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It is the best of times for the music business. It is the worst of times for the music business.
Top record executives are split over whether the industry is in terrible shape or turning a corner, depending on their view toward the industry’s most controversial deal: Universal’s $1.9 billion bid for EMI’s record music arm.
Universal Music Group chief Lucian Grainge, who is trying to prevent US and European regulators from scuttling the deal, contends the business is a price-challenged, piracy-plagued mess.
On the other side of the debate, former Warner Music Group boss Edgar Bronfman Jr., who has been lobbying against the deal, argues the future is bright.
The differing views were revealed in written responses to questions from Sen. Herb Kohl (D-Wis.), who recently held hearings on the Hill to weigh the pros and cons of the deal.
While Kohl is not directly involved in the decision by the Federal Trade Commission, the hearings could influence the decision. They come at a crucial time because Universal is facing a tough review in Europe.
In letters to the music chiefs, Kohl cited figures from PricewaterhouseCoopers predicting 18 percent growth over 5 years for the music business.
“Universal made a $671 million profit on revenues of over $5.5 billion last year, a healthy 12 percent return,” Kohl wrote. “Are you asserting the poor economic health of the music industry as a reason for this merger?”
Grainge portrayed an industry in decline, saying the figures reflect global revenues and merchandising and not just the recorded music slice of the pie.
“By nearly any measure, the recorded music market has declined by 40 percent over [the past decade] not ‘doubled’,” Grainge wrote in his response.
Bronfman had a vastly different take.
“The music industry is not in such poor health that it needs further consolidation to survive,” he wrote. “The RIAA recently reported that in 2011 total US music shipments were up for the first time since 2004, the number of users of music subscription services jumped 19 percent and digital single sales were up 13 percent. ”