How has record label consolidation affected the industry?
In 2002, five major labels controlled 75 percent of the world market for recorded music. In late 2003, Sony and the Bertelsmann Music Group (BMG) announced plans to merge their operations into a joint venture, leaving only four major record labels to sell and distribute the vast majority of music. The merger is pending regulatory approval in the United States and Europe. As labels consolidate they look for savings by merging operations and cutting staff. Divisions are brought under the control of one executive and the number of staff is cut to create a more efficient work force. Even divisions with major stars are not immune from this corporate belt tightening. In preparation for its merger with Sony, BMG announced in that it was laying off 110 of 170 employees from the conglomerate’s Arista label, despite the fact that the Arista team had had major hits and Grammy nominations for artists like OutKast, Avril Lavigne, Sara McLachlan, Pink, and TLC. When Arista’s President L.A. Reid was
