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Will Digital Music Suffer If Universal Acquires EMI?

22.06.2012
Supporters of Universal Music Group's proposed acquisition of rival label EMI's recorded music division found themselves on the defensive at a Senate hearing on Thursday as they squared off against critics who warned that the combined entity would be large enough to effectively dictate the terms of music distribution in the digital age.

Senate Judiciary Committee holds hearing on Universal Music Group/EMI Merger

In testimony before the Senate Judiciary Committee's subcommittee on antitrust, the heads of Universal Music Group (UMG) and EMI Group cited the growing number of independent labels and the proliferation of online distribution platforms to argue that were their two companies to join forces, reducing the number of major labels from three to four, the impact on the market would be minimal.

"Digital has lowered the barriers to entry," said Lucian Grainge, chairman and CEO of UMG, a subsidiary of the French conglomerate Vivendi. "Technology and the Internet have enabled anyone to create music, market music and distribute music."

Roger Faxon, CEO of EMI Group, similarly argued that the power of the major labels is vastly diminished in an age when unknown acts can go viral online and fans are more directly involved with distribution than ever before.

"It's the music that matters, not the source," Faxon told lawmakers. "If there ever were antitrust issues implicated with label consolidation it seems to me they're not present today."