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A clutch of small European music companies have called on the European Commission to ensure that they are not swamped in the consolidation of Internet and content giants.

The companies urged the EC to impose strict conditions on mergers such as AOL/Time-Warner and Seagram/Vivendi. They fear the mega mergers could exert monopoly tactics such as predatory pricing through their control of huge music catalogues and the key distribution points online.

Content/distribution mergers pose a "threat to consumers' choice and the economic viability of independent production and distribution", according to Michael Lambot, chairman of Impala, the independent music companies' association.

It's an interesting take. The music giants and artistes are running scared of Napster (The Corrs are the latest to peddle the 'download is theft' Party Line). And the small record companies are running scared of the music/distribution giants because of their ability to drive down the value of music.

But is this a bad thing for consumers? In traditional monopolies, prices are pushed up, and quality/innovation comes scudding down. But with the new music quasi-monopolies, consumer prices will come tumbling down, even to the point at the Napster extreme of nothing.

In his seminal book New Rules for the New Economy, Kevin Kelly argues that mono-sellers are "actually desirable in a network economy. Because of increasing returns and n squared values, a single large pool is superior to many smaller pools. The network economy will breed mono-sellers with great fertility. What is intolerable in a network economy is 'monovation' - depending upon a single source of innovation. The danger of monopolists in the network economy is not that they can raise prices but they become monovationists".

Kelly recommends "open systems" - or the democratic release of source code - as a way to encourage innovation.

We agree. The days of the traditional music indies look numbered. All the regulators can do is slow their inevitable decline. ®

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