Behind the music: Is Sweden selling its music-makers for a song?


Posted by Helienne Lindvall

Swedish songwriters are up in arms after politician Annie Lööf suggested illegal downloads be legitimised for private use

Considering the size of its population – nine million – Sweden has consistently punched above its weight in the music arena, particularly when it comes to songwriting. Max Martin, Shellback, RedOne, Ishi, Swedish House Mafia … barely a week goes by when there aren't at least a few songs in the UK and US top 10 written by a Swede. Now Swedish songwriters are up in arms after their minister for trade and Centre Party leader, Annie Lööf, came out in favour of legalising illegal downloading "for private use", in an effort to "increase freedom on the internet".

In a TV interview Lööf, who names Margaret Thatcher as her role model, was asked if she thought file sharing for private use should be illegal. "The Centre Party has had a clear view on this since 2005. I've now been marketing it," she responded. "We don't like file sharing – it's illegal – but we're pushing for people being allowed to download for private use."

This statement prompted a group of more than 150 songwriters – organised via Facebook and calling themselves UniSon – to write an open letter to Lööf, published in all major Swedish newspapers. "Our work has enabled the Swedish music phenomenon," reads the statement, referring to the fact that Sweden is one of only three countries in the world whose music export exceeds their import (the other two are the US and the UK). "But our remuneration doesn't come from concert tickets, merchandising, sponsors or lucrative advertising deals. Us songwriters make our living solely from STIM royalties generated from decreasing record sales, which have now been replaced by mere hope that streaming services such as Spotify will one day generate money – even for those who don't own shares in these companies, but fill them with content."

The UniSon statement explains that out of 60,000 STIM members (STIM is the Swedish equivalent of the UK's PRS for Music, the collection society for composers) only 250 earned more than £17,000 before tax in 2010. It calls Lööf's statement an attack on the human rights of the culture sector. "We demand that you and the Swedish government shall act in a way that gives all professions the same basic chance to make a living and that the government resist the opportunistic eagerness to distribute things for free at the cost of others, be it physical or intellectual property," it reads.

"If the government starts to question the basic democratic right of ownership, surely even people outside of our work force would be worried about what the next step would be. Do you, for example, think patented innovations and medicines should be spread without any compensation for those who created them? Who then do you, the minister of trade, suppose would pay for progress and development? The taxpayer?"

While I belong to the UniSon Facebook group and agree with the gist of what they're saying, I did not write this letter myself. Personally, I think there's some technical confusion and lack of understanding of basic economics in Lööf's statement (which is a bit worrying when she's in charge of the ministry of trade). Downloading for private use does not in itself need to be legalised – there are plenty of legal sites where one can download music, some of them in exchange for money, some in exchange for your email address or even given away by the artists and/or labels themselves.

It appears she thinks uploading is wrong but downloading is fine. Yet, when it comes to torrent technology it's one and the same. Besides, the basis for most trade is private use. It's like saying it's OK to take goods without paying as long as you don't sell them on. I often hear the argument that intellectual property is different, as nothing physical is taken away from the owner. But something does indeed disappear when thousands – or even millions – of people download music without paying: demand.

Lööf's comments, as well as the UniSon response, has caused a media storm in Sweden, with some politicians picking unexpected sides. Columnist and member of the Left Party (formerly Communist Party) Jonas Lundgren thinks the lack of rights afforded musicians compared with, for example, inventors and scientists is absurd. One media commentator accused some of the songwriters who signed the letter of not "making real culture" because of their music's commercial pop slant, and accused others of not being full-time songwriters.

It's worth noting that the UniSon letter does not say that all songwriters have the right to make a living from their craft, simply that they should have an opportunity to do so if their music is popular enough, and that legitimising illegal downloading as long as it's for personal use skews the basic rules of trade.

Since receiving the UniSon letter Lööf has tried to clarify that she has three opinions on the subject of illegal downloading: as part of the ruling conservative alliance she's against illegal downloading; as the leader of the Centre Party she's not; and as a private person, she says she would never download music without paying for it as she thinks it's morally wrong and believes in "doing the right thing".

