EMI’s recorded music business has been sold to Universal, owned by French conglomerate Vivendi,  in a $1.9 billion  (£1.1billion) deal which will give Universal control of around one third of the global music business. EMI’s other half – music publishing – has been wrapped up in a $2.2 billion (£1.39 billion)  package under a consortium which includes the Hollywood film mogul, David Geffen (famous for having dinner with Lord Mandelson in the summer of ’09). For policy-makers the deal stirs up a hornet’s nest of issues.

It is already looking likely that the deal will be referred under EU competition policy, on the basis that there will be a concentration of market power in Vivendi’s hands.  According to the Financial Times, music industry executives are reportedly refuting that argument already, on the basis that the power is all in the court of Amazon and Apple.

The EMI sale  will cut into IPR enforcement  policy.   Vivendi is one of the chief lobbyists in the EU, who want to get the ISPs made liable for enforcing copyright in order to put in place web blocking, 3-strikes and other policies to enforce their copyright.   Vivendi’s  subsidiary Universal is a powerful member of the IFPI,  whose stake in that industry lobby group will now increase to one-third, and harden its grasp on  power in Parliamentary lobbies in Brussels and in the Member States.

Policy-makers could take advantage of the inevitable noise that will surround the EMI deal to ask Vivendi some probing questions about music industry finance. EMI was sold off because the company had got into financial problems. But it would be wrong to attribute those problems solely to Internet ‘piracy’. EMI’s woes were largely due to financial mis-management.

EMI was bought in in 2007 for £4.2 billion by the UK financier Guy Hands. This was just before the credit crunch with its consequent market falls. Mr Hands later took his bank – Citigroup, to court for allegedly misleading him on the valuation of the company, but he lost. He was unable to meet payments on loans  and Citigroup took the company back by force.

In fact, the sums paid for the two parts of EMI’s business are higher than expected, perhaps indicating that there are positives about the music industry after all.

The sale means that British jobs are now in French hands, and may be lost – not due to piracy – but in the name of ‘efficiency’. 

 Universal’s chief executive, Lucian Grainge, is quoted in the Financial Times  as saying that he will preserve the British heritage of EMI – apparently he is nostalgic for the music of his youth which was produced by EMI.  So maybe the the famous Abbey Road zebra crossing  and the attached studios where the Beatles, Pink Flloyd and many other famous musicians recorded their music,  are safe.  But is the Internet? That is the real question going forward.

For more info on copyright lobbying in the EU, see my book The Copyright Enforcement Enigma

Please cite Monica Horten, Vivendi picks up EMI – Abbey Road is safe, but is the Internet?    www.iptegrity.com, 15 November 2011.