Major record labels 'stifling creativity' say independents

Independent record labels have warned that creativity in the music industry is being stifled by increasing consolidation following the European Commission's decision to approve the 2004 merger of Sony BMG.

Yesterday's ruling follows the steady acquisition of some of the best-known indies by major record labels, including Universal Music's purchase of Sanctuary, which manages Elton John, and V2, whose clients include Paul Weller and the Stereophonics.

Impala, the trade body which represents indies across Europe, has warned that major labels are not as good at discovering artists. This week's ruling follows a complaint from Impala, upheld by the European Court of First Instance, that the 2004 Sony BMG merger reduced competition.

It was widely expected that the European Commission would introduce a number of remedies to address concern over the increasing dominance of the big four record companies – Universal, Sony BMG, EMI and Warner – but it approved the merger without any conditions. The ruling has also increased speculation over a merger between Warner Music and EMI.

"Twenty years ago the market was balanced between the majors and big competitive independents. There was lots of new music and it was a really interesting market for consumers," said Helen Smith, the secretary general of Impala. "Today many consumers are not fascinated by what's going on. A part of that undoubtedly comes from concentration, which leads to complacency. It's not in the interests of big companies to be innovative."

The concern for indies is that the major labels have the financial clout to ensure their records are played on prime-time radio and featured prominently in record stores. Despite hopes that the internet would make it easier for indies to reach an audience, that is also dominated by the big record companies, Impala said.

Meanwhile, major record labels continue to snap up indies that are struggling to maintain their business in an overcrowded market.

Last week, the Office of Fair Trading launched an investigation into Universal's £7m acquisition of V2. Universal also agreed to purchase Sanctuary Music Group, the label founded by Sir Richard Branson in a £44.5m deal that includes £59.8m of debt.

In a submission to the OFT, the Association of Independent Music (AIM), which has 800 members who represent bands including the White Stripes, the Kaiser Chiefs and the Arctic Monkeys, warned against the "creeping dominance" of Universal, which it said often controls 40 per cent or more of the Top 75.

"Key independents like Island, Chrysalis, Sanctuary, Mute, Mushroom and V2 have been acquired by the majors over the years," said Ms Smith. "Universal is currently on a huge shopping spree. The effect of that is to reduce the competitiveness of the market.

"The independents are very strong at discovering new artists. They just need a fair crack at the whip. Let the consumer decide. But if the consumer can't hear what you've got to offer, they can't make a decision."

AIM's chairman, Alison Wenham, said British music was a "cultural asset" and called on the Government to review competition policy. "The UK is one of the finest laboratories in the world for new artists and I'm concerned the infrastructure will deny that opportunity," she said.

The Big Four

Universal Music

Owned by Vivendi of France, Universal's labels include Island, Def Jam, Polydor, Motown and Deutsche Grammophon.

Artists include Amy

Winehouse, Bon Jovi, P J Harvey, Kanye West, Kaiser Chiefs, Katie Melua, Razorlight and Stevie Wonder.

* Sony BMG

Fifty per cent-owned by Bertelsmann AG and 50 per cent by Sony Corporation of America, Sony BMG is organised into three music groups, RCA, Columbia and Epic. Labels include Jive, Deltasonic, 1965 Recordings, Syco Music, Cheeky Records and Phonogenic. Artists include Will Young, Justin Timberlake, Christina Aguilera, Bruce Springsteen, Kasabian, the Editors, Outkast, pictured, and Shakira.

* EMI

EMI Music's labels include Angel, Astralwerks, Blue Note, Capitol, Parlophone and Virgin. The company's roster of artists includes the Beatles, the Rolling Stones, Norah Jones, Robbie Williams, K T Tunstall, Gorillaz, Coldplay and Joss Stone.

* Warner Music

Labels that come under the Warner Music umbrella include Asylum, Atlantic, Bad Boy, Roadrunner, East West, Lava, Rhino, Rykodisc, Sire, Cordless and Maverick. Artists include Led Zeppelin, Bjork, Missy Elliott, Lil' Kim, Green Day andthe Red Hot Chili Peppers.