Will Apple and Google Bid on EMI?
Now that Citigroup's takeover of EMI seems to be a near certainty, it's time for the pundits to ponder possible acquirers. If history offers any lesson it is that Apple and Google will be frequently cited as companies that should acquire the music company.
At the top of the list, however, is BMG Rights Management. Earlier this week, the CEO was quoted as saying the company has more interest in EMI's recorded music back catalog than its music publishing division. "We are increasingly moving into representing master catalogues and EMI is the iconic catalogue," Hartwig Masuch told MusicWeek.
And, of course, Warner Music Group will be mentioned in most talks about a future home for EMI.
For each of the last six or seven years, pundits have speculated that Apple will acquire a media company such as Warner Music Group or, now, EMI. And each year, Apple wisely licenses rather than buys low-margin content from a struggling industry. Instead, Apple concentrates on its specialties - software and hardware- and generates an ever-increasing amount of profits on high-margin items such as the iPod, iPhone and iPad.
Apple shouldn't be lured by the sex appeal of the music industry. Terra Firma's experience with EMI should be enough of a warning to outside companies who fancy themselves as saviors of the record business. Forbes' suggestion that Steve Jobs would buy EMI as a "personal investment" is simply ludicrous. Yes, Jobs ran Pixar, but Pixar is much more of a technology company that a record label could ever be. Besides, Jobs would not want to ruin a good thing. Apple has a great amount of leverage in its negotiations with record labels and publishers. If Apple owned EMI, that dynamic would take a change for the worse.
Google has become more frequently mentioned as a possible acquirer of media companies. But for the same reasons Apple would not buy EMI, Google should remain a technology company and leave content to others. While Google loves to scan books and stream videos, those activities are squarely in the company's overall goal of cataloging the world's information. It does not - and should not - aspire to create and own the world's information - or at least some of its recorded music.
It's possible much of this Apple-Google-EMI speculation is born from a hope that ownership by a technology company will help bring the kind of changes to copyright and licensing that will help rescue the record business. Or perhaps people imagine incredible synergies in a technology company owning content (They can give away music to lure customers! Music will finally be free!). In a perfect world, yes, consumers would get perfect music services and everybody would get paid handsomely. But these two cash-rich technology giants will end up sticking with what they do best and leave content creation and ownership to the parties with the knowledge and appetite for putting up with such a uniquely frustrating and risky industry.