Songwriters and independent music publisher have criticised the decision of the EU’s competition regulators to approve Sony’s deal to take complete ownership of EMI Music Publishing. Sony made no concessions to the European Commission who in turn said the deal “raises no competition concerns”. Sony will become the world’s biggest music publisher and the World’s second biggest recorded music rights-holder.
Sony originally led a consortium of investors to buy EMI Music Publishing in 2012 and Sony/ATV has been the administrator of the EMI catalogue since then. Sony is now clear to complete a $2.3bn deal where Sony will buy a further 60% of EMP from the Mubadala Investment Company, adding to the 30% it already owns. A $287.5m deal for the remaining 10% has already been agreed with Michael Jackson’s Estate. The takeover double Sony’s catalogue of songs from 2.16m to 4.21m compositions.
Figure from pan-European indie label trade group IMPALA (who opposed the deal) suggested that once complete, Sony’s catalogue of recordings released or distributed by Sony Music and the song catalogues of Sony/ATV and EMI would give Sony control of over 50% of chart tracks in seven key European markets in 2017. In the UK, Sony had control over an average of 73% of charting tracks, while in Spain that control of charting music would be 89%. IMPALA argued that EU competition regulators had previously expressed concern over much lower chart domination by any one company.
It would interesting to know if EU regulators considered either the perceived unfair split in digital revenues between sound recordings and songs, with sound recordings gaining the lion’s share of revenues, or the perceived inequality between recording artists and their labels, with the labels being blamed for taking substantial share of revenues before passing on a much smaller share to the artiste. This is less of a problem with music publishers and songwriters, where these divisions are generally considered far fairer – meaning the two dominant music rights owners, Sony and Universal, could favour sound recording rights in digital deals at the expense of music publishing rights – benefiting the majors at the expense of creators of sound recordings and songs, although the EC did say “authors could credibly threaten to switch away from Sony if it attempted to degrade the value of their publishing rights to the benefit of its recording division” (although that would very much depend on the contractual position of songwriters who would probably not be able to make such a move).
IMPALA boss Helen Smith said that the EC had ignored its own precedents saying “In 2012, it ruled that divestments were required for Sony to become a minority shareholder. Now that Sony is acquiring 100% control of EMI, it is being given unconditional approval. This is inconsistent and simply doesn’t stack up” adding “This is bad news for the music sector and the digital single market. Sony will have a near monopoly over the charts and the whole music value chain will lose out as a result. Songwriters, composers, independent labels and publishers, digital services, and of course music fans, will all be worse off. This decision has dealt a significant blow to innovation and cultural diversity in Europe”.
When Universal Music Group’s acquired of EMI Music in 2012, UMG was required by European regulators to divest the Parlophone Label Group which was acquired Warner Music.
The UK’s songwriter organisation BASCA confirmed it was also “disappointed” with the EU approval of deals that will create a “major super power”, with Chair Crispin Hunt saying: “It is disappointing that this decision will create a behemoth that could hinder balance, diversity and competition for music. Sony is a great music company but it is through competition as opposed to oligopoly [that] we all move towards market success and the innovative future music deserves – online and off – for indies, the self-releasing sector and majors”.
Smith Added IMPALA will review this decision very carefully, and we expect others will too. This is simply too important to let go. It undermines eighteen years of robust merger control in the music sector.”
“We are pleased to have received approval from the European Commission and look forward to successfully concluding this transaction,” a Sony spokesperson told Variety. Sources say the deal is expected to close by the end of the year.