantage that will hold over the next 10 or even 5 years? Their expertise at merchandising? Because really, isn't ADA's core value proposition "getting CDs into the racks at Best Buy"? Who gives a shit what's in the racks at Best Buy? We really think people are going to be buying music at Best Buy 5 years from now? No they won't.
  - ethank 15y ago
    No, ADA also ships to indie retail world wide, manages relationships with about 70 DSP's, plus the rights of those relationships (i.e., some get the full record, some have to bundle, some only take AIFF files, etc). TuneCore or The Orchard or CD Baby sort of do the same thing, but without international reach and without all the DSP relationships. Stuff doesn't just magically show up on iTunes, Spotify, Rdio, MOG and god knows how many other places (including promos to radio, etc). It also doesn't automagically show up with cutouts and exclusive tracks depending on the retailer. Also who do you think manages publishing catalogs for bands like Radiohead (Warner) or Arcade Fire (EMI)? Best Buy will likely eliminate music from their planograms by next year. So will Target and Wallmart at some point. They mostly have. That doesn't mean that an upstart can disrupt the space. There are huge market barriers to entry.

mwsherman 15y ago

The traditional idea of a “label” is going away. The existence of that particular line of business is an accident of history. Not a bad thing, but dependent of a set of circumstances (including medium and distribution) that existed for, say, 50 years. There will still be a role for managing and promoting talent, but it will look more like marketing and less like distribution. It will have less dependence on intellectual property in the form of recordings (which are easy to reproduce) and more in the form of brands (which are hard to reproduce). In startup parlance, the “moat” will be the artist’s brand, not the recording.

dylangs1030 15y ago
Right, this is the music industry adjusting to the freedom of information, one massive merger at a time. If they keep focusing on distribution, they'll keep losing money with piracy. I doubt music will ever be totally free, but they should at least focus more on shifting the market to branding and merchandise rather than fight an idealist war where no one commits piracy despite the ease.
- ethank 15y ago
  Piracy is actually lower now on the list of how people get music for free. Number 1 is YouTube. Ad supported streaming and radio are also up there. Piracy has been falling as a primary mover of free music for quite a while now. The shifting of the market to branding and merch has been going on as long as I've been in the industry. I was a big part of it at Warner for a while, in our direct-to-fan initiatives. The problem is where money in these companies is invested. They need to be technology oriented entities, but don't want to be. Apple cleaned the clock on that, and they let them.
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  - maximusprime 15y ago
    AFAIK Youtube has deals with the labels so that they get a cut of advertising revenue for any music video. Also for anyone that uploads cover versions etc. I wouldn't be surprised if that income is quite substantial.

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EREFUNDO 15y ago

Unregulated markets do lead to monopoly. Why? Because it is the very nature of competition. There will be a winner (or a few) and most will either be acquired or they will die out. With monopoly comes political power and this leads to crony capitalism. Then the monopoly can now dictate prices and influence both legislation and government regulation. The idea that companies will compete in perpetuity and benefit consumers as a result is flawed. Competition will not last, someone will win.

mitjak 15y ago
I'd argue otherwise, in any other case, but since a label's success solely depends on the success of its artists, which isn't always predictable, and considering the shrinking number of artists wishing to be signed onto a major label, there's a possibility of the music labels consolidating even more. Then again, by the time they do, they just might stop mattering altogether. I keep hoping for self-implosion, anyhow.
- EREFUNDO 15y ago
  I think the innovations in social media and file sharing will help artists become more independent and distribute their work directly to consumers. The trick is finding a way to monetize this efficiently and minimize the risk of people just getting it for free. Maybe adding advertising per download would be a viable option, I think there are some start-ups that are already doing that.
jwallaceparker 15y ago
> Unregulated markets do lead to monopoly. Can you give an example of a company that achieved and maintained monopoly control of a free market? > With monopoly comes political power and this leads to crony capitalism. I think it's actually the opposite: monopoly is born out of crony capitalism and political power. The only monopolies I'm aware of (railroad, telecom, power) are government granted monopolies. Anyway, I'd be curious if there are any free market monopolies because I've never heard of any.
- 15y ago

droz 15y ago

Record labels can be useful. For example, take Mo'Wax from back in the day. Under James Lavelle they cultivated an impressive collection of up and coming artists in the electronica scene. Finding similar artists became a breeze by browsing through their artist roster. Similar things can be said about Breakin' Bread and Metalheadz Problem is that record labels became to large and too broad. Their only real purpose to create revenue instead of giving exposure to artists.

minikomi 15y ago
I think that netlabels have to start being as selective and driven as real labels.. Look at Jahtari, they have a good, clear "image" and are very consistent.

gravitronic 15y ago

Without the sales to support such a large "industry" of lawyers and business people, and without the need for many of their services (marketing and distribution, at least), are major labels not irrelevant? With dwindling sales they seem willing to further exploit their one resource, the artist. Artists on twitter are talking about getting monthly cheques for ~7 cents from Spotify. Guess who made that contract? I feel like we're about to hit a new low for professional career musicians. Their existing structure is falling apart (and it should) but the replacement is not quite ready. Today's professional musicians have to tour constantly to be profitable enough to survive, not to mention constantly churning out new tracks to remain relevant. It's a tough gig. Signing to a major label is not a great move financially (cue the albini essay), they're in dire straits and will exploit you for every dollar you can generate, leaving you with little but debt. I hope that in the future, the fat will be trimmed from the industry (good riddance) but a sustainable model will be created where the artists and minimal management make healthy livings without being run ragged just because they devoted their lives to making music.

