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The Primer - Know Your Label Part 1 - February 4, 2007

HitQuarters is proud to present an introductory who's who of the world's top record labels: Part 1: The Big Four

picture Did you know that a beverage distilling company and a funeral parlour conglomerate were crucial collaborators in the development of some of the world’s biggest record labels?

Care to find out how the 'Big Six' narrowed down into the 'Big Four'?

HitQuarters presents its basic introduction to the history of the world's leading record labels. Part 1 includes Universal Music Group, Sony BMG, Warner and EMI.

Universal Music Group

The Universal Music Group (UMG) is not only one of the globe’s ‘Big Four’ record labels, but with a 25% hold over the world market and operations and licensees in 63 countries, it is also the largest business group in the entire record industry.

This success is in a large part due to its sizable portfolio of record labels- a selection of these include Geffen, Mercury, Polydor, Vertigo, Verve, Wing, A&M, Island and Decca. It also manages one of the largest music publishing companies in the world, the Universal Music Publishing Group.

The Universal Music Group derives from the Music Corporation of America (MCA), a company initially founded in Chicago in 1924 as a music booking agency. It entered the music business in 1962 with the purchase of the US Decca branch. As Decca owned Universal Pictures, MCA therefore assumed ownership of Universal.

In 1966, MCA formed Uni Records in Universal City, California and in 1968, established the MCA label outside North America to issue releases by MCA's labels.

In 1979 MCA acquired ABC Dunhill Records along with subsidiaries ABC Records, Paramount Records, Impulse Records, Dot Records and Dunhill Records. Chess Records was bought out in 1985 and Motown Records in 1988. GRP Records and Geffen Records were acquired in 1990 and in the same year, MCA was purchased for $1.6 billion by Japan’s Matsushita group, best known as the parent of Panasonic Electronics.

In 1995, Matsushita, underwhelmed by their purchase’s performance, accordingly sold an 80%, $5.7 billion controlling stake to the largest distiller of alcohol beverages in the world, the Seagram Company Ltd. The following year the new owners dropped the MCA name and renamed the music division Universal Music Group.

In 1998 the ‘Big Six’ record companies that accounted for 80% of the world market- Sony, Universal, BMG, PolyGram, EMI and Warners – became the ‘Big Five’. Seagram acquired PolyGram from Philips and it was absorbed into the UMG.

When Seagram's drinks industry was bought by France’s Pernod Ricard in 2000, all its media holdings (including Universal) were then sold onto Vivendi SA, which renamed itself Vivendi Universal to reflect the purchase.

In February 2006 the French company bought out the remaining 20% from Matsushita, thereby becoming the sole owner.

Sony BMG

One of the “Big Four” record labels that account for 80% of world recorded music sales market, Sony BMG Music Entertainment was created in 2004 as a 50-50 venture between Sony Music Entertainment and Bertelsmann Music Group (BMG).

Sony BMG’s impressive assortment of record labels includes Arista Records, Burgundy Records, Columbia Records, Epic Records, Jive Records, LaFace Records, Legacy Recordings and RCA Records.

Before the merger with BMG, Sony’s musical heritage was rooted in the history of the American company Columbia- a record label renowned for its pioneering developments in music and technology ever since the arrival of the first gramophones in the late 1800s.

Columbia were pioneers in the manufacture of pre-disc cylinder recordings, introduced mass production of double sided disc records in 1908, and in 1948 introduced the format that would revolutionise the industry and become the standard for a quarter of a century, the 33 1/3 RPM LP.

In 1938 the label was bought out by Columbia Broadcasting System (CBS), a company originally founded by Columbia. In 1953, CBS launched a new label, Epic Records, which in little under ten years would earn its first gold records and develop into a fearsome hit-making force in rock, pop, R&B, and country that would go on to prosper throughout the '70s, '80s and '90s.

The ‘60s and '70s meanwhile saw great advances for its parent company, CBS Records. The company founded its own direct mail order club, Columbia House Company, which still survives today as a joint venture with Time-Warner Inc. and is the largest direct marketer of pre-recorded music and videos in the world.

1968 saw CBS first join forces with the Sony Corporation. Their CBS/Sony imprint was created for the purpose of marketing CBS product alongside domestic Japanese product in Japan, Macao and Hong Kong.

By 1978, worldwide sales for CBS Records had reached $1.2 billion, making it the first American record company to cross the billion-dollar threshold.

Columbia’s legacy of technological innovation continued with the appearance of Sony’s Compact Disc, which CBS helped introduce into the market in 1982. At the same time, CBS Records were to be a key player in establishing music video as the new promotional tool.

In January 1988, Sony Corporation acquired the CBS Records Group and three years later marked their entry into the music market by renaming themselves Sony Music Entertainment.

