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What Does Major Label Consolidation Signify For The Music Business?

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Well, there are two sides to this coin, one negative and one positive. Obviously, industry consolidation generally infers market domination. However, in the recorded music sense TMV would state it is more likely to depict a decline in old school business models that the major labels were built on. Major labels are generally witnessing every degreasing profit’s, on a year-on-year basis – Warner music sticks out like a sore thumb in respect of this.

So, let’s look at the negative site first, as the positive side flows from this. Firstly, consolidation leads to significant human resource layoffs – of which the major labels have cut to the bone in the last five years or so. The knock-on effects include; less employment opportunities and more competition for the few recorded music industry jobs still available within the marketplace. Sadly, nepotism thrives in such austere times. One only has to look at the cabal of cronies Doug Morris brought with him to his stewardship of Sony Music.

The level of nepotism I witnessed at EMI, Warner Music and Sony whilst based in London for 10 years was astounding – we might as well have been back in 14the century feudalism. Interestingly, Universal Music seemed to be the only Major Label where nepotism was not as visibly prominent and where talent and results were what was rewarded over all else.

One only has to see clear as day Howard Stringer’s blatant nepotism for his younger brother, despite his continual and numerous lose making decisions. Albeit, TMV have good reason to believe Columbia Records Co-Chairman’s sacking is not too far off. We are however surprised Sony HQ in Japan has yet to cut older brother Howard loose. Let’s not even bother about Bronfman Jr as TMV have already widely documented his incompetence.

Those caught in the political cross-fire of leadership moves are generally left with their pants down around their ankles. It is this, which is the most depressing element in TMV’s opinion. It breeds the continual brown-nosing mentality that has been the bane of the industry, yet has been most prominent in the last decade. So, the ineptest staff stay-on due to their ass licking capabilities, whilst generally the most competent get cast aside!

Fear of losing one’s job also breeds the most unproductive workforce and internal staff conflict, which in itself weakens’ a company and therefore its creative output. Innovation takes a step backwards when personnel fear for their job security. Lack of innovation if continued unabated over the medium term, leads to a company’s eventual decline and death as a viable business.

On the positive side, consolidation has opened up numerous opportunities for independent labels and artists. The decline of major labels enables a more level playing field and if anything, actually tips the opportunity in the Indies favour. Innovation amongst independent labels has never been more evident in TMV’s view. Market share on independent music in the last decade has grown to where it is extremely close to thirty percent, which makes it larger than Sony Music or EMI and Warner Music combined.

Now that Universal Music has won the battle for EMI Music, TMV predict two potential outcomes, which are incredibly positive for the music business as a whole. The first being that, Warner will either be swallowed up by Sony Music, which yes whilst signifying further consolidation, will ensure new business models proffered by new digital music services will be adopted quicker. That in it-self can only be a positive.

An alternative outcome is that Warner Music declines over the next five years to a point where it is a worthless slowly rotting carcass of a label, and where its key artist’s move too more equitable deals with independent labels. Why do I say this is a positive? Quite simply because if it gets to that point there will be some easy and cheap pickings for the larger independent labels to take advantage of. It would also ensure the continued expansion of the independent sector as a whole. And that can only be a positive for the art of music and the industry generally.

On a final note, another key positive is the fact that a number of these intelligent cast offs from the never-ending cycle of major label layoffs, establish their own independent labels and thereby increase the independent label sectors knowledge base and market share. On the flipside some of these same cast away executives will start-up new and innovative digital music propositions. Thus, in TMV’s view it is a win-win situation for independent labels.

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