I'd like to think that what the Swedish minister of trade was trying to do with her statement was shift the focus of anti-piracy from the users to the enablers (as in the sites and cyberlockers trading illegally in copyrighted works). But that shift took place a few years ago – the latest example being the film industry's legal victory in forcing BT to block Newzbin 2. Songwriters, however, don't have the might, money or power to take on companies such as Rapidshare, Megaupload, The Pirate Bay and Grooveshark.

What is interesting is that a leader of a party in the conservative alliance, who has Thatcher as a role model and whose position in the government is focused on trade, seems to view music as an ideological issue. She sees free access to all music as a human right that far outweighs the right of music-makers to determine what happens to their work or to compete in a market that offers them the chance to make a living from it. It sounds almost socialist. If it is, I can only assume that Lööf also believes musicians (and authors and film-makers and authors) should be wholly subsidised by the state.

Pop and rockMusic industryDigital music and audioHelienne Lindvallguardian.co.uk

Behind the music: Universal’s EMI buyout will be painful – I should know


Posted by Helienne Lindvall

When Universal gobbled up the label I was signed to, I lost out. How can we stop EMI's smaller artists suffering the same fate?

Speaking as someone who was directly affected the last time Universal gobbled up a major, the news that EMI Music would be bought by Universal (with EMI Publishing going to a consortium led by Sony) filled me with dread. In 2006, BMG was broken up just like EMI, though in that case the record label went to Sony while the publishing arm went to Universal. I woke up one day to find I was signed to a completely different label. Years earlier I'd refused an offer from Universal, deciding to go with BMG instead, and now I'd ended up there anyway. It seems all roads lead to Universal.

EMI boss Roger Faxon may say there aren't any redundancies planned, but many of us suspect the opposite. When BMG was bought, almost everyone I'd dealt with for the past four years (including the person who signed me) was sacked. I was given a new point person who didn't know me and who was overwhelmed by suddenly having a roster of songwriters twice as long as before. Now the same will be the case for EMI artists. A manager said the deal will only benefit EMI's biggest stars, who can now expect more powerful backing; smaller artists may get lost in the mix and eventually dropped.

A Universal executive once told me an anecdote about the former owner of EMI, Guy Hands. After Terra Firma (Hands's firm) had taken over the label had taken over the label, Guy went out to dinner with Mick Jagger to show him the spreadsheets. "Can you imagine?" the executive scoffed. "You don't show Jagger spreadsheets. You ask him to tell you rock'n'roll stories." It's well known that Hands was out of his depth when it came to dealing with artists' egos, but that doesn't make Universal any more artist friendly. In fact, the major labels' obsession with market share does nothing to foster artist development in the long run. (The fact that Adele, who is signed to independent label XL Recordings, has outsold every major-label artist this year and helped her label to a huge portion of the market, must be a sensitive topic for the majors.)

Any problems that arise will be nothing to do with Universal's staff in general – most of the employees have a true passion for music and devotion to the artists they work with. Problems will come from the pressure to get an instant result. Years ago, a Universal Publishing executive complained that ever since the company had been bought by Vivendi he had to send weekly reports to head office. "It's ridiculous," he said. "Music publishing is not like selling detergent. Nothing ever happens in a month, let alone a week." Yet the shareholders wanted to see an immediate return on their artist investment.

Independent labels are understandably up in arms over the Universal/Sony takeover of EMI, with their international organisation Impala registering a formal complaint with the European Commission and pledging to fight the merger to the bitter end. After all, the purchase would hand Universal more than 40% of the market and with it the power to dictate the terms of any deal with a new digital music platform. Personally, I would have preferred Warner to buy EMI, as that would reduce the major labels to three, and those three would have a similar share of the recorded music market. (Ironically, Impala successfully fought a Warner/EMI merger years ago.)

"Breathtaking corporate arrogance is the phrase that comes to mind," said Martin Mills, chairman of Beggars Group. "It's hard to imagine this acquisition being approved, given Universal's existing dominance in an over-concentrated market. Even greater dominance would be bad news for almost everyone involved in the art and business of music."

Lucian Grainge, chairman and CEO of Universal Music Group (UMG) issued this statement: "This is an historic acquisition for UMG and an important step in preserving the legacy of EMI Music. For me, as an Englishman, EMI was the preeminent music company that I grew up with. Its artists and their music provided the soundtrack to my teenage years. Therefore, UMG is committed to both preserving EMI's cultural heritage and artistic diversity and also investing in its artists and people to grow the company's assets for the future."

