Level of Music Label Power Is Debated in Senate Hearing

Is the music industry like other businesses, and thus subject to concerns about market concentration, or is it an anomaly in which nothing matters but hits? That was one of the central questions at a Senate hearing about a proposed $1.9 billion deal in which the Universal Music Group would acquire the record labels of EMI, giving Universal — already the world’s largest music company — control of the recordings of the Beatles, the Beach Boys and Katy Perry.

“In almost all industries, reducing the number of competitors from four to three expands the market power of the remaining companies and increases the risk of higher prices,” asked Senate Antitrust Subcommittee Chairman Herb Kohl (D-WI). “Why shouldn’t these same principles apply to the music business?” Universal, a division of the French conglomerate Vivendi, says its investment will reinvigorate EMI, which was hurt by a disastrous private equity deal. Opponents worry that Universal, which would gain a 40 percent market share as a result of the deal, would assume undue influence over digital music services that depend on the labels for licenses.