Digital Music – The Future

In another sign of an industry in decline, Warner and EMI are circling in a merger dance. The big question – who's on top. Since the industry is unable to grow and unwilling to change, the only way to increase shareholder return is to cut costs. A merger would save the combined companies two to three hundred million dollars. It also would reduce the number of major labels from four to three.

The music businesses had a deal to merge in 2000. But European officials blocked it on antitrust grounds. It's unlikely that will be an issue now. While the combined company would claim about 25% of global music sales, it would still be smaller than the Universal Music Group's market share.