Explore Economics

Apologies for the reference in this Blog’s title to the Human League’s 1981 Christmas number one single – it betrays my age.  I’m sure if you come to use this example of competition regulation and contestability you will use something much more contemporary.  

The back catalogue of all of the Human League songs of that era, along with many thousand more recent songs (such as those of Take That and Duffy) have just been bought by BMG – one of the world’s largest music publishing groups.  BMG have purchased these rights from Universal who have been forced to sell them as part of their own takeover of EMI earlier in 2012.

Both European and US regulatory bodies enforced the sale of the EMI asset when they agreed to the Universal takeover – attempting to ensure that Universal did not have too much individual power in the music publishing industry.  You can read an article from the BBC here.

The music publishing industry is possibly a decent example of contestable market – with very low sunk costs.  BMG are now the fourth largest music publishing firm in the world but did not exist in its current form five years ago – but their heavy investment and spending on the purchasing of various catalogues is possibly not as risky as it sounds given that they can be sold on in the future.  Music catalogues are not hugely physical assets either (more legal entities than physical ones) adding to the contestability.

Now, altogether….

“You were working as a waitress in a cocktail bar, when I met you….”

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