SXSW and the Future of Digital Music Distribution
SXSW and the Future of Digital Music Distribution
SXSW and the Future of Digital Music Distribution

    Get Involved Today

    For those who are journeying down to sunny Austin, Texas for
    the kick-off of the SXSW Music festival today, don’t forget to check out Public
    Knowledge’s panel
    where we’ll be talking about the effects of market concentration on consumers,
    artists, and digital platforms.

    The panel, inspired by the recent merger between major
    record labels Universal Music Group and EMI, will also include artist advocate
    and principal of WYZ Girl Entertainment Lita Rosario, CEO of indie label
    association Merlin Charles Caldas, manager and CEO of V. Brown & Company
    Vernon Brown, and Paul Geller, co-founder of The BKRY and former SVP of

    The UMG/EMI merger was a controversial proposal, attracting
    loud opposition from consumer advocates, artist representatives, and
    independent record labels, which both compete with and sometimes depend on
    major labels for distribution. Post-merger, the recorded music business is now dominated
    by just three major labels—UMG, Sony, and Warner—which gives the remaining
    majors even more leverage over music distribution platforms and artists.

    The major labels own large catalogs of copyright, and
    through those holdings the majors control the vast majority of the music
    streamed or purchased today. As Public Knowledge testified [link] before the
    Senate Antitrust subcommittee, this gives the majors leverage to demand
    disproportionately high prices or partial ownership from online streaming or
    download platforms, which raises prices for fans and squeezes the share of
    revenues that goes toward independent and unsigned artists, who don’t have as
    much bargaining power. This in turn makes it harder for independent labels to
    earn a sustainable income, which makes the majors a more attractive choice for
    artists looking for a label.

    Of course, that’s only if the majors agree to license at
    all. If a new music hub wants to launch but the combined UMG/EMI is refusing to
    license its 37-40% of the recorded music market, it’s near impossible to
    attract enough subscribers or buyers to become viable business. This only leads
    to fewer outlets for musicians to reach their fans and sell their music.

    Now that the UMG/EMI merger has been permitted by the U.S.
    Federal Trade Commission and Universal has just recently finished selling off
    parts of EMI as required by European antitrust regulators, the full impacts of
    the merger remain to be seen. We have seen potential Spotify competitor Deezer
    be purchased by Warner owner Access Industries, but the overall consequences of
    the merger will likely not unfold for some time yet.

    We’ll be talking about all of this and more at our SXSW
    panel tomorrow at 3:30, so if you’re in town don’t miss a great conversation
    about an issue that will shape the development of the online music business.