A music business: Universals gamble Summary When Universal Music Group bought a part of MI’S Capitol Records, many asked themselves if this was a smart decision. A ‘gamble’ of $1. 9 billion. Many questioned if this merge would disadvantage smaller companies, because Universal owns, thanks to this merge, 40%-50% shares of most markets. Because of the long statement of objections by the European Commission, Resources might force universal to sell parts of MI, such as Virgin Music and MI Classics. Even though the eventual forced sell, universal has to pay $1. 75 billion to MI.
Shareholders and sister companies of universal aren’t happy about this. Competitors of Universal, are happy to hear this, “hole some ask themselves why universal wanted to participate In this merge In the first place. The Industry Is Instable, and sales have fallen thanks to idealization. MI Is In good shape, notwithstanding the economize of all firms In this Industry. Still, the part universal got from MI, Is the most harmful to the idealization. Universal Is In a difficult position. To investors, it says that the industry is starting to stabilize, and that investing your money, will give you profits.
While to regulators, it says that it’s getting tougher and tougher to compete against the digitization, and that they must expand to stay in the game. Lucian Graining, head of universal, says: “The merge will invest in the industry’s future, and it will help building the company back up. ” After all, universal needs to find a way to make a profit next to all subscription services.