The EMI-Universal Merger

          On September 21^st, the recording industry took a huge turn towards further consolidation when the European Union and the Federal Trade Commission in the United States approved the takeover of EMI by Universal Music Group. The deal would give the new company 40% of the industry. EMI and Universal are two parts of the current industry Big Four. The group also has Sony with 30 percent and Warner Music with 20 percent. EMI is coveted for its famous roster of artists that include The Beatles, Pink Floyd, Frank Sinatra, and Katy Perry. In Europe, the deal has tighter restrictions including sellingoff certain labels that are currently part of EMI, most notably Parlophone,which was the Beatles’ home at the company. The Beatles catalog will not bepart of the sale.

            In an article from the Huffington Post, it is argued that the merger will stifle innovation on the digital music. In one group controlling 40% of content, one could view that without that pass a project would likely die. According to the article, very expensive licensing agreements have hurt two very popular digital music services, Spotify and Pandora as these agreements make it very unlikely they will see a profit anytime soon. Spotify at last has the Big Four has shareholders so as investors, they have a stake in the company’s success but it’s always easier when you have the content provider in your back pocket. Another article from InvestorPlace suggests Pandora will also be ok because it’s up to politicians to set Internet radio royalties that dictate their cost. Maybe that’s a loophole that can be exploited to avoid having to pass Universal’s approval. Of course, the issue is not existing services, but potential new services.

            My biggest concern with the merger is the state of jobs in the industry. Yes, this big music company will be made of smaller labels, but with a merger always comes consolidation. Why have two marketing departments when you could run it out of one? Will that mean, it will become harder to get the job I want in the music industry going forward. Some would say the rise of independent labels may nullify this but 60 independent labels use Sony’s RED distribution for marketing including the current #1 album in the US, Babel by Mumford & Sons. I wish I had numbers on if job changes occurred during the last big music industry merger Live Nation and Ticketmaster to get a read on this but as we go from a Big Four to a Big Three, I have to believe that the number of people employed in the recording industry will shrink again.

National Association of Recording Merchandisers

If you’ve ever been part of an industry in the United States, more than likely your company has representatives in a trade association. Trade associations are groups that businesses form to collaborate an also support combined interests. Trade associations have been known to exist in America since at least 1883, when the American Seed Trade Association was founded by businesses in the seed trade. In the music industry, there are two major trade associations. The most well known one is the Recording Industry Association of America, which represents the recording labels. The RIAA is mostly known by the general public for recently fighting against piracy and handing down fines to people who have violated copyright law per its modus operandi to do so. But while the RIAA gets all the press, the music actually has a second trade association that works more towards putting that music in the hands and ears of the fans.

            That association is the National Association of Recording Merchandisers. NARM began as a coalition of wholesalers and retailers focused on physical sales. In 2002, NARM expanded to include all aspects of the music business including digital sales, mobile phone use, gaming, applications, merchandise, videos, and other parts of the music industry. With a board of directors that includes representatives from iTunes, Amazon.com, Microsoft, Target, Verizon Wireless, and Spotify, it easy to see that NARM is a heavy hitter in entertainment. According to press releases, NARM members control 85% of music sales in the United States.

            So what does NARM do? The main thing NARM does is creating promotions and marketing for recorded music first and foremost. Such programs have a “Gift The Gift ofMusic” campaign, which usually shows how music is a great gift for the holidays. They also worked with the Rock and Roll Hall of Fame on the Definitive 200, a list of albums selected to be the best by these two groups. With the trend being buying older music, this is a great idea to promote older records. Beyond that, they also hold free online seminars for members to help people understand the music industry and bring ideas together. The also have an annual conference on entertainment law and another one on digital startups. By looking at these, it seems that NARM is an association that understands how music in changing and wants to remain relevant rather than fade away. I like that. I also feel like as a hopeful member of the music industry, it’s good to have a trade association that feels like it wants new members.

I feel joining this trade association would be helpful to me in that I can known what’s going on using NARM’s massive release database so my clients will known when new albums are coming out. I also feel it would help me see what technology is changing things and maybe even get in the ground floor myself. Again, it also feels like they want to expand and having that knowledge is also comforting.