Europeans' Same Old Tune on Mergers

EUROPEANS' SAME OLD TUNE ON MERGERS
[SOURCE: Los Angeles Times, AUTHOR: Editorial Staff]
[Commentary] European regulators are reconsidering their unconditional approval of the 2004 merger of Sony Music Entertainment and Bertelsmann Music Group. But opponents of the deal have a weaker case now than they did two years ago, and that's not just because Sony BMG Music Entertainment has proved to be something less than the sum of its parts. First, the barriers to entering the music business and building an audience have all but evaporated, thanks to low-cost ways to produce, promote and distribute songs. At the same time, a host of new, decentralized tastemakers and act breakers are emerging online. Second, the music market is slowly shifting away from packaged goods like CDs to digital ones, most notably downloadable singles. This demand for singles, in turn, favors the indies' approach, in which overhead is low and upfront investment small. Third, technology is increasing the pace of change. This doesn't favor bureaucratic conglomerates. Sony BMG certainly hasn't looked like a behemoth since the merger. Its market share dropped sharply amid management turmoil, and it has reported losses in five of the seven quarters since the merger. So it's not as if the indies are being overrun by the ever-shrinking cabal of major labels. Instead, technology is overrunning the industry's time-worn business models.
http://www.latimes.com/news/printedition/opinion/la-ed-sonybmg20jul20,1,...
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