Indies at war over music mega merger

Merlin waves magic wand

Independent labels are in a public row over whether to back Warner Music's bid for ailing British major EMI. The merger would see the 'Big Four' consolidate into a Big Three.

Impala, which represents indie trade groups worldwide, has spent much of its seven year-life fighting antitrust issues, and was originally formed to help block a Time Warner/EMI tie-up that was abandoned in 2000.

But last week it voted to back the merger, citing concessions made by the Warner Music Group. However, that consensus doesn't include the The Ministry of Sound label, which has withdrawn from British indies trade group AIM, the Association of Independent Music, in protest at Impala's support. MoS said the WMG backing was struck without consultation.

This is quite the turnaround from last June, when Impala sank Sony-BMG's proposed takeover of EMI with a successful legal challenge in the European court, the organisation's vice president, Hein van der Ree, made a prediction:

"This locks the door for an EMI/Warner merger, thankfully."

Why is Impala opening that door now?

A joint statement last week by both WMG and Impala included a commitment by the US giant to back Merlin, the global digital rights licensing agency announced last month at Midem. Impala described this as "no strings attached" funding. It also contained two non-specific terms to restore competitiveness: an promise to divest recordings, and a good behaviour pledge.

Impala said WMG's pledges were "assistance to build capacity":

"IMPALA believes that Merlin will serve as a catalyst for entrepreneurialism and diversity on-line. IMPALA believes that the financial and other support being provided through the agreement with WMG provides Merlin with the resources to allow proper aggregation and exploitation of rights by independents which otherwise would take many years to develop," the group said in its statement.

In response to Ministry's resignation, AIM president Alison Wenham added:

"As is entirely to be expected in a democratic organisation, not everyone will always agree with positions which are taken on the issues affecting the market, and all companies are entirely at liberty to exercise their own views in whichever way they choose. Nothing has ever prevented others from taking their own position in respect of Warner EMI, or any other music industry merger in front of the Commission over the past seven years."

Impala and AIM could do well to get the concessions they've won out before their members - who'll then be able to judge the promises on their merits. A further statement is expected this week.®

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