The big 3 – or why EMI to UMG means SFA
The deal has been done and now, there’s just three major labels stalking the landscape. It’s like a scene from one of those dinosaur films – first, there was five, then there was four and now there is three! – …
The deal has been done and now, there’s just three major labels stalking the landscape. It’s like a scene from one of those dinosaur films – first, there was five, then there was four and now there is three! – and we all know what happened to the dinosaurs in the end (Who’s next? Will the Warnermusicsaur fail to keep pace and end up getting eaten by the Sonyopod?) Anyway, back to the boardroom. Universal Music Group has paid £1.2 billion to Citigroup to acquire EMI’s recorded music divisions. The publishing side of the EMI house has gone to Sony for $2.2 billion. We’re waiting for the regulators to run the rule over the deal – legal eagles to the left, legal eagles to the right – and there will be a ton of questions to be asked and answered by the analysts about the value in all of this. But it’s fair to say that everyone (bar those EMI employees who are probably going to lose their jobs in the shake-up to come) is happy. Right? Of course, there’s always one….
Really, it’s the kind of deal which makes me do a Vinnie Browne and sigh a bit because the emphasis is all wrong. These transactions are from the mergers and acquistions playbook, a case of a big swinging dick acquiring a catalogue because there’s cash on the balance sheet to throw around and make their bottom line look larger. No talk of spending that money on some kind of creative R&D. No chance of using that cash to nurture and develop new talent. No way that money will be used to create new opportunities. Nope, just another step down the inevitable road to major labels as catalogue pimps, a bunch of fast-talking spivs in bad suits flogging their warehouse of recordings to anyone who wants to do a deal with them. You want The Beatles, Coldplay or Lily Allen for your new-fangled iPadymajig? You want to go back to giving away CDs with newspapers? You want to give us some cash for your new streaming service? Come to UMG, baby! We’ve got big love for you, pappy.
The real creative work, as is now the norm, happens way beyond what happens at the top of the major universe. There are still labels and players in the game – and better still, getting into the game – who realise that the major label model stopped functioning in October 1999 (or was it 1998?). There’s no imagination or insights to be had at major labels any more, no mavericks seeking to cause some mischief, no weirdbeard flights of fancy because it’s a music company and that’s what you’re supposed to do at a music company. All of that carry-on is discouraged. Instead, the bean-counters have won the culture wars and anyone who wants to make a difference goes to work somewhere else (or work for themselves). Best for sharp players to think of the majors as a giant ATM machine, which will occasionally take you out for a swanky lunch in a one-star Michelin restaurant or snazzy sushi place.
But there will always be a place for the major labels because they have their hands on the collateral in the shape of back-catalogue and still have some seed capital to invest on pre-proven talent like Real Madrid in their galactico pomp. Yet for all this, these labels will increasingly not be the ones who will produce and develop the next megastars. When the question is asked about where these stars are going to come from, the answer won’t be the major labels. Oh sure, they’ll fluke the odd Lady Gaga due to sheer marketing muscle, but the real sustainable careers won’t come from that quarter because the majors have lost the mojo to develop talent into long-term careers. See, moulding talent takes time and the majors in general, despite the fact that there are still some very fine people working there who do know what has to be done, just don’t have time to give that time. It’s about shareholder value, short-term gains, quarterly values and getting the first album in the shops (well, “shop”) for Christmas. The act? Do they really care about the act any more?
You have to hope that the act care enough about themselves to realise the major label game is up. It used to be part of an act’s gameplan to get the big record deal and live happily ever afterwards. Now, you wonder if an act who have that paragraph in their plans know what they’re on about. Why sign to one of the Big 3 and give up all your freedom and control? Why do a development deal with one of these lads when the chances are it will come to nowt?
Sure, it’s good to have someone else paying the bills and you may think it’s free money but remember (a) you have to pay back that cash before you turn a profit, (b) the bill-paying does come to an end at some point and (c) if you’re serious about having a long-term, sustainable career, you don’t really want to be in hock to a major label’s accounting department. The major label deal is really for those jokers who are just looking for a bit of fun before they go off to become auctioneers or accountants or, worse, those numpties who have hired permanent establishment advisers who only know the major label route to market. Those who want to have a career out of making music won’t be going down that road. Maybe an one-off licensing deal in time when the money is required to up the ante, maybe a nice dinner when you want one, but sign away your work to the catalogue pimps? Think about what happened to the dinosaurs.