Some Indie Labels Oppose Sony-BMG Merger

BRUSSELS, Belgium (AP) _ A group of independent music labels Thursday blasted Sony and Bertelsmann's plan to create the world's second-largest music company and urged European antitrust enforcers

Thursday, June 10th 2004, 11:25 am

By: News On 6

BRUSSELS, Belgium (AP) _ A group of independent music labels Thursday blasted Sony and Bertelsmann's plan to create the world's second-largest music company and urged European antitrust enforcers to take ``severe'' measures to protect diversity at a critical time for music sales.

``It's much more dangerous to allow market concentration in a weak market, because smaller companies will find it even harder to survive,'' said Osman Eralp, economic adviser to Impala, which represents some 2,000 independent music companies.

With legal online distribution services beginning to appear in Europe, Impala and the heads of some of Europe's top independent labels warned they were in danger of being ``marginalized further'' by the majors ``manipulating access to music at retail, media and on the Internet.''

They called on the European Union to either block the merger or demand ``severe and broad remedies'' to curb potential abuses of market power.

Yet at a news conference after presenting their case to EU antitrust chief Mario Monti, the music executives suggested that even torpedoing the deal might not be enough to keep their businesses afloat in the face increased competition from various sides.

``The spending of teenagers on mobile phones is a real problem,'' complained Michel Lambot, head of Impala and co-chairman of Brussels-based PIAS, whose artists include the Scottish rockers Mogwai and Belgian composer Wim Mertens.

Some hinted at extending French- and German-style price controls on books to CDs to help close the gap with the current five ``majors,'' which control 80 percent of the market.

``Maybe we are small in economic terms but we are very important in civilization terms,'' said Patrick Zelnik, whose French label Naive includes Carla Bruni and Joe Jackson.

Yet other indies were not at the news conference because they favor the merger, reflecting differing market assessments that will be fought over at closed-door hearings Monday and Tuesday _ five weeks before the European Commission's deadline to rule on the deal.

In an interview, Michael Haentjes of Germany's Edel Music noted Sony Music and Bertelsmann's BMG are expected to drop some less-popular artists as they strive to achieve the hoped-for $300 million in annual savings.

``Artists that only sell midsize numbers will probably become available for companies like us,'' said Haentjes, whose artists range from Toni Braxton to The Rasmus, an up-and-coming Finnish band. ``That could be an advantage for the independent sector and make the market more competitive.''

Lambot disputed contentions from Haentjes and others that a Sony BMG giant would open up opportunities for smaller companies to move into neglected local markets.

``It doesn't mean we have more breathing space because we won't have the shelf space,'' Lambot said, adding that the discounts the majors give to supermarkets make it harder for smaller outlets _ where indies usually do better _ to stay in business.