Big Three Record Labels

The Industry Was Disrupted in 2012 With the Buyout of EMI

Lady Gaga is now a Universal Music artist
In 2012, Universal Music purchased EMI, giving them access to artists such as Lady Gaga.. Kevin Winter/Getty Images

As a music fan, it may seem like there are hundreds of music labels across the world. New record companies are created every day, catering to niche audiences and music styles. However, these companies are just subsidiaries of the major labels. In reality, there are just three major record labels; all of the others are actually part of these labels. In 2012, Universal Music purchased EMI, reducing the Big Four labels to the Big Three.

The Big Three

The Big Three record labels are the three major records labels. They are:

These labels represent the majority of the music sold, making up as much as 80% of the music market or more depending on the year.

Artists who are signed to a major record label are either signed to the central label or signed to a subsidiary of the label. For instance, a band may be signed to Sony, or they may be signed to the Sony subsidiary label Columbia Records. These subsidiary labels have their own staff, sign their own artists and make most of their own financial decisions. However, they are answerable to the "main" company, who sets their overall budget and makes decisions like reducing staff at the subsidiary. A poor performance can close the subsidiary and lead its artists to be distributed among the other subsidiaries under the major label.

In this respect, the hierarchical structure of a major label can be quite complex and can differ a bit from label to label.

In essence, a Big Three label is a corporation that manages several smaller businesses. In addition to the labels that are divisions of the major, these Big Three record companies also sometimes offer distribution to indie labels. Under these deals, the major label offers the indie's releases to stores along with their own releases, but they do not have a say in what albums the indie releases or how the indie manages their label.

Controversy Over the Big Four

In 2012, Universal Music expressed interest in purchasing EMI, making an offer of $1.9 billion. On June 14, 2012, consumer watchdog groups released a report encouraging the government to halt the deal, stating that the buyout would cause major issues in the industry. The new mega power would be able to disrupt pricing, costing consumers significant amounts of money.

There was a congressional hearing on the issue and it was examined by European authorities as well. After several months of debate, American and European regulators approved the takeover of EMI. By doing so, Universal Music gained access to the work of major artists, including the Beatles, Pink Floyd, Lady Gaga, Kanye West and more.

This sale created a huge shift in the industry, consolidating power to the Big Three and changing the business landscape. With this buyout, the Big Three now controlled the vast majority of the music market. In response, some artists, in an attempt to gain control over the work and career, moved to independent labels or opted to self-publish.

With the internet and various distribution options now available, the music industry landscape continues to change based on the Big Three.

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