With all the media attention currently devoted to the EU Commission’s treatment of the proposed mergers of AOL/Time Warner and Warner/EMI, one might think that the Commission’s interest in the music business was confined to the determination of market share and the regulation of market power. However, judging by a little reported speech given by the EU Commissioner for Competition Policy, Mario Monti, last month this view may be wide of the mark.
Speaking at a conference on “Barriers in Cyberspace”, Mr Monti said that the music industry raises interesting issues relating to distribution over the Internet. Mr Monti remarked that “in the context of how suitable the current licensing and distribution arrangements are to Internet sales mechanisms, the Commission may have to look very closely at whether the current arrangements for collecting societies have been properly updated to take account of the changing circumstances of the Internet.”
Mr Monti also considered that the competition problems posed by the Internet “may well require analysis going beyond determinations of market definition and market share and that it may also be necessary to look at the structures of industries such as the music and publishing industries to see whether the commercial interests of parties in maintaining the status quo is hampering the development of Internet services.”
This suggests that the Commission’s concerns will focus on all players in the music industry and not just collecting societies who have traditionally enjoyed their fair share of attention from Brussels.
It is clear that the Internet will play an increasingly important role in the distribution of music in future, whether by streaming, downloading or on-line access to consumers’ own music collections (so called “locker room” arrangements). Since Mr Monti considers the Internet to be one of the most important commercial developments since the industrial revolution, the music industry will increasingly find itself under the EU Commission’s microscope.