At a press conference, Grainge added: "(We will) replenish and rebuild the rosters that have lacked the level of investment that frankly a business like this should have had. EMI is not a utility company." (Surely a dig at Hands?) Mick Jagger praised the deal. "This is a very positive development and I particularly welcome the fact that EMI will once again be owned by people who really do have music in their blood."

One independent label boss I spoke to, who referred to Universal as an "evil force", isn't buying Grainge and Jagger's assurances. "Appointing Lucian Grainge as the guardian of the nation's musical treasures is as laughable as it's scary – you might as well entrust them to Attila the Hun. The mere fact that they found it necessary to roll out Mick Jagger and friends with supportive endorsements proves the point."

Another source tells me Universal has been asking independent labels what they would want in return for not opposing the merger. The indication from the independent community is that the answer will be "nothing". But maybe this is a chance to make serious changes to how Universal operates, and achieve more transparency and accountability. Universal could start by abolishing non-disclosure agreements (NDAs), which prevent artists from knowing what deals the label does with companies such as Google and Spotify.

Mick JaggerEMIMusic industryHelienne Lindvallguardian.co.uk

Farewell then EMI, your tunes were the background to our lives | Simon Napier-Bell


Posted by Simon Napier-Bell

The company that brought us Cliff, the Beatles and the Sex Pistols is disappearing. We should salute its contribution to our culture

In the 1930s, after a merger with Columbia UK, EMI became the biggest record company in the world. By the 1950s, its worldwide sales outdid everyone else's. Yet its artists were uniquely British: Cliff Richard singing the likes of Living Doll and Summer Holiday; balladeer Matt Monro, an ex-London bus driver; and Frank Ifield, who yodelled.

Amazingly, with these artists EMI built world dominance. Only in America were sales lacking. So the company bought Capitol Records and picked up Frank Sinatra, Nat King Cole, and the Beach Boys. And this was all before the Beatles. With the Beatles added, the competition was annihilated. In 1964 the company held the No 1 position in the UK charts for 41 of 52 weeks.

The company's decline started in the 1970s when it signed the Sex Pistols. Their manager, Malcolm McLaren, was an anarchist on a mission; not so EMI's holding company, Thorn Electrical, which made brain scanners and came with a very pukka board of directors. In fact, a whole decade of EMI inaction could be traced to the moment when the Pistols' Johnny Rotten arrived at Heathrow the worse for wear. His ensuing public vomiting got into every newspaper. "Vile Sex Pistols", "Disgusting Punks", "Teenage Filthies". To add to the fun, a week later the group said naughty words on television.

When Thorn Electrical said the group had to go, McLaren turned it into class warfare. The ensuing row froze EMI's record division for a decade. Demoralised. Not signing new acts, losing staff, re-packaging old songs, living in the past. In the '80s the company perked up with its Now… compilation albums of hits. Then again in the '90s with the Spice Girls, Coldplay, and Robbie Williams.

But in 1996 Thorn Electrical set EMI adrift. It was put on the stock market as a music company and nothing else. When it had hits, shares went up; when it didn't, they tumbled. And the boardroom panicked. The top man was paid £15m to leave. A few months later his replacement was given £6m to go. The next man decided to run the company from America. And all the time the company's value dropped.

In 2007, Guy Hands's private equity outfit Terra Firma pulled off a takeover. Bouffant and blond, Mr Hands thought the world of himself and his hair. But he didn't much like artists. When he told them so, Radiohead left, then Paul McCartney, then the Rolling Stones. And things slid downhill. Citigroup, who loaned Hands the purchase price, took over the company and now – finally – it's been sold to the French-owned Universal.

With EMI no longer a power in the industry, it feels as if there's a void. But culturally, Britain doesn't lose much. We still provide the world with singers as quirkily British as Adele and Susan Boyle, and with the likes of Radiohead, Coldplay and Gorillaz.

EMI was the first company to sell flat discs, records as we know them. The company's history and the history of the record business have been interlinked ever since. So with sales dying fast and records about to fade from our lives, perhaps it's fitting that EMI fades out too. Records are what the company did but records are finished. And a nice place in history isn't a bad place to be.

• This article was amended on 17 November 2011. The original referred to the Sex Pistols' manager as Malcom MacLaren. This misspelling has been corrected.

