In what the Los Angeles Times calls "the most massive restructuring in the history of the music industry," Seagram Co., which owns Universal Records and MCA Records, bought Polygram Records (Motown, Mercury, Def Jam) for $10.6 billion.
The acquisition makes Universal Studios Inc., Seagram's entertainment division, the largest music company in the world, surpassing the other four major labels: Sony Music Entertainment, Warner Music Group, BMG Entertainment and EMC Music. The new group will account for 25 percent of all music sold.
In an effort to create a lean company, Universal will fold the Geffen and A&M record labels under the umbrella of an expanded Interscope Music Group. The labels will release music under their own logos, but will operate with reduced staff and artist rosters. Sources estimate that 20 percent of the 15,500 workers employed by Polygram and Universal could be let go.
The merger hits close to home for Valley recording artists Pharoahs 2000 and the Low-Watts. Both groups, which contain members of the former Gin Blossoms, were given new record deals with A&M upon forming new lineups. Their recording futures, like those of bands around the country, are in limbo until the dust settles.
"You have to be someone like [A&M labelmate] Sheryl Crow to be impervious to this," says Pharoahs 2000 lead singer Robin Wilson. "You have to be capable of selling millions of discs right out of the box, and we're still a risk."
Last May the band completed an album that had been slated for release in March, but that release date has been suspended. "The label has suspended all of the CD release dates, not just ours," says Wilson, who was told that the merger could push the disc's release back to May.
"A year of our career has been lost to this sale," he says.
Where does this put the band?
"[Interscope Records chief Jimmy] Iovine is going to be handed a list of bands," Wilson says. "When he sees the name Pharoahs 2000, he'll be told that it's the band with that guy from the Gin Blossoms. From there he can either say he didn't like them, or he can say maybe they have a chance. Either way, we're nothing to them right now. We're just a name on a list. Just a name on a piece of paper.
"It's possible that we'll get dropped, but less likely because we've already completed an album," Wilson says.
"We knew this was coming," says Low-Watts guitarist Scott Johnson, "but I haven't heard anything official yet."
"We don't even know what's going on, but we're asking to get out of our contract because who knows what will happen?" says bassist Darryl Icard. "Not only are they going to dump bands, but they're going to cut everybody's budget."
Icard says the hype surrounding having a record deal is overrated. "Everybody thinks that having a record deal means excitement, money, the big time and everything. In most cases I've known... it really doesn't mean a thing. If you're selling big digits for them, great; if not, they don't care about you."
Johnson says he's not sure the band is any worse off than the Pharoahs, even if they don't have a completed album to their name.
"I don't know if [executives] want to take time to listen to demos during a merger. They just look at the money and how much they have to spend. I don't know if the label's attitude toward us would be 'Let's cut them off now while we've only given them a little bit,' or because we haven't made a record yet, keep us because there's still the mystery of what the record will be like," Johnson says. "For the Pharoahs, because their record is done, they can just throw it in during a meeting and make a decision about whether they like it or not."
He relates the situation to a recent gas merger.
"It's like the Mobil and Exxon thing, when there's too much product for not enough customers. The labels are combining and cutting their product, which is their artists," Johnson says. "It's the exact same thing, but in the music industry. I don't' know what's going to happen with us, but I have a feeling that they're going to drop us. I don't know, I can only assume."
Because of legal reasons, Valley BMG sales representative Courtney Proffitt will not comment about what she thinks the merger will mean for local musicians. but Proffitt does offer advice.
"The musicians shouldn't assume anything," she says. "Everyone should just take a wait-and-see attitude. It's going to be crazy with only five major labels, but nobody's going to really know what's happening until after the first of the year."
The merger is discouraging to Valley musicians, signed or unsigned.
"It just puts another wall for us to climb in front of us and makes it more overwhelming than it was before," said Paul Cardone, bass player for Satellite.
Gloritone's label, RCA subsidiary Kneeling Elephant, is unscathed by the merger but bass player Nick Scropos thinks it will have far-reaching effects.
"It affects all musicians in town because it closes a door," he says. "It adds one more step of despair for bands trying to get signed."
Scropos says he believes big-business moves are overshadowing potential talent.
"No one is taking time to develop bands," he says. "Either you start with a hit single or you get dropped. It's about money and not talent anymore. By dumping all the bands not immediately making money, no one gets a chance."
Charlie Levy, Gloritone's manager and longtime fixture in the Tempe music scene, can see good and bad in the merger news.
"I think anytime there is less competition, it's not good," Levy says. "A lot of people lose their jobs, bands get dropped and everything is streamlined. Every time there's a shake-up like this, it's the bands who are going to get hurt."
But he can also see the positive side. "It leaves space for other things," he says. "All of the talented bands who won't have a job at the end of this merger can now start smaller companies with better music."
Levy says that those responsible for monster labels having so much power lies with consumers more than the labels themselves.
"Everything comes down to the general public and the people," he says. "I don't blame the industry at all. I blame the people who don't look elsewhere for talent but just buy the cookie-cutter, one-hit wonder bands the labels put out."
Levy says giving more attention to independent music labels and vendors will propel that change.
"It's up to the people to start shopping at places like Stinkweeds and Eastside instead of falling into the mall trap of CD displays with the big posters and promotions behind them," he says. "But it's the '90s, when things are easy and fun; it's like a country club. It's when things go bad in the world that music will get good again."