Warner Music Makes a Deal With Small Labels

When the Universal Music Group agreed to pay $1.9 billion for EMI’s recorded music business in late 2011, it faced major opposition from independent groups, who feared that Universal â€" already the biggest music conglomerate â€" would gain too much market power. Last year, European regulators ordered Universal to sell about a third of EMI’s recorded assets as a condition for approving the transaction.

The Warner Music Group, a smaller rival, is acting quickly to avoid the same regulatory headache for its recent $765 million deal for most of the assets EMI sold. It has struck an agreement with two independent trade groups to sell or license “a significant portion” of that music to small companies, according to a joint announcement on Tuesday by Warner and the two grous, Impala and Merlin.

The announcement did not specify which assets â€" or even how much music â€" would be made available as a part of the agreement, and a Warner spokesman declined to comment further.

The catalog that Warner bought, known as the Parlophone Label Group, includes two of EMI’s flagship labels, Parlophone and EMI Records; the EMI and Virgin classical catalogs; several formerly independent record companies; and a number of subsidiary companies across Europe.

Warner’s Parlophone deal is subject to the approval of European regulators. The news of Warner’s deal with the independents was first reported by The Financial Times.

Impala, a group in Brussels that represents thousands of small music companies, lobbied aggressively against Universal’s original deal, arguing that it would disrupt the balance of power among the three remaining major labels. In a statement included in Tuesday’s an! nouncement, Helen Smith, the group’s executive chairwoman, signaled her approval of Warner’s Parlophone deal â€" or at least a lack of opposition to it.

“Having not blocked the sale of EMI,” Ms. Smith said, “the result we have negotiated offers regulators the ‘best of both worlds’ in strengthening the independents by bringing more scale into the sector and by creating a more effective challenger to the Universal-Sony duopoly.”

Ben Sisario writes about the music industry. Follow @sisario on Twitter.