Music industryEMIPop and rockSimon Napier-Bellguardian.co.uk

Vivendi upbeat as Universal Music and Activision thrive


Posted by Mark Sweney

French media giant upgrades forecast as overall profits rise 5.3% in third quarter, with music division's earnings up 31.8%

Vivendi has upgraded its profit forecast after strong performances by Universal Music and games division Activision Blizzard in the third quarter.

The French media giant sold a $427m stake in Activision Blizzard, the home of mega-selling games franchise Call of Duty: Modern Warfare 3, to support its $1.9bn purchase of EMI Music last week.

Profits surged 5.3% year on year to €1.5bn in the third quarter, while revenues fell 1.36% to €6.78bn.

Universal Music, home to acts including Lady Gaga, U2 and Take That, reported earnings before interest, tax and amortisation up 31.8% year on year to €112m.

Revenues fell 4.7% to €979m, although this represented a 0.7% increase when currency fluctuations are stripped out.

Polo Tang, an analyst at UBS, said Universal Music's performance "suggests the market may be reaching an inflection point after a decade of decline".

In the second quarter Universal Music posted 0.6% year-on-year revenue growth on a constant currency basis.

On Friday, Universal Music agreed a $1.9bn deal to take over the recorded music division of EMI, home to acts including the Beatles and Coldplay.

Vivendi pledged to dispose of €500m in non-core assets at the music division, such as minority stakes in businesses, to mantain its credit rating and push the deal through regulatory investigations.

On Tuesday, Vivendi surprised the market by announcing it intended to reduce its 63% stake in Activision to 60%, making the company $427m.

Vivendi denied that the sale had anything to do with the EMI deal, describing it as a tactical move to improve its capital structure, pointing out that the sell-off put it at the same level stake it held at the start of the year.

However, media analysts felt that the move was connected to EMI, pointing to Vivendi's desire to maintain its BBB credit rating with agencies. Vivendi reiterated that the deal will be "financed from Vivendi's existing credit lines".

"The BBB credit rating & dividend increase … are important parts of the story, but we still find this approach surprising," said Claudio Aspesi, an analyst at Bernstein. "The wisdom of selling off parts of the key growth engine to support expansion in a challenged industry seems questionable."

Vivendi announced an upgrade of €200m for full-year adjusted net profits, to "above" €2.85bn.

The upgrade is unsurprising given the barnstorming success of Activision Blizzard, which recently announced that it tripled profits in the third quarter and revealed it racked up Modern Warfare 3 sales of $400m in 24 hours.

Activision increased profits by 78.8% year on year to €118m in the three months to the end of September.

Revenues fell 7.6% year on year to €533m in the third quarter, but this does not include the "outstanding" sales of MW3, which launched in early November.

Vivendi said that debt had ballooned to €13.3bn as at 30 September, compared with €8bn on 31 December 2010, mostly due to the €7.7bn payment for Vodafone's 44% stake in SFR.

•

Universal Music’s £1.2bn acquisition marks end of the road for EMI


Posted by Mark Sweney

The deal trumped an offer by rival company Warner Music and is the first part of the breakup of the British music major

Universal Music has triumphed in the auction of EMI's recorded music division, home to the Beatles, Coldplay and Tinie Tempah, tabling a knockout offer of £1.2bn ($1.9bn).

The deal is about $500m more than that offered to owner Citigroup by rival Warner Music, which pulled out of the running a week ago, and marks the end of the road for the British company as a music major.

Friday's sale is the first part of the break up of EMI, with the music publishing division tipped to go to a consortium led by Sony for about $2.2bn.

BMG Rights Management, a joint venture between Bertelsmann and private equity group KKR, has tabled a rival bid of $2bn which poses no regulatory risk.

Universal, the world's biggest record company, is aiming to beat the inevitable regulatory investigation into the acquistion by selling off €500m (£429m) of "non-core" assets such as small catalogues and stakes in minority ventures.

The deal is certain to spark criticism that the disappearance of EMI to a French owner – Universal is owned by French media giant Vivendi – leaves Britain without one of the major global record companies for the first time since EMI was founded in 1931.

Lucian Grainge, chief executive of Universal Music, attempted to head-off some of the inevitable criticism by highlighting his British background and pledging to keep the iconic Abbey Road Studios intact.

