[imsic we For Everyone in the Business of Music 2 JULY 1994 £2.80 What a waste How to spend £21 m for no qood reason at ail rCOMMENT I anythingper CD that's up to équivalent 5.2m units. to sales of consumée!are even worse. by the Itaffair, is a thetribute effecl t tant thing now is to heal the areThe even costs more of thehorrendous. MMC inquiry The despitethe industry's it ail we management have managed thî t m Nî'd be doing vement in their lot. Understand- pansoiie of out its to389 about pages^That's £54,000 forone each hell lesson of the past ISmonths It of ail this - as IGLESIAS STING, ART GARFUNKEL and DOLLYPARTON. Indudcs Ihe single 'CRAZY' as seen on GMT\ TheNick, Big LondonBreakfast, Tonight Good and Morning Surprise with Surprise. Ann ar » CD & MC 474738 2 • 4 COU MI1IA ►►►►►►►► CAN GEORGE WIN AT APPEAL? - p9 ► ►►►►►►►► Order from Sony Music Telcsales: 0296 3951; ■■■■ Managing Media Change Are you: Please contact: ® under pressure to keep down costs? Paul Styles ® rethinking your rôle in the emerging Head of Media Consulting marketplace? KPMG Management Consulting ® confused by the pace of technological David Murrell change? Head of Media & Entertainment e looking for new commercial opportunities? KPMG Peat Marwick If so, KPMG can help. 1 Puddle Dock London EC4V 3PD Building on our base as one of the world's Téléphoné 071 236 8000 leading accountancy firms, we have a specialist média group providing expertise in management consulting, corporate finance, stratégie analysis and tax, as well as audit. ■ Peat Marwick 1 WHATTHEY SAID On George Michael versus Sony... Judge blâmes Kahane for rift WHY THE JUDGE VINDICATED SONY By describing the ternis of the Sony deal as "r and fair", Mr Justice Parker destroyed the main planks Kahane, Michael's manager since of Michael's case: that his contract was in restraint of unreliable1986, is described and unlrustworthy as "a thoroughly witness" trade; that European compétition laws apply to UK bythe judge, whose verdict represented recording contracts; and that it had wider implications actiona crushing against defeat Sony forMusic. Michael in his for ail record contracts. Kahan Parker also vindicated Sony because: • The company agreed to Michael's requestto bring is family in Los Angeles forward advances totalling $11 m in 1988; on Wednesday to • Sony improvedtermsin 1990 to "place Michael on a par Wham!Kahane, before who becoming Michael's man- with US superstars"; • Michael requested and received a $1 m advance for his in JusticeHe says Parker's Kahane: judgment. third album in February 1992, thereby "affirming" the • misled Michael about Sony's contract even though the cash was returned in full in aC August; Michael's*Ted bothlawyer to Tony George Russell; Michael and and • Michael received expert légal back-up when he ^ • demanded advances so he could renegotiated his contract in 1988 and 1990. views of'sony's of Tony Compare"I must be £10-£12 the only with man the vuho £50-plus thinks thatCDs peopleare ton are ch Ferret&Spanner.prepared to pay for computer games," - Neil Ferri; !>►>>[>[> BICKNELL PREDICTS £15 CD IN 18 MONTHS - p4 MUSIC WEEK 2 JULY1994 THE MMC REPORT | REPORT AT A GLÂNCË Theindustry main were: findings of the MMC's report on the UK record • The "large and internationally important" industry employsachieves more annual than retail 48,000 saies people. of more UK than sales £1bn represent and of7% recordings of the world sold market globally. and UK artists contribute to 18% PolyGram,• A complex Sony. monopoly Warner exists and BMG, in favour bêcause of EMI, together theythis does have neta market operate share against of more the publicthan 25%. interest. However, •Price, WH opérâtesSmith, through a scale its monopoly, own shops because and subsidiary it supplies Dur compétitivemore than 25% market of the and market. there Butis no record evidence retailing that theis a scaleSmiths' monopoly profits for enables record Smithsretailing to areexploit not excessive. its position; •companies Copyright to is invest central money to the and record enterprise industry, in allowingcreating andcommercial overseas recordings with légal protectionwhich can against be exploited unauthorised at home successfulreproduction. artists Copyright and songwriters ensures the are talents rewarded. of • Much of the apparent différence between CD prices Salesin the taxesUK and in US the relates US are to much différent lower tax than arrangements. the UK's MMC sides with tax17.5%, in the and US, record whereas prices UK are shelf displayedwithout prices include VAT. sales • Prices of full-price popular CDs are on average 7%- industry's claims 3%of $1.50 higher ta thein the pound. UK than Compared in the US with at ana number exchange of other rate induslrialised countries, UK