Strange Bedfellows: Can Gaga, Madonna, and Katy Perry Coexist? UMG to Buy EMI’s Record Labels—When 4 Really Become 3

Back in May 2011, I wrote about Citigroup-owned EMI facing a possible buyout from Len Blavatnik’s recently-purchased Warner Music Group [WMG] and some implications of what would happen when 4 major recording companies get narrowed down to 3.

But when the sale of EMI’s recorded music product was announced while Americans were honoring the people who have served their country’s military, the big winner turned out to be someone bigger than WMG. It was Universal Music Group [UMG], once co-owned with the Universal Studios motion picture business but spun off into its own company back in 2006 by its current owner, France’s Vivendi, which, until 2000, also owned water and waste systems in addition to entertainment.

UMG put up almost $2 billion for EMI’s catalog of recordings, just a few weeks after WMG, which had put up a $1.6 billion bid that many thought would have been enough to win, but pulled out over unresolved pension liability issues for EMI’s office employees.

IMPALA, the European organization of independent record labels, is pushing the European Commission to not only block Vivendi/UMG’s purchase of EMI, but also prohibit UMG from distributing recorded music released by the new record label owned by concert promoter LiveNation, which includes a forthcoming album by the legendaryMadonna.

Katy Perry, Madonna, Lady Gaga

IMPALA might be right to be concerned, because the EMI/UMG merger, plus the latter’s partnership with LiveNation, could make for strange bedfellows. For instance, can Gaga, Madonna and Katy coexist? Lady Gaga and Katy Perry are perhaps two of the most popular singers over just the last 2 to 3 years, each with catchy chart-topping hits and successful, yet sensationally-staged, concert tours. And then, there’s Madonna…what’s been said about this Rock & Roll Hall of Famer and mother of self-reinvention that hasn’t already been said over the last three decades?

Gaga, as mentioned previously, has that “360 deal” going with UMG and its Interscope label, while Katy Perry is signed to EMI’s Capitol on what could be a standard contract, and Madonna’s $120 million deal with LiveNation, signed way back in 2007 while she was still under contract to Warner Music Group, but now in full effect and given even more weight by LiveNation’s new partnership with UMG, also falls into that 360 realm.

It’s not going to be easy having these three, in effect, under the same corporate roof, but with Katy Perry and Gaga winding down their promotional runs, Madonna’s going to get the bulk of the attention as 2012 approaches.

Beyond this potential female super-triumvirate, the EMI/UMG/LiveNation triple-play is going to mean UMG, as well as the other two biggies, Warner Music Group and Sony Music Entertainment, might not be as likely to sign acts that it thinks will have sales potential in order to keep the triumvirate immortalized. While the perception is that being on a major label rocks, when 4 become 3, it’s not going to happen as much.

And once the UMG consolidation happens—if it does—a lot of underperforming deadwood currently signed by the merged company will potentially be shed to cover its bottom line. Here’s hoping that the acts which do get cut by this major-label merger have enough of a fan base to keep them going so that they can afford to be independent and online.

As for those acts who remain with the merged company, keep in mind that this is the same UMG that not only takes half of every cent Lady Gaga earns on that 360 deal, as well as was the target of Courtney Love when she did the math over a decade prior [back in the days when Ed Bronfman, Jr. owned one of UMG’s predecessors], but is also the same UMG that is going through a lawsuit filed against them by rapper Chuck D. of Public Enemy, who accuses them of underpaying on digital royalties.

So if you get cut by a major label, consider it a good thing. It means that you get to own what you record in the future, keep more of what you earn from the sales, use the Internet to keep your fan base informed, and not have to worry about 360’s and other politics that come with being part of a major label.

When 4 really become 3, do you think it will encourage more signed acts to reconsider being partners with the major labels?