"Abbey Road Studios are a symbol of EMI, a symbol of British culture, a symbol for the creative community of exactly what the company is and we are [now] part of," he said in a call with analysts and the media. "For me, as an Englishman, EMI was the pre-eminent music company that I grew up with. [Universal] is committed to both preserving EMI's cultural heritage and artistic diversity."

Universal said that it expects to achieve £100m a year in synergies from a combination of Universal Music and EMI.

The company added that it was "very confident" that it will be able to get the deal through a regulatory investigation that could take up to year, saying that it expects "deep and fruitful dialogue".

Vivendi Universal – which earlier this week benefited from bumper third-quarter results from Activision Blizzard, the company behind the top-selling game Modern Warfare 3 released on Tuesday – said that the deal would not require it to raise funds through a rights issue.

The company added that it expected to be able to maintain its credit rating, helped by the sell-off of €500m of Universal Music non-strategic assets, and to increase its full-year dividend.

Stephen Volk, chairman of the board of EMI Group and vice chairman of Citigroup, said that the deal "accomplishes Citi's objective of maximising the value of EMI".

"[This gives] EMI Music a partner in Universal Music that appreciates EMI's rich cultural legacy, its incredible stable of musical talent, and its employees who work so hard to deliver successful outcomes for the artists they represent," he added.

Dave Holmes, the manager of one of EMI's leading acts, Coldplay, said that the deal "can only be a positive" for EMI.

"I look forward to working with the Universal team," he added. "They have assembled the most talented group of executives in the industry today and their success speaks for itself. This can only be a positive for the artists and executives at EMI."

Mick Jagger, whose dislike of former EMI owner Guy Hands is well-known, said that he "particularly welcomed" the new owners. The Rolling Stones switched from EMI to Universal in mid 2008 during Hands's tenure at the company.

"This is a very positive development and I particularly welcome the fact that EMI will once again be owned by people who really do have music in their blood," he said.

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EMIMusic industryMedia businessMark Sweneyguardian.co.uk

Universal and Sony reach deal to buy EMI for £2.5bn


Posted by Dan Sabbagh, Mark Sweney

Famous British music business could be split into two in agreement that hands control to biggest rivals

EMI, arguably the most famous corporate name in British music history, fell into the hands of its two largest rivals in two deals worth £2.5bn – a finale to a disastrous four-year period that saw the company loaded with debt by financier Guy Hands and rejected by bands like the Rolling Stones.

Universal Music, the world's biggest recorded music company, triumphed in an auction for EMI's recorded music business, with a £1.2bn bid for the label behind Coldplay, Tinie Tempah, and above all, the Beatles. Its offer was about £250m more than rival Warner Music.

It was the first part of a two-stage break-up of EMI, with the music publishing division, the home of the Motown catalogue, going to a consortium led by Sony – the world's second-largest music group. Sony reached agreement in principle to buy the division for £1.3bn, seeing off a bid from BMG Rights Management, a joint venture by Germany's Bertelsmann and the private equity group KKR.

EMI was put on the block by US bank Citigroup, which seized control of the company in February after it became clear that its owner, Guy Hands's company Terra Firma, could not contend with the £3.4bn debt taken on when he bought the business in 2007.

The double sale means that Citi will recoup about £2.5bn of its original loan. The bank also scooped a little over £200m in fees from the original loans to Terra Firma, meaning that its overall loss on those loans is a little less than £700m. Bank insiders characterised that as "a good result" given that EMI was bought at the height of the credit boom and is being sold in a downturn.

Universal's move for EMI means that the two companies will account for 38% of all recorded music sales worldwide. In some countries, such as France, that figure will be over 50%. Vivendi, Universal's owner, pledged to take on the regulatory risk in the deal. Chief executive Jean-Bernard Lévy said it would pay £1.1bn in 10 months' time and a further £100m on completion.

Simon Dyson, editor of industry newsletter Music & Copyright, said that he would "be very surprised" if regulators cleared the deal "without a lot of sell-offs" – and said that the overall market share level was perilously close to "the magic number for an outright no" for the Universal-EMI combination. Sony's deal for EMI's music publishing catalogue carries far fewer regulatory risks because Sony is a relatively small player.

