Battle of The Recording Titans

info: Submitted by Nick Parker on Wed, 2006-09-06 22:24.

In an increasingly confusing day for industry commentators, three of the world’s largest record companies have been quietly thrashing out the sort of financial deals that would easily match the economy of many a moderately sized nation.

Vivendi’s Universal Music Group are reported to have managed to extract a settlement worth $60M from rivals Bertelsmann against claims that they breached copyright following their financial involvement with the failed Napster. At the same time they appear to have also managed to persuade them to part with their Music Publishing business for an unexpected €1.63B.

An interesting turn of events, given that it had been reported during the day that Britain’s EMI was also in the bidding for BMG against a consortium led by Goldman Sachs, and that the bidding was expected to settle for around €1.5B.

Part of the German media giant Bertelsmann AG, Bertelsmann are renowned for their controversial attempts to link themselves with Sony Music under the banner of Sony/BMG. Originally given the green light by the EU competition watchdog in 2004, this approval was rescinded only a couple of months ago following an appeal by independent producers' association Impala, who had protested that “such a concentration of power would leave the music giants with a stranglehold on CD prices and artists' contractual terms”.

Thomas Rabe, CFO of Bertelsmann has curiously stated that “Bertelsmann remains fully committed to its recorded music business through its partnership with Sony in Sony BMG Music Entertainment”, although one can’t help wondering who would be likely to buy any business deemed unlawful by Europe’s Competition Commissioners or indeed whether there is any business left to sell.

Once again BMG appear to be set to feature centre stage in a furious row over monopolistic trade practices, as it appears that Vivendi/Universal Music Group’s plans are strictly contingent upon the approval of the competition authorities. And if history is anything to go by, this is far from being a done deal..

But it’s comforting to note that what Napster did six years ago is still having repercussions in the recording industry and yet, despite their combined phenomenal resources, they still haven’t managed to set up a digital music sales network to rival the popularity of the original Napster. But this isn't about Napster, it's all about domination and the ability to control prices.