IMAGI-BLOG
EMI buying out indie labels to raise bottom line
Submitted by imaginary dana on November 20, 2007.This was the top story in my Aversion daily email...
EMI is hoping that by gobbling up a horde of independent labels, it can boost its bottom line.
The music company earmarked $100 million for acquiring independent labels, according to The New York Post, and, if things go its way, the label will spend twice that to buy out those cool, artist-friendly labels we've all grown to love. No potential buy-outs for the massive label have been announced.
Of course, because those plans are part of a larger plan for the label to increase revenues by 766 percent in five years, so the whole plan may be a little flawed. In addition to expansion into the indie-label market, the company plans the usual belt-tightening and cutbacks that always accompany a push for a bigger margin in the music industry. EMI also plans to boost its bottom line through digital distribution.
Does the phrase "gobbling up a horde" make your stomach churn? Which labels do you think they'll target? How do you think it will impact the actual bands and musicians on said labels? Any chance a decent chunk of that $100 million will make its way toward the actual musicians and help them tour/record/boost their careers (my eternal optimism shining through)? Or would an acquisition only signal a downward spiral toward less truly independent music and more lowest common denominator crap rock?
Also, any bets on which labels will be targeted first?
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The Grim said on November 20, 2007:
Hostile takeovers? Huh? I don't think this has anything to do with shareholder drama.
Won't they just do it the way big labels traditionally bought up small ones, i.e. wave a huge amount of cash in front of the owner who buckles like a fat kid in a candy store?
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ALLALOMusic said on November 21, 2007:
I wonder who they will target...most indie labels that are so focused on money have already been bought out (T&N anyone?) - the labels that really care about artists and independence will never sell themselves out.
The majors are just scared because they know their end is coming... and no amount of money will save them.
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Tim Hanken said on November 21, 2007:
This is a brilliant strategy. Buy up the indie labels, double the prices for all the albums and watch the money roll in.
Who are the people that come up with these terrible plans? Why not spend $100M to actually develop artists as opposed to trying to buy indie labels that you will most assuredly run into the ground?
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Reviews
Erik Gonzalez said on November 20, 2007:
Um, unlike publicly-held business, large corporations can't have "hostile takeovers" of privately-held businesses, correct? I think whichever labels do get bought out it will be thanks to an owner who wants to cash in. My guess it will be a lot of labels we don't care too much about (Side One? Red Int?) or maybe they can just buy out Sub Pop!
EDIT: Oh yeah, and this was reported in the New York Post, too. Fine rag there.