(Information provided by MEBIS - sponsored by the AMM Music Group )
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Seagram - owning Polygram - Universal |
Amsterdam, New York |
The result of a merger of Polygram and Universal. Polygram was bought by Seagram and merged with Universal. The company owns music, music publishing and film interests; has strong own music distribution ; Both companies are generally perceived within the music community as being more able then most large competitors in seeing the vaulue in niches - and expanding them. Good at understanding regional markets too - in some countries. |
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Time-Warner |
New York |
huge integrated media , music and film company Some regional branches of the music operations are too dependent on US-product choices - or even boycott product or niches locally that they do not see as strong (in contrast to Polygram for example) |
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EMI Music |
London |
vertically integrated music company, owns huge publishing, record company, distributors and even stores - the company resulted from the split of Thorn EMI into the Thorn hardware company and EMI software company. Often similar problems as Time-Warner in regional music marketing , but sometimes better at local product. Many regional branches seem to rely too heavily on "me too" products. Currently (end of 1998) a takeover candidate, because the managment does not really seem to have aclear direction. |
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Sony Music Entertainment |
Tokyo |
A spin-off of Sony Managment capability and potential varies greatly within the music operations from country to country. |
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Walt Disney |
New York |
in addition to the film , cartoon etc operations, Disney also has a music department and an independent music distribution operation in the USA |
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Nimbus CD |
New York |
international CD-manufacturing plant with a small software marketing arm. Seems to be profitable, but (as most hadware-based companies) endangered by modern networks and the switch to a software economy - and it lacks own music rights |
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Edel Music |
Euro-Exchange, Frankfurt |
One of the youngest companies - much smaller then the main ones - but has a good reputation and while lacking strong longterm rights, Edel has quite strong distribution rights which should help for the next 3 to 5 years. The shares have almost quadrupled since the IPO in September - mainly because some investors begin to discover the enormous potential in music and Edel is the only purely music company available publicly except for troubled EMI |
BMG is another of the leading software and media conglomerates - but the shares are privately held and there is only a kind of non-voting preferred shares available on the german exchanges.
All of the big companies cooperate with smaller labels - owner/marketer/developer groups and have their core competencies in the fields of financial backing as well as administrative strenghts and distribution/sales/wharehousing infrastructure. They might be vulnerable in the coming years to the modern transmission and sales possibilities of the Internet.
Something that is not obvious in evaluating products and companies in the music field is a good look at the products and product pipeline - and its originality. When other fields of the economy are evaluated, one sign for caution is a heavy involvement in so called "me-too" products - meaning products who are more or less copying someone elses pre-existing products. Usually such products can be made reasonably successfull - with a heavy investment, which might make them good for overall sales, but problematic seen from a profit standpoint. In music, this kind of thinking is often missing. There are numerous examples of "very successfull" records and musicians of the last decade who were actually money-losing, because they were "me-too" products that were not original enough to really become economically viable.The tendency with many people in the middle managment of the major record companies is to develop "me-too" products, because they usually can not be blamed for accepting those products and therefore think that their jobs are safe if they don't make mistakes. They do not see the problem that exactly this behaviour - not going for innovative products - is a mistake in itself. With "me-too" products, the costs of marketing are much higher then with an original project. This tendency is not limited to music record companies - but can be found with musicians , radio station programmers and many others.
There are also some publicly traded companies supplying technology for the music business:
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Harman International |
New York |
one of the biggest manufacturering conglomerates in the field of audio equipment - mixing consoles, studio equipment etc. - they own the professional audio activities of Studer and many other companies in the field |
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Avid Technologies |
NASDAQ |
a company mainly known for its harddisk-based video-editors - but they also own Digidesign , the main harddisk-based audio editor systems company |
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Euphonix |
NADAQ |
a company specialising in hightech computer controlled audio mixing consoles |
Liquid Audio and N2K are also publicly traded - they are Internet technology and sales companies and N2K even owns some rights and some distribution rights.
Yamaha Electronics is also heavily involved in the music technology and musical instruments businesses. The electronics giants Sony and Siemens are also involved in professional audio equipment.
For a value oriented investor though, the real interest is in aquiring companies that actually own copyrights - because these will profit from the coming years when electronic distribution channels will multiply, while the supply of good products will stay about the same as today.Since musical copyrights are protected between 50 (recordings) and over 70 years (70 years after the death of the composer in the case of musical compositions), they have a very long and lucrative lifespan if handled right and can be considered safer then real estate in some cases.
This is also the reason that today publishing rights are often
traded atbetween 15 and 25 times the yearly income of the publisher
from compositions (if the songs are available on CDs for at least one
or two years).
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Last Updated: 22.December 1998