Rumors that both Apple and Microsoft are talking to Vivendi about buying off that company's Universal Music Group (UMG) hit the markets today. Apple is said to be offering between $5 and $6 billion for the division. Vivendi, the French water company turned media mogul, is under pressure to sell off its media assets, from which it has been leaking money fast. Other media assets slated for sale include movie and TV studios (Universal), theme parks, TV networks (USA and French Canal +), and game software (it's number two in PC games in the world).
UMG is the largest of the Big Five recording companies, with a 23.5% share of the market and over $6.5 billion in sales. It includes such labels as Universal, Decca, Mercury, Verve, Deutsche Grammophon, MCA, Motown and many others. It also owns the largest music publishing company in the world, with the rights to over a million songs.
Why does either company want to get into the recording business, a hot potato that others (MCA, Vivendi, Seagram's) have dropped? That business is in crisis, and neither computer company has the expertise to make the company really work. What I think both are interested in are two pieces: digital distribution rights, and, especially for Microsoft, the song collection. Gates has a vast collection of stock photos that he has amassed, and song rights would be right in line.
But without these pieces, the rest of UMG is worth very little. I can't believe in a full takeover, but either Apple or Microsoft may buy the whole company and split off pieces. Somehow, the thought or Jobs or Gates leading a campaign on the pop charts and the shelves of music stores while developing new artists and coddling Eminem and Nelly. It's too much of a culture clash; but then again, presidents of big companies tend to get a thrill out of "owning" artists and reading about themselves in Entertainment Weekly. After all, that's how Vivendi (and Seagram's) got in trouble in the first place.
