A2IM, the American Assn. of Independent Music, has reiterated its opposition to the Universal Music Group's acquisition of EMI in its most forceful statement yet. The statement is apparently prompted by the remedy package the Universal Music Group submitted to the EU Commission, which proposed only overseas divestments.
"With no divestitures or operating remedies proposed for the U.S. - the world's largest music market and home to the vast majority of the technology companies who work with the music community - the negative impact on music consumers and emerging technology companies is clear," the A2IM statement says. "Such market concentration will diminish healthy competition, providing one dominant market leader damaging clout in terms of both consumer pricing and the means with which music is made available... Approval of such an acquisition with no U.S. remedies will further constrain [independent music] resources [with higher potential distribution fees and less money available to create diverse music for consumers both very probable]. We continue to join our European Impala independent music label colleagues in their concern over this acquisition and reiterate A2IM's opposition to this transaction.
The statement further called on "the FTC to take the required steps to insure that this transaction is blocked so that it does not move forward."
UMG responded with a statement of its own. A2IM president "Rich Bengloff clearly does not speak for the many indie labels and artists who have come out publicly in support of the deal," according to UMG. "There is growing recognition that Universal Music's investment in EMI will create more opportunities for new and established artists, expand music output and support new digital services. Barriers to entry have evaporated in today's digital environment and there are more ways than ever for labels and artists to get their music out to fans. We are working with regulators around the world and are confident of winning approval."
While in Europe regulators are concerned with how a deal may impact consumer pricing as well as how it will impact competition, in the United States, regulatory agencies tend to focus more on pricing. In Europe UMG had an issue because it had over 40% market share in many of the European territories, while in the U.S., UMG and EMI's combined market share currently stands at 39.22%.
When the UMG divestment package has been discussed by industry executives, they said its composition suggested the UMG was much more confident that it would get regulatory approval in the U.S.
But the wild card in opposition to the deal in the U.S. remain with what impact the copyleft organizations' like Public Knowledge will have on regulatory approval. Those organizations, backed by such companies like Google, singlehandedly killed SOPA dead in its tracks when it looked like it would cruise to passage by the U.S. Congress.
It also remains to be seen whether the U.S. Senate hearing on the deal last month has swayed any Congressional members to act behind the scenes with regards to the UMG/EMI deal.
Meanwhile, A2IM first hinted at its opposition against the EMI deal back in November when it issued a statement saying that "the increased concentration of copyright ownership, historically, has always hurt the Independent label community in terms of achieving economic parity and market access. We join our European Impala Independent music label colleagues in their concern over this acquisition and await more details".
Then, on June 26, after Beggars Group founder and chairman Martin Mills testified at the U.S. Senate Senate hearing, A2IM issued another statement.
In Mills' testimony, "he noted that the proposed acquisition would have a detrimental effect on the independent recording industry and recording artist community and that it would contribute to an uneven playing field for the recording industry as a whole," the A2IM statement said. "Not only does A2IM applaud Mills for courageously taking a stand on behalf of the entire independent music community, A2IM also supports his assessment and recommends in the strongest terms that the proposed Universal/EMI merger be denied."