Universal was quick to emphasise its commitment to EMI's musical heritage, with Lucian Grainge, the British chief executive of Universal Music, pledging to keep the historic Abbey Road studios where the Beatles and many other famous artists have recorded. "Abbey Road Studios are a symbol of EMI, a symbol of British culture, a symbol for the creative community of exactly what the company is and we are [now] part of," he said.

Universal said that it expected to save £100m a year in costs by combining operations with EMI. The company added that it was "very confident" that it would be able to get the deal through a regulatory investigation, which could take up to a year, saying that it expected "deep and fruitful dialogue".

To emphasise the point, Universal wheeled out Mick Jagger, who moved the Rolling Stones catalogue from EMI to Universal after a falling-out with Hands. The singer said Universal's move was "a very positive development and I particularly welcome the fact that EMI will once again be owned by people who really do have music in their blood".

EMIMusic industrySonyGuy HandsMedia businessMick JaggerThe Rolling StonesTinie TempahThe BeatlesDan SabbaghMark Sweneyguardian.co.uk

EMI: the sad demise of a very British company


Posted by Eamonn Forde

For three decades, EMI took on the world in record sales. Now its sale to Sony and Universal marks the end for the music major

EMI has been put through the wringer more than any other music company in the past few years so news of its sale today – in two parts to two different music companies – finally ends all the speculation and uncertainty about its future. Inevitably, as with every sale or merger, jobs will be lost; but the EMI brand, after having been owned by private equity company Terra Firma since November 2007 and then finding itself under the begrudging custodianship of Citigroup bank since February, will live on in its new homes, among music executives again.

Even as the final details of the sale were being hammered out, it was business as usual for the company. On Thursday night it took over its
iconic Abbey Road studios in London to showcase its brightest prospects for next year: new talent like Emeli Sandé, as well as Kylie Minogue, the
singer whose career rehabilitation in 2000 coincided with her signing to
EMI imprint Parlophone and from whom a new album is now anticipated.

Assuming it all clears the European Commission, US antitrust bodies and the aggressive lobbying of the independent sector, EMI's record music arm could now be folded into Universal Music (giving that company a global market share of over 40%) while EMI Music Publishing is absorbed by Sony/ATV to create a new publishing powerhouse.

The journey to this point has been a rocky one that saw EMI cut its staff, previously occupying three huge offices across London, so they could squeeze into one building as the company's global significance waned. For better or for worse, Terra Firma was there for the long haul and wanted to revive EMI as a company and as a brand – with no less an ambition than to reinvent it as the first truly 21st-century music company. Citigroup just wanted shot of it to the quickest and highest bidder, with no real care for the legacy EMI – with one of the truly great music catalogues in the world – represents.

This all marks the sad, almost apologetic, demise of a standalone EMI – a very British music company that took on the world and, for a time at least from the 60s to the 90s, was winning. The traditional music business has had a difficult time post-Napster in 1999, unable to move quickly enough and adapt to a new rhythm punched out by the internet and digital technologies. Universal bulked up (notably by swallowing indie giant Sanctuary), Sony and BMG merged in 2004 and Warner Music most aggressively pursued the contentious "360-degree" route (where all acts now signed must give over a share of their non-recorded income).

For EMI, its publishing business was in rude health – it was the biggest music publisher in the world until the merger of BMG Music Publishing with Universal Music Publishing in 2007. The recorded side was the real concern, having only broken a few acts globally this millennium (notably Coldplay and Katy Perry). Even the brightest stars of its catalogue business were jumping ship (the Stones, McCartney and Queen have all - presciently - defected to Universal in recent years and even David Bowie was rumoured to be shopping around for a new home).

It was with some chutzpah that Guy Hands, on buying EMI, described it as the "worst company in the worst performing industry" – but he said he was going to save it, mostly from itself. The EMI old guard walked the plank and Terra Firma tried to rebuild from within. A schizophrenia at the executive level meant management from non-music companies (such as Reckitt Benckiser, Google, Northern Foods – never mind former BBC DG John Birt) was constantly changing, and new ideas were tested and then quickly scrapped; all the while, no one was quite sure where the company was trying to get to or how it was going to get there and so EMI's woes grew.

