There's a reason why some people are freaking out about the EMI buyout. Sure, recordings are on the decline, but a combination with Universal Music Group would result in a monstrous marketshare tilt. Which is why one major label executive forwarded us this marketshare breakdown for the week ending November 27th.
The breakdown shows a combined 46.03 percent album share for albums in the US, as tracked by Nielsen Soundscan. Or, nearly one-half of recording marketshare across all formats. This counts both current and catalog releases.
UMGD = Universal Music Group Distribution, which emcompasses a huge number of labels (just a few are listed above). And, its 36.96 share plus EMI's 9.07 equals 46.03 percent.
The digital percentage is comparable, at 44.03 percent. Unfortunately, we lack historical details to make comparisons, and these are US-based statistics. That's important because the biggest roadblock to this merger is actually happening in Europe, where indie consortium Impala is already threatening to stymie the merger (US regulators are likely to rubber stamp the combinations).
There's also the issue of exactly how independents are being counted. Indie label consortium A2IM has been complaining for years about the way Nielsen tracks label marketshares, specifically because numbers are calculated by distributing group, not the originating indie. That seemed to shift earlier this year, though it now appears that Nielsen's marketshare calculations will remain tilted towards the majors.
This breakdown pegs indies like V2, Side One Dummy, X5 Music and E1 Entertainment at a collective 11.32 percent. That's more than EMI, but much, much less than UMG+EMI.
/paul. Written while listening to Lizst.
Joda Wednesday, November 30, 2011
I've been in the business for a couple of decades. Once upon a time this would have mattered but I really don't see how marketshare matters now. There's not a lot of difference between having 5% and 50%.
Joel Thursday, December 01, 2011
J Thursday, December 01, 2011
Agreed, in the evolving music industry market share is EVERYTHING. Our industry is being determined by the content you provide, the more content you have the more power you have to dictate deal structure and monetize. In a market where everything is evolving to a pay-per-view model (to labels, not consumers) the more content you have will dicate the amount of money you get. The more money you get the more power you have to get more artists. The more artists you have the more money you get. It's all about getting the most content for the least amount of money to maximize profitability under this new model.
This is just how it is and this is why UMG wants EMI in the first place. It's not a talent buy, its a product buy. UMG CAN NOT be allowed to have this kind of power.
Joda Saturday, December 03, 2011
If you think that's everything then you are nuts.
There's a much bigger business out there than that. Spend some time away from the computer.
To be honest, the only reason the up front payments are important now is because most of these digital services aren't very profitable. So that payment it the only real payment anyone will ever see.
But as with all advances, they are just money up front. If a company is profitable then everyone gets paid anyway.
That will happen in time.
The $$$ is ALL ABOUT Market Sh Wednesday, November 30, 2011
I respect that you've been in the industry for decades, Joda, but market share matters MORE today than it ever did.
How exactly do you think every new digital service negotiation is based?
New service "x" approaches U.S. rights holders for licenses. They go to Universal first (largest market share) and UMG demands xxx based upon their market share. Digital service swallows hard and ponies up. Then they go to Sony and so on. By the time they get around to the smallest indie distribution companies they got nothing left to give and indies wind up on DMN bitching about how they don't get any money from service x, y, or z.
Deal fees that don't get paid out to artists or distributed labels (read: indies) get negotiated based on market share. Minimum or floor streaming rates get negotiated based on market share. Equity positions get negotiated based on market share.
Why do you think UMG overpaid for the distressed EMI in the 1st place? Vivendi has a jones for The Beatles masters? Uh, nope. And why do you think Warner pursued the purchase before ultimately dropping out when the bidding got ridiculous? WMG is major #3 in terms of market share and they wanted to bolster their position. UMG wanted to secure their position and exert more clout over WMG who has, in recent years, not always agreed with how UMG maneuvered in the digital market place. A bigger UMG is going to make things even worse for WMG (and for everyone else).
My good man, it's all about market share. That's why, for instance, A2IM has (not complained but) promoted to the industry press the sustainable fact that when you count market share by master ownership rather than by who distributes the (often PHYSICAL only) product, indies account for 30% of all sales in the U.S. and 38% of digital sales. It's right there plain to see in any SoundScan market share report.
Wanna know who gets counted as "major label marketshare" when you go by distributor in those market share reports? Glassnote, Curb, Concord, Wind-up, Nettwerk, VP Records, Victory, Fat Wreck, Century Media, Stones Throw (for crying out loud - Stones Throw is a major label?!?! Yup, according to the way market share typically gets reported)...the list goes on. Indie labels who happen to have their music distributed by major label owned distribution companies. Take the indie distributed labels out of the major label market share reports and the numbers change drastically!
I'm skeptical you'll ever see it because the industry press is (a) typically pretty lazy and (b) pretty well controlled by the majors.
+1 Thursday, December 01, 2011
Very well said. Excellent post.
@Spartz Thursday, December 01, 2011
Guess who gets to control the innovation agenda through licensing.
David Allen Thursday, December 01, 2011
jdr Thursday, December 01, 2011
Out of curiosity - can you give an example of how Uniersal "throws their weight around"? And one thing to keep in mind: these buyouts and mergers are never a 1 + 1 = 2
PaulSanders Thursday, December 01, 2011
"This breakdown pegs indies like V2..."
You mean ones owned by Universal - http://www.reuters.com/article/2007/08/12/industry-universal-dc-idUSN1028826420070812
paul Thursday, December 01, 2011
For some reason, the marketshare breakdown lists V2 as 'Other,' ie indie, and not part of UMG. Not sure why that would be, though I could guess.