Sony Buys EMI for $2.3 Billion – Becomes Worlds Largest Record Label

The Big four record labels is becoming the big three record labels. The deal likely won’t dampen fears of a lack of competition.

It’s perhaps the biggest news story to come out of the music world. Sony is buying a controlling stake in major record label EMI. From The Guardian:

The agreement is Sony’s first major deal under its new chief executive, Kenichiro Yoshida, who noted that the music business has enjoyed a “resurgence” in recent years due to growth in revenues from streaming services provided by companies such as Spotify and Apple.

With this purchase, Sony “is becoming one of the biggest music publishing companies, both in name and reality”, Yoshida said.

Music publishing has become an increasingly important revenue generator as the music industry moves into the digital age. Every time something is streamed or sold, the record label collects revenue for the recording, while the publisher or rights bodies collect for the songwriters.

As some might point out, EMI has been looking for a buyer for a considerable amount of time now. More than a decade ago, Warner also “approached” EMI about a possible buyout. Even back then, there were concerns about competition in the industry.

Over the last decade, we’ve seen many accusations that the industry is anti-competitive. When it comes to suing filesharers, anti-circumvention laws, three strikes laws, and now, outright censorship, the major record labels have basically walked in lockstep with each other. They have their own organization known as the Recording Industry Association (RIAA) to speak on their behalf. That organization has become synonymous with controversial anti-piracy efforts over the years.

Not helping the music industry’s image is the Payola scandal that saw the cozy relationship between radio and the music industry. Some feel that the tight relationship still exists to some degree.

In 2002, when the music labels were referred to as “the big five”, RIAA members were sued for price fixing of albums. The labels settled out of court on that deal.

Now, 16 years labels, they are no longer being referred to as “The Big Five”. Now, they could really be referred to as “The Big Three” with this latest acquisition. It’s unclear if fears of competition will continue. One thing is for sure, some won’t feel that this helps competition amongst the major labels.

Drew Wilson on Twitter: @icecube85 and Google+.

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