tomg 15y ago
> Today's professional musicians have to tour constantly to be profitable enough to survive, not to mention constantly churning out new tracks to remain relevant. I think this is just the nature of the beast, so to speak. Due to the large number of musicians, the very, very low cost of recording a track, and the global, nearly free distribution channel of the Internet, the value of a pre-recorded piece of music is practically $0. However, going to a show, seeing a real performance, feeling the music, etc etc, is still worth $10 a ticket to me, even for music that isn't particularly good. You can't copy/paste that experience on to someone else's iPod.
- gravitronic 15y ago
  Your comment summarizes where we are today, but maybe there's other solutions in the future? Right now we have basically the two mentioned modes of contact with the artist: listening to their released music and seeing them perform live. Already big concerts have been adding revenue streams with things like VIP tickets or a chance to meet the artist, but what about more streams in the online domain? David Lynch is a bit of a pioneer in this space, from what I gather his website has a paid-subscription model where you get access to a ton of his work from finished pieces to random things he does through the day. If some of my favorite artists had networks like this I would consider subscribing. If you really want to change the game, first change the vocabulary and context and the game will change itself.

greyish_water 15y ago

Why do we cringe at the idea of single-digit numbers of record labels, movie studios, or publishers, but not at search engines, operating system vendors, etc?

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wavephorm 15y ago

There is no really good reason that a "music recording industry" needs to exist any longer. Before vinyl records people would pay money to see a live musical performance. Operas, musicals, concerts, a live event people can go to and enjoy. The concept of paying money to listen to a pre-recorded performance is a relatively new phenomenon. It only made sense during the short time window when the ability to copy pre-recorded music was expensive. Now that the cost of digital music reproduction is zero, there is no legitimate way for this industry to continue, and there is no real reason for it to continue other than if it is legislated to continue.

TylerE 15y ago
Ironically, vinyl is the one segment of the industry that well. It's been growing double-digits percentage wise every year for at least the last 6-7 years. In 2010, vinyl sales were actually higher than in 1991, the last year the majors were distributing most releases on vinyl. 2011 looks like it could be up as much as 25% over 2010. Why is this? Well, at least for me, it's a much better value proposition, despite being substationally more expensive. Full size art, much better sound quality, etc.

taylorlb 15y ago

The buzz/concern about the merger is semi-premature. Universal will be fighting for years in order to pass regulatory in the EU. IMPALA, who tied up the Sony/BMG merger for 3 years, is dead set on blocking the UNI/EMI merger: http://www.musicweek.com/story.asp?sectioncode=1&storycode=1047449&c=1 http://www.musicweek.com/story.asp?sectioncode=1&storyco... Who knows what the industry will look like in 3 years. UNI might even decide to bail on the deal by then. EDIT: changed the link to a non-paywall one

guard-of-terra 15y ago

This is sad because Universal was the most beefy of them four. It was something like 1:1:2:3 (e/w/s/u) weighted by catalog ("impressions"). Now it would be like 1:2:4 Universal controls the more than half of said impressions, speaking of western mainstream music. (Luckily, they also seem to be the sanest of all four)

rsanchez1 15y ago

I would say this is a bad move that reduces competition, but the Big Four have been acting like a Big One for a while, conspiring together against us normal folk who like music.

tkiley 15y ago

Wow. I knew the labels' economic relevance was declining, but I'm amazed that one of the four key "factories" in the commercial music industry just changed hands for $1.9 billion - less than half of Dropbox's recent valuation.

tobylane 15y ago
That's been mentioned a few times, someone even said four big tech companies (e,g. Apple Google Facebook and Microsoft) should just buy one each and cross-licence, the customers would love that.

skanuj 15y ago

With their cash piles, I think Apple, MS and Google should buy 1 of each.

mkramlich 15y ago

In a world where the web exists, YouTube, all these video and audio sharing websites and tools, I'm not sure the notion of a major music company is needed anymore. Make music, record it, put it out there, be findable, if it's any good, people will like it, share it, trade it and generally find out about it. At most, artists may want to sign up with some company to help promote themselves, but as a general rule, quality will win out in the end. May just take time. On the other hand, if you get lucky you can go viral quickly. Just have a monetization channel active and ready. And there are tons of self-service ones now, not just for the music itself but for related products/media like posters, t-shirts, etc.

code_duck 15y ago

Excellent! I'm looking forward to that becoming one, then zero.

mrweasel 15y ago

What I find a bit strange is that if this where any other business, where one of the major players bought up one of the others, then this deal would need to be approved by the US, EU an perhaps others. Aren't the politicians concerned with competition in the entertainment industry?

aphexairlines 15y ago

I wonder how this influences the RIAA's influence on governments.

timinman 15y ago

... and one ring to RULE THEM ALL!!!!