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Breaking up Sony BMG?

Ashley Milne-Tyte Jul 13, 2006

KAI RYSSDAL: If you want to buy music, chances are good it comes from one of four companies: EMI, Warner, Universal or Sony BMG. But the number might go back up to five. A European court today said it was throwing out the merger between Sony Music and Bertelsman’s BMG, meaning Sony BMG might be forced to break up. Ashley Milne-Tyte takes a look at the B-side.

ASHLEY MILNE-TYTE: The court agreed with a consortium of independent labels that had appealed the 2004 ruling on the merger, saying the EU didn’t do a good enough job two years ago of considering dominance in the music industry.

Indy artists and producers have been complaining for years that they they’re being muscled out because marketing and distribution are so dominated by the media giants.

Industry watcher Aram Sinrike says the court’s decision is the biggest coup for indy labels since the invention of the Internet.

ARAM SINRIKE: It’s virtually impossible for anyone to compete on even terms with these companies.

Sinrike tracks the music industry for Radar Research. He says if Sony BMG had to end its merger, at least the playing field would be a little more even. Other mergers may be in danger too.

SINRIKE: If the European Union considers the Sony BMG joint venture to be beyond the pale, it’s very unlikely that they will look favorably upon a Warner-EMI merger.

Breaking up is hard to do, and in the case of Sony BMG, says Nathan Brackett of Rolling Stone, it would be agony.

NATHAN BRACKETT: It would potentially cripple both companies for years to come, in terms of how much money they would have to spend just to kind of separate themselves — to get new office space and separate the rosters. It’s the kind of thing where you really wouldn’t know where to begin.

He is expecting the company to fight the decision with everything they’ve got.

I’m Ashley Milne-Tyte for Marketplace.

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