George Clinton Speaks Out On The Music Merger Senate Hearings

By Dr.George Clinton

UGI has embarked on a series of acquisitions with EMI music catalog at the scope of this hearing. Before identifying the adverse impact of the merger, the initial question which is posed is, “Why now?”

Beginning next year the “work for hire” provision of the 1978 Copyright Act tolls for artists who contracted prior to the law. Major artists are prepared to reclaim copyright from the catalog of the proposed merger. Is the acquisition a revenue-maximization scheme which will produce unreasonable restraints in trade of the emerging derivative markets of sampling or is it a method of ensuring the recording artists will not have any financial avenue of recourse in reclaiming their copyrights with the termination provision of "work for hire?"

Economic impact upon the residual market of digital sampling will be a direct impact to “artists of the pre-1978 Copyright Era”. As there has yet to be clarification of the policies of the Library of Congress Copyright Office these music conglomerates have promoted the practice of capturing future derivative markets of sampling through manipulation of the proper ownership of copyright. 

The purpose of testimony is to illuminate the practices of UGI and EMI in falsely claiming copyright and the art of “profit-fixing”. The acquisition is not an issue of competition but of collusion.  Can the issues surrounding “buying-out-the-competition” be fixed with divestitures?  The answer is simply, no.

It is widely accepted that both Universal and EMI are touted as part of the “big four” Music Majors or recording companies with Universal possessing the largest market share in both the United States and Europe.  Thus, at a minimum, the antitrust and market power implications is/are that the relevant players in the market will diminish from 4 Majors to 3 Majors.  Additionally, both Universal and EMI as "recording" companies also have separate music publishing arms.  Under the proposed transaction, it is understood that EMI will essentially be "split" between the remaining Majors as follows:  (1) the recording business and catalog will be sold to Universal; and (2) the music publishing business and catalog will be sold to Sony.  As a result, there will be an elimination of competition in both the recording market and the publishing market.

To use a purely Detroit analogy, where GM, Toyota, Ford, and Chrysler are the corresponding "4 majors", if Ford was "parted out" in a manner where GM acquired the car-side of the business and Toyota acquired the truck-side of the business, relevant competition as well the entire automotive vehicle market itself would be impacted not only from the standpoint of reduced consumer product choices, but also the applicable retail (dealer) networks, repair/parts distribution, applicable financing arms, likely product warranty options, and the numbers of all suppliers, 1st tier, 2nd tier, and 3rd tier, and channels of trade, not to mention the impact on supporting industries such as advertising and all forms of media.  Clearly, certain other companies exist which sell cars and trucks (i.e. Mercedes and Land Rover), but these are often niche or specialty type vehicles targeted to certain demographics and segments of the market - just like smaller or "independent" music entities would exist for musical genres such as Classical, Gospel, and Religious Music.  However, these segments (like vehicles) are neither fungible nor interchangeable.  In short, just as a typical Ford vehicle consumer may not be able to "just" purchase a Mercedes instead if there is no Mercedes dealer to sell or service their local area, a recording artist may not be able to "move" their musical catalog to an alternative musical entity that may not have the expertise to promote the works or a product distribution ability to disseminate the works to the market.

The Copyright System was created to protect the individual creators or authors of the works - not corporate interests. 

George Clinton, who received his honorary Doctorate in Music from the Berklee School of Music, has over 50 years in the music industry speaks firsthand about the consolidation that has taken place which has left only 4 Major Music Publishers -  now to be 3 Major Music Publishers – and that the independent labels are not truly independent. 

“The Universal Music Group/EMI Merger and the Future of Online Music”

Senate Judiciary Committee
Subcommittee on Antitrust, Competition Policy and Consumer Rights

DATE: June 21, 2012
TIME: 01:30 PM
ROOM: Dirksen 226

OFFICIAL HEARING NOTICE / WITNESS LIST:

June 8, 2012

NOTICE OF SUBCOMMITTEE HEARING

The Senate Committee on the Judiciary has scheduled a hearing of the Subcommittee on Antitrust, Competition Policy and Consumer Rights entitled "The Universal Music Group/EMI Merger and the Future of Online Music” for Thursday, June 21, 2012, at 1:30 p.m., in Room 226 of the Dirksen Senate Office Building.

Chairman Kohl to preside.

By order of the Chairman.

Witness List

Hearing before the
Senate Committee on the Judiciary
Subcommittee on Antitrust, Competition Policy and Consumer Rights
On

“The Universal Music Group/EMI Merger and the Future of Online Music”

Thursday, June 21, 2012
Dirksen Senate Office Building, Room 226
1:30 p.m.

Lucian Grainge, CBE
Chairman and Chief Executive Officer
Universal Music Group
Santa Monica, CA

Roger C. Faxon
Chief Executive Officer
EMI Group
New York, NY

Irving L. Azoff
Executive Chairman and Chairman of the Board
Live Nation Entertainment, Inc.
Chairman and Chief Executive Officer
Front Line Management Group
Los Angeles, CA

Edgar Bronfman, Jr.
Director
Warner Music Group Corp.
New York, NY

Martin Mills
Founder and Chairman
Beggars Group Ltd
London, UK

Gigi Sohn
President and Chief Executive Officer
Public Knowledge
Washington, DC 

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