Universal, Sony and Berners-Lee News, April 21, 2012

Universal, Sony and Berners-Lee News, April 21, 2012

The purchase of EMI continued to make the news this week as several entertainment industry trade unions publicly voiced their support of Universal’s purchase of the recording arm, and Sony revealed its plans for the publishing side post-trade-commission approval. Also, the creator of the World Wide Web criticized the music industry’s push to stop “openness” on the Web through anti-piracy initiatives.



Two Trade Unions Backing the Benefits of Universal’s EMI Purchase


Letters sent to the U.S. Federal Trade Commission by the American Federation of Musicians (AMF) and the recently-merged Screen Actors Guild and the American Federation of Television and Radio Artists (SAG-AFTRA) surfaced last week, voicing support for Universal Music Group’s potential purchase of EMI’s recorded music faction, an article posted on the Bloomberg site stated. The possible sale and two-way split of EMI was announced in November and, if approved will close for $4.1 billion. The two organizations commended UMG’s handling of previous labor agreements and advocated for the FTC’s approval on April 12. Correspondence from AMF read,  “[Universal’s] compliance with and respect for its collective bargaining agreements has been positive when compared to its peer companies … Sustaining the EMI legacy would appear to benefit AMF recording musicians.”


SAG-AFTRA, which houses over 150,000 members, pointed out UMG’s history of commitment to improving the landscape of the music industry by investing in new artists and supporting new, inventive musical genres and advocated for a speedy FTC decision via email:  “For EMI to be left to further drift into oblivion, or for EMI to be acquired and sold off in pieces by capital investment speculators with no appreciation for, or commitment to, artists who fuel the recording industry, would ill serve the industry … [Universal is] committed to reinvesting in EMI to create even more opportunities for new and established artists, expand the marketplace with more music and support new digital services.”


Other groups, including the public advocacy group Public Knowledge, who expressed concerns in March, have asked the FTC to very carefully consider the ramifications of the final sale of EMI, for fear it might infringe upon healthy competition within the music industry when the number of major record labels dwindle from four, to three. Many continue to feel that this consolidation could put Universal too firmly in control of new distribution options and strategies.


Regulators in Europe are still looking at the UMG deal, and California Attorney General Kamala Harris is also formally investigating the proposed purchase.


Sony Could Mass Cut EMI Jobs Post Purchase


European regulators approved Sony’s $2.2 billion purchase of EMI Music Publishing on April 18, according to The New York Times. This will put Sony firmly in control of 31 percent of music publishing – copyrights and songwriting. The EMI catalog is comprised of 1.3 million songs, including the entire Motown collection and hits like “Over the Rainbow.” Sony’s own publishing faction, Sony/ATV has 750,000 songs and the rights to the entire Beatles oeuvre.


While the FTC continues to review Sony (and Universal)’s absorption of EMI – and the American and European regulators communicate but do not always issue the same judgment – early European approval has spared Sony from a second, more intensive phase of scrutiny. It also has Sony pushing ahead for its future plans, which, according to both Bloomberg Businessweek and The New York Times will include cutting 326 EMI Publishing jobs in the first two years after the acquisition.


A recently-leaked document created by UBS AG (UBSN), an advisor to Sony listed $39 million in potential severance costs and the elimination of 152 positions within the first year. Sony stated these mass layoffs will be necessary because of the $106 million worth of restructuring costs in the two years after the deal is finalized. These layoffs will get rid of 60 percent of the current EMI staff and will reduce the company’s annual operating cost by $70 million.


All regulators are closely investigating Sony, EMI (and Universal’s) growth and how much of an advantage merging assets would give to them over, particularly, competing digital music services, which are highly dependent on licenses from labels and publishers. Indie labels, consumer advocates and organizations – such as Impala in Europe – that represent small music companies have been very vocal about their concerns over the deal. Helen Smith, executive director of Impala revealed in an interview earlier this week, “We believe these deals would give Sony and Universal excessive control over the markets for publishing and recordings, over collecting societies, how artists are signed, and how their careers are able to develop.”


While Sony representatives limited their comments on the issue, Sony/ATV spokesman Jimmy Asci said, “Discussing details of any integration plan is premature while the regulatory approval processes are ongoing.”


The European rights to the EMI catalogs made $20 million in revenue in 2011.


Sir Tim Berners-Lee:  The Email Snooping Plan Should be Dropped


Renowned computer scientist and inventor of the World Wide Web Sir Tim Berners-Lee stated that recent initiatives to curb piracy and those designed to allow security services to monitor websites should be cut off, as they entirely go against the purpose of the Internet. New email surveillance plans in the UK are set to be laid out in the Queen’s speech in May, according to a piece in The Telegraph. Sir Tim expressed that these plans could potentially dangerously compromise private and sensitive information – like political figures’ sexuality or medical history, putting them at risk for blackmail and other issues.


He told the Guardian:  “The amount of control you have over somebody if you can monitor internet activity is amazing … You get to know every detail, you get to know, in a way, more intimate details about their life than any person that they talk to because often people will confide in the internet as they find their way through medical websites … The idea that we should routinely record information about people is obviously very dangerous. It means that there will be information around which could be stolen, which can be acquired through corrupt officials or corrupt operators. We open ourselves out, if we store this information, to it being abused.”


And his concerns about what the Internet has become also extend to recently heavily-debated issues over SOPA, PIPA and other anti-piracy bills. At a recent conference in Lyon, France, he stated that record labels have had “too narrow a focus” in the digital arena:  “Record labels have a very strong voice when it comes to arguing for their particular business model, which is in fact out of date. The result is that laws have been created which make out as if the only problem on the internet is teenagers stealing music.”


Berners-Lee added that he believes creating a new process that excludes record labels will be the only way to get money back in the hands of music creators.