Bertelsmann is one of Germany’s major historic companies with roots stretching out over 170 years. BMG (Bertelsmann Music Group), one of the six divisions of Bertelsmann, was established in 1987 to combine the music label activities of Bertelsmann.

On July 20, 2004, the ‘Big Five’ record labels that dominate the world music marketplace became the ‘Big Four’ as Sony Music Entertainment merged with BMG. The new company was accordingly named Sony BMG Music Entertainment.

Warner Music Group

The Warner Music Group is the pnly one the world’s ‘Big Four’ record labels to be independently run. It is owned by a group of private investors headed by CEO Edgar Bronfman, Jr. Its labels include the Atlantic Records Group, Reprise, Rhino, Rykodisc, Sub Pop and East West Records.

The history of WMG began with the foundation of Warner Bros Records in 1958, when the Warner Bros movie company decided to expand its interests into record production.

In 1967 Warner was bought by Seven Arts Ltd for $84 million dollars and the company name evolved into Warner Bros-Seven Arts. One of the first decisions of the new boardroom was the purchase of Atlantic Records.

However, in only two years Warner Bros-Seven Arts was forced to sell its operations due to mounting financial concerns. The new owners were the Kinney National Company, a funeral parlour conglomerate.

1970 saw a dramatic change in Warner Bros’ fortunes, sparked off by the success of the Woodstock film. As a result of the boon, Kinney purchased Elektra Records and Nonesuch Records.

In 1972, a financial scandal in Kinney’s non-entertainment interests provoked another name change, this time to Warner Communications Inc. The company then decided to tie up its three record labels into one unified group and name them Warner-Elektra-Atlantic (WEA).

In 1987 Warner purchased the music publishing company Chappell Music and renamed it Warner-Chappell Music. The same year the company announced that it was to merge with Time Inc., the USA’s largest magazine publisher. When the merger was completed two years later Time Warner emerged.

In 2000 EMI and WMG announced merger plans, but these were curtailed by European anti-trust laws. There were, however, no restrictions on WMG’s parent company Time Warner merging with AOL the very same year, at a cost of $183 billion – at that time the largest corporate merger in history.

Time Warner, rumoured to be beleaguered by a hefty debt load, sold off their record company for $2.6 billion to a group of investors headed by Edgar Bronfman, Jr. The spin-off was completed on February 27, 2004.

The increasing dominance of Universal and Sony in the ‘Big Four’ bundle provoked rumours of another merger attempt between the WMG and EMI. The rumours eventually proved founded when 2006 not only saw EMI attempt a buy-out of WMG but Warner propose a takeover of EMI. Both offers were nevertheless rejected by their respective boards.

EMI Music Group

Our last of the ‘Big Four’ major record labels, the EMI Music Group is based in Brook Green in London, and operates in 25 other countries. It counts EMI Music Publishing, one of the ‘Big Five’ music publishing companies, and the Capitol, Blue Note, Parlophone, Chrysalis and Virgin record labels amongst its many assets.

The roots of EMI can be traced back to 1897 and the London-based Gramophone Company. It was this company that at the turn of the century bought ‘His Master’s Voice’, Francis Barraud's painting of a dog and a gramophone horn, one of the most iconic images in the history of popular music, and one which lives on today in the EMI subsidiary HMV.

In March 1931 the Gramophone Company became Electric and Musical Industries Ltd (EMI) after merging with the UK Columbia Gramophone Company. In November of the same year EMI opened the world-renowned Abbey Road Studios in the St John’s Wood area of London.

In 1957, EMI entered the American market by purchasing a controlling 96% stake in Capitol Records, a move necessitated by the recent severing of long-established licensing arrangements with RCA Victor and Columbia Records.

During the 1950s, ‘60s and early ‘70s the company established itself as the most widely known and successful recording company in the world - a status in part due to contemporary signings the Beach Boys, Pink Floyd, the Byrds and, in the biggest coup of them all, the Beatles, who signed to Parlophone, one of EMI’s subsidiary labels, in 1962.

In 1971, Electric & Musical Industries changed its name to EMI Ltd and in 1973 the subsidiary Gramophone Company became EMI Records Ltd. In 1972, EMI replaced the Columbia and HMV pop music labels with the EMI record label. As the decade drew to a close, EMI acquired United Artists Records, before merging with Britain’s largest television and radio manufacturer, Thorn Electrical Industries Ltd., thereby forming Thorn EMI.

In 1991, Thorn EMI completed the takeover of Chrysalis Records and in the following year bought out Richard Branson's Virgin Records.

On August 16, 1996, Thorn EMI shareholders voted in favour of de-merger proposals. The resulting media company has since been known by the name EMI Group PLC. Four years later EMI and Time Warner announced they were to merge, before the plans were vetoed by European anti-trust laws.




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Next week: Know Your Label Part 2


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