Madonna has a new boss: Edgar Bronfman Jr, who has just bought her record company. Jim Carroll reports on the implications the mega deal could have for the music industry.

Don't be too surprised if the next albums from Madonna and REM feature versions of To Love You More or Whisper In The Dark. These songs, once recorded by Celine Dion and Dionne Warwick, were written by Edgar Bronfman Jr, songwriter, one-time Broadway and Hollywood producer, heir to the Seagram drinks fortune and, since late last month, owner of what was TimeWarner's music business. Its acts might be wise to take a closer look at their new paymaster's songwriting catalogue - and seek legal advice about their contracts.

Bronfman's takeover comes at the end of an extraordinary four weeks of activity at the major record companies. The musical chairs began when the world's number two and number five music companies, Sony Music and BMG, announced that they intended to merge.

EMI Music, having failed to agree a merger with both BMG and Warner Music back in 2000 and 2001, then tried to purchase Warner Music. Once it became clear that its offer was not strong enough, EMI withdrew, leaving the field clear for Bronfman to swoop with a winning €2.2 billion offer. Ironically, EMI itself is now the subject of a rumoured takeover bid, with a US private equity company called Blackstone thought to be preparing a similarly sized bid for the music company.

Such boardroom shenanigans and telephone-number deals are set to have a profound effect on every aspect of the music industry. Ensuring that mergers and acquisitions on this scale are profitable means cutting costs. Music-industry employees can therefore look forward to another round of swingeing redundancies as Sony-BMG and the new Warner Music set-up look to combine sales and marketing offices around the world.

Acts signed to major labels but not enjoying worldwide hits - that is, the vast majority of them - can expect further scrutiny of their contracts and much shorter development periods to allow them to progress from next big things to chart-toppers. Successful acts should expect to see majors demanding a share of their publishing, merchandising and touring revenues come contract-renegotiation time, a move initiated by EMI in its ground-breaking €115 million deal with Robbie Williams.

For consumers who simply buy CDs there will also be changes, albeit less apparent ones. Given their size, the new majors may act semi-monopolistically with the retail sector, snapping up shelf space to ensure their releases are prominently displayed and promoted, to the detriment of everyone else's products.

Yet there is nothing new about the corporate raiding of the past few weeks: each of the "big five" majors consists largely of what were once thriving, landmark stand-alone record labels. Such blue-chip imprints as Island, Blue Note, Virgin and Columbia have been subsumed into these corporations over the past 20 or 30 years. Indeed, Bronfman is an old hand at this: when he was chief executive of Seagram, he acquired the MCA and Polygram groups and mashed them together to create Universal, the world's largest music company.

What has changed, however, is the climate the corporations operate in. The music industry is struggling, with falling sales and music piracy blamed for the obliteration of profits that had not long before been boosted by the launch of the lucrative new format of the compact disc and a cartel-like common stance on pricing.

A recent report estimated that one in three discs sold worldwide last year was pirated and that piracy as a whole represented some €17 billion in lost revenue. The major companies have tried to fight back with various cumbersome, unwieldy online subscription services and headline-grabbing lawsuits, but it has been to little avail. It appears that piracy is turning out to be the battle where the music industry loses the war.

But if they are to be the losers, there are also going to be winners. Hard as it might be for some players to appreciate, the current spate of corporate cannibalisation may turn out to be the best thing ever for the music industry - not because there will be fewer major labels but because of what it means for the independent companies that have, historically, been first to the punch, endeavours that thrive in times of strife.

You won't find them engaging in such ridiculous business practices as EMI, which signed Mariah Carey, then, shortly afterwards, paid the troubled diva a further €17 million to terminate her contract. Even though 75 per cent of the global music market is dominated by the big five, there is still plenty left to go around.

So while the majors continue to look to repackaging their existing catalogues, the field will be left clear for small, hungry, enthusiastic independent labels to find the stars of tomorrow. Majors will still employ talent scouts to keep up appearances, but it will increasingly be the bean-counters rather than the music men who will have the final say on who is signed and who is dropped.

For the majors, creativity will come down to fighting among each other for a slice of the next Pop Idol entertainment-synergy project. (Tellingly, the two executives chosen to head the proposed Sony-BMG venture, Andrew Lack and Rolf Schmidt-Holtz, have TV backgrounds.)

Acts will also begin to wise up, realising that swapping their independence for a short-term advance and a lifetime of debt is a futile exercise. Although they may continue to use the expertise offered by major labels in such areas as distribution and international marketing, key creative decisions will remain firmly in the grasp of the act. Current major-label signings will discover that life doesn't end when their deals finish, as a host of heritage acts have found out of late, thanks to labels such as Sanctuary and Anti snapping up artists who might be regarded as major-label cast-offs but are turning out to be far from spent commercial forces.

Some have predicted that the latest round of deals will mean big artists becoming bigger and smaller acts staying small, but it's telling that such doom and gloom is coming from management companies and artists who have become very cosy with the major-label infrastructure.

Given that these commentators have never had to engage with the cottage industry of independent labels and the admittedly intricate, sometimes near incomprehensible network of licensing deals used to distribute independent releases worldwide, it might be time for them to catch up. They may find that instead of simply succumbing to major muscle and signing over a swathe of their rights, a little research, imagination and hard work could be richly rewarded in time.

The majors that remain will have some short-term relief. Consolidation and mergers will cut costs and help to stave off those crippling losses of recent years. Their existing catalogues are always good to go, so repackaging and greatest-hits releases will continue to bring in income.

But the music industry needs more than revenue from its existing assets to survive. There is always a need for new talent, and it will be the majors' inability to nurture and develop acts to follow Coldplay, Bruce Springsteen, Eminem, Norah Jones and Justin Timberlake in topping charts and filling arenas that will be their ultimate undoing.

More mergers won't help: what's needed is a change in what these companies are about and how they do business. That, however, is unlikely to happen, and so the day could well be coming when it won't be the big five but, rather, just one major player in control of the music world. At that stage, we might be glad of Edgar Bronfman Jr and his happy songs.