AIM is 'steadfastly against' the UMG/EMI merger - a statement from AIM CEO Alison Wenham

 
Last week saw a fissure open up in the solid support for Impala’s stance on the Universal acquisition of EMI. Have the independents lost sight of the prospect of a market dominated by one company which would be twice the size of its nearest rival? One which has systematically bought market share for ten years, picking off the leading independent companies in many European countries, leaving our distribution lanes weaker and more vulnerable as a result?



The offer to Impala from Universal is beguiling, and is clearly intended to make us believe that a company that has controlled the market for ten years has undergone an epiphany, has seen the light and wants to stimulate the market for others, including smaller companies and digital start-ups. Why such ethical corporate generosity of spirit now? That stimulation would have been welcome ten years ago to kick-start a whole new era for the industry. But the majors took such a hostile approach to the emerging digital players that we effectively have market failure. Remember Napster? Beyond Oblivion? Spiral Frog?  The investors who lost tens of millions of pounds trying to secure licences from the majors and found they were fatally crippled by debt before a single day’s trading certainly do. This is the legacy of ten years of aggressive and hostile behaviour.

This merger would be as bad for new artists and new music as it would be bad for the Indies. We are the creative driving force of the global music industry. Our business is to find great artists and help them to reach an audience enabled by an open, healthy and competitive marketplace. Competition is at the heart of great music, and this merger could kill it.

Let’s keep our eyes on the real prize, which is a functioning market for the benefit of all companies, not just a few.  That doesn’t seem a realistic prospect when Universal’s nearest rival, Sony, would be half its size, and Warner half that size again. The only countervailing measure would be yet another merger. 


Innovation runs the risk of being stifled by a complete lack of real competition. 



If some of the larger Indies are keen to buy assets from Universal, rather them than a pension fund. It seems like a good opportunity to recover some lost market share. But only in the short term, I firmly believe. It looks like short-term gain, but undoubtedly will lead to long-term pain. With this in mind, and aware that Universal is monitoring every single word said about its highly contentious attempt to buy EMI, I am happy to report that AIM’s strategy group will advise our board that they have reviewed the offer from Universal and find it seriously wanting in many respects.

In particular, the group think the divestment package is weak - catalogue is increasingly less valuable. The proposal offers no solution to the difficulties of gaining access to media. Whilst we accept a solution is not within Universal’s gift, a company controlling nearly 60% of the all-important new release market means they will control upwards of 60% of media coverage. And most importantly, the loss of a major competitor in EMI to the largest music company will leave a gaping hole in the market for artists, narrowing choice to a simplistic level. The future market place for music would be shaped according to the wishes of Universal, and Universal alone. 


So AIM steadfastly remains totally opposed to the merger, and calls upon the Commission to do what is right for everyone in the music industry, including artists and digital companies as well as consumers: block the acquisition outright.




Alison Wenham

Chairman and Chief Executive, AIM.

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