Independent Music Companies Cry Foul Amid Planned Sony-BMG Bid for Parlophone Label

LONDON -- Independent music companies have raised concerns about a plan by Sony Corp. and Bertelsmann music venture BMG to bid for former EMI label Parlophone, arguing an acquisition would give the music giants, particularly Sony, too much market power.

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Vivendi's Universal Music Group acquired EMI's recorded music business late last year and had to promise European regulators to divest parts of it for market share and competition reasons.

But Mumford & Sons label Glassnote Music is among those that are already warning regulators that a Parlophone sale to Sony and BMG would hurt independent labels and artists. Parlophone, the home of such stars as Coldplay and Kylie Minogue, is seen as the crown jewel of the assets that Universal is selling in an auction process expected to take several months.

“The European Commission and the custodians they appointed have distorted the original intention” that the UMG asset sales should help smaller labels, Daniel Glass, who runs Glassnote, told the Financial Times. “You know who’s going to get hurt? The artists.”

And the influential Impala, the trade group representing indie labels in Europe, argues that particularly the involvement of Sony, the second-largest recorded music company by revenue, raises competition concerns in the case of a Parlophone deal.

Some independent labels are bidding or expected to bid for smaller EMI labels that UMG is selling. Among them are the Sanctuary and Chrysalis labels and the "Now" compilation albums business. Glass said Glassnote, too, had hoped to acquire Chrysalis, but had dropped out of the auction.

The FT said that Impala has also started to ask European regulators to intervene in late last year’s agreement for a sale of the Virgin Music catalog, whose stars include Robbie Williams, and other catalogs to BMG. A Sony-led consortium that had acquired EMI’s music publishing arm had promised to divest it. But Impala has now raised concerns about that deal involving Sony and BMG amid the joint BMG-Sony bid for Parlophone.

Said Helen Smith, executive chair of Impala: “Making sure the independents are able to compete effectively is crucial. All interested companies should be treated equally as bidders for any assets to be sold off.”

Email: Georg.Szalai@thr.com

Twitter: @georgszalai