It was only, ironically mere months before Guy Hands lost his grip, that a solid recovery plan was finally put in place with the June 2010 appointment of Roger Faxon, then running its publishing arm, to take charge of the entire company. His plan would, he said, take three years to come to fruition. But the fact it is now being carved up into two portions actually unpicks a lot of what initially Terra Firma and latterly Faxon were trying to do in terms of reinventing EMI as a "full rights" company, ensuring its recorded and publishing arms worked in unison. Faxon himself had said post-Terra Firma that a splitting of the company was the worst possible outcome. His nightmare is about to come true. As no single music company could have bought EMI Records and EMI Publishing outright, so the chainsaw was applied. The cut will not be a clean one.

There is an argument that EMI would have gone out of business if Terra Firma had not bought it. The irony here was that most of its debts were absorbed by Guy Hands's misreading of the market, making it more appealing to other buyers such as Universal and Sony/ATV. Until recently, Warner Music (itself no stranger to new owners) seemed the likely home and might well have been the best fit for the market overall. They'd tried to merge in the past but had been blocked due to regulatory issues. Now the climate has moved on so much that the biggest major can look to buy the smallest – a situation that was unthinkable even a few years ago.

Presented with the hypothetical situation of EMI merging with Warner, one leading independent label executive told me recently that having three record company super-powers - each with a relatively equal market share was - preferable to a duopoly of Sony and Universal. Now, for the indies at least, something much worse has happened: one company controls just under half the market. The lobbying against this happening will be ferocious so this is all far from a certainty.

If, however, the deals go through, it will mark a bittersweet ending to a chapter in the history of the music industry. The EMI legacy – of enviable diversity and leftfield signings that went multi-platinum – looks like it will live on as a brand, but doing so within much bigger multinational concerns and as just another part of their steady march towards consolidation.

Pop and rockEMIMusic industryEmeli SandéKylie MinogueProfessor GreenGuy HandsEamonn Fordeguardian.co.uk

Universal Music to buy EMI’s recorded music division for £1.2bn


Posted by Dan Sabbagh, Mark Sweney

World's biggest record company to buy home of Coldplay and the Beatles

Universal Music, the world's biggest record company, is poised to announce the £1.2bn purchase of EMI's recorded music division, home to the Beatles, Coldplay and Tinie Tempah.

The sale is the first part of the break-up of the 114-year-old British company, which is likely to be followed by the EMI's music publishing division, most likely to a consortium led by Sony for in excess of $2bn (£1.26bn).

Although the enlarged Universal will now account a third of all music sales worldwide, company executives believe they can persuade regulators to allow it to swallow the business whole because the music industry is in such decline.

Nevertheless, Universal will respond by selling record labels or catalogues if the European Commission were to demand disposals. Its goal, however, will be to retain the Beatles material.

Buying EMI is a coup for Universal's boss, Briton Lucian Grainge, whose bid had been considered opportunistic. Smaller rival Warner Music, recently bought by Len Blavatnik's Access Industries, had been considered the front runner.

EMI is being sold by Citigroup, the bank that ended up owning the record company, after it seized control of the debt-laden business from venture capitalist Guy Hands.

However, Citigroup is retaining in deficit EMI's pension fund, which has 21,500 members. The deficit was £162m according to the last set of publicly available accounts.

Media businessMusic industryEMIDan SabbaghMark Sweneyguardian.co.uk

Feargal Sharkey stands down as chief of UK Music


Posted by Josh Halliday

Former singer of the Undertones has announced his resignation from the industry body in order to 'continue other journeys'

Feargal Sharkey has resigned as chief executive of the industry body UK Music.

The former singer of the Undertones announced on Friday morning that he was standing down with immediate effect from the organisation he co-founded in 2008.

Sharkey will be replaced in the interim by Jo Dipple, the senior policy adviser of UK Music.

"UK Music has been one of the greatest adventures of my life and I leave now so I might continue on other journeys," Sharkey said in a statement.

"While there will be many memories, above all I shall never forget what a honour and a privilege it has been to have worked with such a dedicated, creative and professional team of staff, without whom, so much simply would not have been possible.

"Their friendship, support and guidance has been an inspiration and they will always have my overwhelming admiration and respect. Thank you so much for allowing me to be part of that."

Andy Heath, chairman of UK Music, said it was a "very sad day" and that Sharkey was irreplaceable.

