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Diskeries maneuver around mergers

Biz moves overshadows music, sales

Mergers, piracy and downloads dominated music talk more than the work of any particular artist in 2003, and the hand-wringing looks likely to continue into 2004.

Up first is the regulatory approval of the merger between Sony Music and BMG, a deal that came together in less than two months in the fall. By not including publishing and manufacturing, the two distribs strategically set up their deal to sail through regulatory waters with little fear of sinking. Undoubtedly cost-cutting and staff reduction maneuvers will shift into overdrive once the deal is OK’d.

Warner Music, too, will be cast adrift from Time Warner, with Edgar Bronfman Jr. at the helm. Bronfman, who captained the merger of Universal and Polygram in 1999, returns to the music business via some bottom-line driven investors. As a self-sufficient unit, optimistic observers see Warner as a potential beacon, a record company capable of restoring its artist-friendly reputation via expanded artist development policies that, in the long run, better the industry. Detractors figure investors will want a quick return on the dollar, and drastic trims will be made to the already cut-to-the-bone operation.

EMI made yet another attempt to walk down the aisle with a recorded music company, and found itself spurned for a third time. Company, with stronger Euro value than U.S. and the dependable catalogs of the Beatles, Beach Boys and Frank Sinatra, is ripe for a takeover, some observers have suggested, by a non-musical entity. As a stand-alone, however, and with its rock acts such as Coldplay, Radiohead and Starsailor consistently rising in popularity, its value may well rise in the next 12 months.

Merger mania was seen a key strategy to combat the rampant piracy caused by file-swapping on the Internet. The Recording Industry Assn. of America took on the role of being the bad guy, and started suing music fans with high numbers of music files on their computer hard drives.

The labels, which obviously endorsed the RIAA’s legal actions, gave a big thumbs up to Apple Computer’s iTunes music download system, the first major, comprehensive system approved by the major labels.

SoundScan started tracking downloads July 2 and by Christmas, more than 17 million digital tracks had been purchased through the paid services iTunes, Napster, Musicmatch, Rhapsody, MusicNet, MusicNow, Liquid Digital Media and Buymusic.

Outkast’s “Hey Ya” was the most purchased download of the year, hitting the 100,000 sold mark toward year’s end. But in the illegal market, tracked by Big Champagne, “Hey Ya” was swapped more than 4 million times between its Sept. 23 release and Dec. 31.

Overall music sales were down a modest 4.7% in 2003, thanks to steady sales during the holiday gift season. The RIAA certified 271 gold, 130 platinum and 136 multi-platinum albums in 2003, meaning every category was up from the year before when the org awarded 257 golds, 121 platinums and 134 multi-platinum albums. The predicted rise in music-oriented DVDs was borne out: video sales increased 103.9% over 2002 (15.7 million vs. 7.7 million).

While record release schedules were all back-loaded, the concert industry is getting off to a bang this year with tours from Alan Jackson, Britney Spears, Metallica, David Bowie and Neil Young that are all starting in the first quarter.

Last year was especially strong in the reunion department, led by Simon & Garfunkel, Fleetwood Mac, Jane’s Addiction, the Doors and Iggy Pop and the Stooges. This year could see Jimmy Page, Robert Plant and John Paul Jones return as Led Zeppelin for the first time in 24 years, but the big bread-winner could well be U2, which is planning a summertime go-round.

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