Hmmm... EMI+Warner, could this happen?
Hmmm... for conspiracy junkies; for your consideration:
Edgr Bronfman Jr, stinging from the reaction to Steve Jobs' open letter and the industry response, sees a golden opportunity in the fortunes of EMI.
He has his company buy out EMI. The existence of the new joint company causes both companies contracts with the iTunes Store to be moot, necessitating a new contract with the joint company.
Then, in the Apple boardroom, Mr. Bronfman decides to:
1. Force Apple to institute variable pricing
2. Force Apple to give up some of the iPod "revenue stream"
3. Stop calling for removal of DRM
... and if Steve doesn't do all this, threaten to pull the joint company's music off iTunes.
Scary, to me... could it happen?
[793 byte] By [
Mightion] at [2007-11-11 16:43:52]
# 1 Re: Hmmm... EMI+Warner, could this happen?
I guess it is feasible. Though, in my eyes, this type of a tactic would just show the music industry's greediness at its extreme. In my opinion, $9.99 is a fair price to pay for an album. $15-20 is too much. The idea of paying more money for specific albums that are say more popular or "rarer" online is ridiculous for one reason alone. That reason being that no media has to be manufactured to sell online music. The record companies do not have to manufacture any discs, they do not have to pay for distribution costs. Their bottom line only increase in online sales yet they want to charge the same, if not more, than the actual CD.
I saw an example of this on the iTunes Music Store recently. There was one album that I can purchase for $15 at CD Universe but it is for sale on iTunes Music Store for $25. I want somebody to justify the iTunes Music Store price.
# 2 Re: Hmmm... EMI+Warner, could this happen?
Well from what I've read (admittedly not much) coming out of Mr. Bronfman's mouth, he seems like a rather greedy individual.
# 3 Re: Hmmm... EMI+Warner, could this happen?
Actually, I could see the reverse happening. Apple renegotiating the contract and:
1. Force them to agree to another contract on Apples terms
2. Give them no money
3. Start talking about non-DRM music.
Where else are they going to go? MS? The labels can't afford to leave iTunes yet without something substantial to turn to. All the other music services COMBINE won't make up for it. Pulling out simply shows the consumer that they really don't care and really ARE greedy.
baggss at 2007-11-15 17:58:20 >
# 4 Re: Hmmm... EMI+Warner, could this happen?
CDs still account for 90% of the music business. One of the big four is not going to buy out another (particularly an American company buying a British company when the dollar is weak) just so it can re-negotiate a contract with the #4 retailer.
bdb at 2007-11-15 17:59:25 >
# 5 Re: Hmmm... EMI+Warner, could this happen?
I guess it is feasible.Feasible?
Whilst it is technically possible that what the OP suggested could happen, it's not going to. It is so far from reality it's not worth thinking about.
For a start, it's a pretty big assumption that Warner will buy out EMI.
IIRC, last time they started bidding, EMI starting bidding for Warner and, unless I'm very much mistaken, EMI were offering people a greater profit on Warner's shares than Warner were offering on EMI's.
Secondly, it's assuming that the head of this conglomerate is an idiotic megalomaniac.
Warner/EMI would lose out as much as Apple would, probably even more-so, if their music was pulled from iTunes.
Also, the exchange rate isn't a huge factor in takeovers unless it fluctuates greatly shortly afterwards, which it doesn't look like doing.
If we assume that the exchange rate will stay at $2 to the pound for the foreseeable future, then it has no effect on the deal. The exchange rate is what it is and the value of the two companies is based on their shares - say EMI is made up of 1 million shares at 5 each and Warner is made up of 1 million shares at $20 each (just for simplicity) then that mean Warner ($20 million/10 million) is worth twice as much as EMI ($10 million/5 million). The exchange rate is meaningless, as whichever currency you look at the two companies in, the ratio of their relative worths is constant - whether Warner wants to buy EMI in dollars or in pounds, the actual cost is the same, just the numbers differ due to the exchange rate, so it's not really like Warner end up paying more unless, as I said before, the exchange rate drastically shifts.
That's a very simplistic way of looking at it but it holds fairly true.
# 6 Re: Hmmm... EMI+Warner, could this happen?
As a UK company, EMI is subject to the whims of our competition and monopolies and mergers bodies, and there's no guarantee that an EMI/Warner merger/buyout would be approved.
Even if it is, the idea that "The existence of the new joint company (would cause) both companies contracts with the iTunes Store to be moot" is, in my view, most unlikely.
And even if a contract does need to be renewed, it would seem to me that Apple's negotiating position has improved with the increasing success and popularity of the iTMS, while the greater importance of digital sales leaves the record companies more likely to have to bend to Apple's will.