A former A&R manager for Polydor records, Sharkey helped launch UK Music as the representative body of the UK's commercial music industry in 2008. Members include the British Phonographic Industry, the Music Publishers Association and the Musicians Union.

In his UK Music role, Sharkey has lobbied extensively on copyright issues, most notably on the Digital Economy Act which was passed through parliament in 2010.

Feargal SharkeyMusic industryDigital music and audioJosh Hallidayguardian.co.uk

EMI sale edges closer after Universal closes in


Posted by Mark Sweney

Music company's owner Citigroup poised to secure $1.5bn deal

Universal Music is close to sealing a $1.5 bn-plus deal to buy EMI Music, home to acts including the Beatles and Coldplay, with owner Citigroup pushing for negotiations to be concluded by the weekend.

The company is the only bidder still in the running to buy EMI's recorded music division after Warner Music, widely considered the favourite, took its $1.5bn (£944m) offer off the table after talks broke down with Citigroup.

Meanwhile, there are believed to be two potential buyers for EMI's music publishing division, with reports that Sony/ATV has emerged as a rival bidder to BMG Rights Management, long seen as the frontrunner to pick up the $2bn business.

Citigroup is understood to be looking for between $1.7bn and $1.9bn for EMI Music. Universal is thought to have offered $1.2bn with negotiations down to how many hundreds of millions to factor into the deal to cover pension liabilities and leases.

Talks with Universal, which were revived after the music company supposedly pulled out of the auction, could still easily fall apart.

At the heart of Universal's plan is a desire to snatch the profitable rights that EMI controls over the Beatles catalogue.

Two weeks ago Warner Music Group, which was acquired by Len Blavatnik's Access Industries for $3.3bn (£2bn) in May, came within a whisker of signing a deal to buy EMI's recorded music business.

Warner, which balked at Citigroup's efforts to persuade it to boost its $1.5bn offer, was expected by many to mount an eleventh-hour return to the negotiating table.

A tie-up between US-based Warner Music, which is chaired by Edgar Bronfman Jr, and UK-based EMI has been mooted for the best part of a decade to create a combined group that could take on the global market leaders Universal and Sony.

However, by late on Thursday it was understood that there had been no contact between Warner and Citigroup, which took control of EMI in February after Guy Hands's Terra Firma could no longer support its debts, after its bid was pulled.

"The only way the [Warner Music] deal is not dead is if Citi come back on valuation, that call hasn't happened," said a source with knowledge of the situation.

One source believes Citigroup is aiming to drive the deal through with Universal with a threat that if an agreement is not reached imminently it could try to hold onto the recorded music division – and potentially offload it at a later date – and just sell EMI's music publishing arm.

However, the source said they believed this was a "hollow" threat to try and conclude the protracted and fraught negotiations, because keeping one piece of EMI would not make strategic sense and the sale value next year is unlikely to be significantly more than now.

The battle for EMI's music publishing division, which owns the rights to a catalogue of more than 1.3 million songs, including compositions by artists such as Jessie J, Arctic Monkeys, Beyoncé, Kanye West and Jay-Z, is being fought between two bidders for a price tag of about $2bn.

The longtime frontrunner to win the bid has been BMG Rights Management, the joint venture between Bertelsmann and private equity group KKR.

However, reports have emerged placing Sony/ATV, a joint venture with the estate of Michael Jackson which has taken considerable time to secure a finance package, as the lead bidder.

"Don't believe everything you read," said one source with knowledge of the situation, indicating that BMG is unlikely to give up on winning the EMI battle without a fight.

Even if Universal is able to secure a deal, it is likely to trigger a protracted regulatory process, which could even scupper the takeover.

Universal is the world's largest music company. Combining with EMI will give it huge market share in major markets including Europe and the US.

French company Vivendi, which owns Universal, will be forced to face a regulatory process lasting almost a year and to sell off large parts of EMI with no guarantee that the deal will gain clearance.

"What will EMI do for a year? There will be no investment," said one source. "Is this going to be worth it for a company that is already the sector leader?"

There has been speculation that Citigroup might cancel the auction and hold on to EMI until the markets pick up.

However, one source with knowledge of the negotiations believes this will only be considered as a nuclear option in the worst case scenario that the sale process stretches into December.

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EMIMusic industryCitigroupBankingMark Sweneyguardian.co.uk