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FROM THIS EPISODE

This is Celia Hirschman With On The Beat for KCRW.

Last week, the US federal Trade Commission gave &quotthumbs; up" to a merger between two entertainment giants - the Sony and BMG worldwide music groups. If one considered record sales from the first six months of this year, the newly formed Sony BMG would own 30% of the US market share. This merger makes them the largest record conglomerate in the world, surpassing the Universal Music Group.

And the business continues to change. There are only three other conglomerates left in the music business: Universal, EMI and Warner Brothers. Most business analysts agree that EMI and Warners will try and merge in the coming months, just to stay competitive. Otherwise they risk being swallowed up by the others.

This game of corporate Ms. Packman underscores a serious schism in the business. The major label business has not proven its ability to sustain the test of time. Remember, we-ve lost Elektra, MCA and Arista - 3 major labels, in the past 18 months. And it-s been the independent labels who have brought forth some of the most interesting work in the last decade. But in spite of their vision, the playing field for the indies has never been fair. In fact, it-s incredibly uneven.

Out of the thousands of rock records released each year, only a handful of independent releases have made it to the top of the sales charts. And it-s not surprising. Virtually every facet of marketing - from media exposure, commercial radio airplay, retail positioning, to television airtime and the distribution pipeline - are all built to benefit the major labels.

The majors will tell you in an environment of continuing expenses, shrinking profit margins and rampant fears, they-re just trying to figure out how to stay afloat. The theory is that with combined strength, they have a better shot at owning the majority of marketing avenues for their artists. And with those marketing avenues, they can sign a quantity of artists and hope for the best.

I have a different point of view. I-m pretty sure music is like other fine arts - it shouldn-t be judged on the quantity of the collection, but rather the quality of that collection. And quality does really matter. Music-s unique power and reach is not contrived in a boardroom for the purpose of mass market. Instead it grows out of a deep, personal, almost intuitive sense of identification, liberating us from our small worlds. That-s a pretty difficult business model to deliver with regular quarterly earnings.

Major record companies have built over time a structure that sorely needs to be adjusted to the realities of investment. Independent labels have survived throughout troubled times because they have an exquisite sense of what-s to come, keen business practices and a strong reality meter. Unlike the majors, indy labels sign artists early, before competitive bidding wars take negotiations to absurd levels. Indies give their artists lots of freedom in the studio and they don-t over invest in marketing unless clear signals to move forward are demonstrated.

As the music business continues to consolidate, it-s going to be an interesting road ahead. Hopefully, what will emerge will be a beauty not yet experienced. Look for it, outside the confines of big business, in the underground, where the artists love to play.

This is Celia Hirschman with On The Beat for KCRW.

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