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Essential chief says he was misquoted at Congressional hearing on EMI

By CMU Editorial | Published on Friday 29 June 2012

Elsewhere in EMI takeover news, the MD of UK-based distribution company Essential Music & Marketing, Mike Chadwick, has filed a short statement with the US Senate anti-trust subcommittee, which last week held a hearing on Universal’s bid to buy the EMI labels, claiming he was quoted out of context at the hearing by the mega-major’s big bad boss man Lucian Grainge.

In his submission to the committee, Grainge name checked a couple of independent music execs who had gone on the record as saying that, in the digital era, they felt it was easier for their companies to compete against even the biggest record companies. One of those execs was Chadwick who, in an interview with Music Week earlier this year, said that he didn’t feel directly threatened by a combined Universal/EMI, because as the majors get ever bigger, there is an increasing number of artists who are looking for other options, such as using a smaller independent distribution company like his.

Grainge noted that Chadwick had said of the EMI deal, “Is it good for us? It’s great for us”. However, the Essential chief says that was quoted out of context because, while he doesn’t feel directly threatened by the looming merger, he did express concerns, in the same interview, about the wider implications of further consolidation in the record industry. Clarifying his viewpoint, Chadwick submitted the following to Congress this week:

“Lucian Grainge’s testimony to the Subcommitee on Antitrust, Competition Policy And Consumer Rights last week contained a selective quote from an expansive interview I gave Music Week magazine in the UK earlier this year. Mr Grainge suggested that I believed the proposed merger was a positive step for the business. In fact, my interview offered a view in which I questioned whether the merger would be good for the music business”.

“To clarify further, my company is a sales, distribution and services company and tends not to compete on label or artist signings with Universal or EMI, however I nevertheless believe that the concentration of market power that would result from the merger would be a negative step for the industry and for independents”.

“My considered view is the increase in market share and market power of the merged company would give it too much leverage with important gatekeepers such as radio, TV, music magazines and other media, as well as across retail. Therefore, although the transaction could free up certain artists, given Universal’s enhanced market power, those artists would have significant difficulty in accessing media and commercial outlets on level terms. A merger would also enhance Universal’s ability to abuse its dominant position in the emerging digital market and this would be certain to disadvantage independents in their ability to compete across the world”.

As previously reported, although last week’s Congressional hearing made for entertaining viewing, what really matter to Universal are the regulatory investigations being undertaken by the FTC in the US and the European Commission over here.