prices are generally lower. Theso favourable MMC's verdict that some on CD industry pricing insid- was HOWUK PRICES COMPARE • The major record companies compete vigorously ers suggested wryly it could have been areamong a pronounced themselves feature and with of the the independents. industry and theNew majors' labels strengthmeans the is majorshalanced cannot by powerful exercise retail market groups, power which to the disadvantagelevels. The majors of consumers. are not making Prices excessive are set at profits. compétitive great• The majority record industryof releases is a dohigh-risk not sell business enough copies - the to I j recoup their initial investment Record prices must HJ thereforecover losses be seton failures.sa that earnings Companies on successful have developed records formatspricing structureswhich reflect for différentconsumers' recordings perceptions and différentof quality ' andpricing value. policy Given is justified.the market's strong compétition, the and• Record established companies artists, compete and contract actively terms in signing have moved new in artists' favour over the past 20 years. Artists are iiisjilfjii contracts.normally professionally Ownership and advised control in of negotiations copyright for about a significanthas made a period large initialis essential investment ta a record in recordings company and that disputesan arlisfs is career. the courts. The proper forum for resolution of ïs are justified in ti free• There singles was to concem retailers about to promote record new companies releases. giving On ofbalance, the compétitive no change process is required and benefitsbecause independent this forms part dSSSSS supportretailers to who the doextent not receiveof large discountsretailers. and promotional be• Theremisled was by major also some retailers' concern charts that which consumers show might. , etThe by exonérationthe OFT in Aprilechoes 1992 a similar following ver- expensivesumer's perception is so weli entrenched.that CDs are too rtill be a public perception that CDs cost prédictions of future sales rather than actual sales. The 15-month inquiry sparked by a report Michael Dillon, owner of Scottish '■ bn addressed." clearMMC theconsiders basis on that which retailers charts which have do been this shouldcompiled. make >!>!>►► ► HOPES ARE DASHED FOR INTEREST GROUPS - MUSIC WEEK 2 JULY1994 THE MMC REPORT \\ NEWS FI LE Perry praises indies' support BRIindependent chairman labels Rupert whose Perry supporthas paid he tribute says provedto the small Bard backs call invaluable in the induslry's defencc campaign. "A lot of peopleabout people have worked like [Temple very hard Records forthis," managing he says. director] "I think ScotlandRobin Morton, to go whothrough came that ail Select the way Committee." down from Morton says,nearly "The works. MMC Hopefully have just this proved will be that the democracy end of it" to clarify charts TheFree MMC singles says giving not away anti-competitive free singles to retailers to CHARTS - WHO promote new releases is not anti-competitive. The USING WHAT investigation accepted the practice is often necessary to thoughget into the the volume chart and of freeon ta singles the Radio sometimes One playlist, reaches even 50%argued of aail store's companies stock. engage"The record in this companies because itallows have thempromotional ta compete teol," for it salessays. Theand MMC'sis regarded main as concern a legitimate position,about the but practice says it is will that not it might recommend influence any chart changes "It's not right that anyone can shove labelsbecause engage it is net in againstthe practice. the "compétitive process' as ail anysomething sort of explanation."up and call it a chart without ReplayFellow Records indie Briansays he Mack, compiles of Bristol's his Top FearsParallel the MMC import report fearsquelled could open the floodgates for 10s each Tuesday, with information parallel imparts have proven unfounded. The repart 1 - . which includes projections MMC's recommendation - notices were based on early week sales and expected rejects Consumer Association claims that prices are' ,? ourageis going people to sell," to hebe says. very "1 wodb launchedin place - Woolworthsbefore the alsoinquiry announced was chartHe says,at number "Things eight corne which into theFve albumnever stricthigher copyright in this country controls than on in parallel the US imparts'.because The the MMCUK has ■utd memberit. I would had be any astonished problem if v on Thursday that it would comply. soldchart." a copy He of.believes I have he to compilewill be mycovered own says stores rely on a good relationship with UK record bas increased among retailers in recent under the new guideline by calling his havingcompanies