Elvis was still king, Chuck Berry still had rockin' pneumonia and American pop stars dominated the music business on both sides of the Atlantic. Then, in the spring of 1962, a record studio on London's Abbey Road took a flyer on a catchy little ditty called "Love Me Do."
That first Beatles record was probably the most important signing in the long history of EMI Group, the biggest and oldest British record company. The corporate history of EMI--for Electric and Musical Industries Ltd.--dates back to the cylindrical gramophone records of the 1890s.
Its contributions to the industry include the image (later borrowed by RCA) taken from the painting "His Master's Voice," showing a dog listening at a gramophone. By the early '60s, though, EMI badly needed Help to move beyond Yesterday.
Revitalized by the Fab Four, EMI signed up other great British acts, including the Rolling Stones, David Bowie, the Spice Girls and Blur. Then it went global, and today it is a major world player, with a roster of regular million-sellers ranging from the Beastie Boys in the United States to the irresistible Japanese pop group Dreams Come True.
Now the last British record label will become one more title on the long roster of companies clustering around America Online Inc., the Dulles Internet giant. In yet another AOL coup, EMI agreed over the weekend to merge its music business with Warner Music Group, the big American record company whose parent, Time Warner Inc., was just acquired by AOL.
The transfer of yet another British corporation to U.S. hands--just days after Citigroup bought the London investment bank Schroders--prompted concern here. "U.S. takes over Britain's last major record label" read the front-page headline in today's Independent newspaper.
There was evidence to support that point of view. The new venture will be called "Warner EMI Music." Its headquarters will be in New York. The American partner is guaranteed a majority of seats on the board, and Warner Music Group Chairman Roger Ames will run the show.
Both American and British executives responded defensively at a news conference here today when asked about a U.S. takeover. "We still have a famous British company," argued Eric Nicoli, chairman of EMI Group. He noted that the London Stock Exchange will still trade EMI shares, adding: "We're acutely aware of our roots and traditions." Nicoli winced a few minutes later, though, when Time Warner Chairman Gerald M. Levin, addressing the same news conference from New York, referred to EMI as "our London arm."
Executives brushed off concerns that the deal--creating a firm with a 20 percent to 25 percent share of the global music market--will reduce consumer choice.
"There is no such thing as a leviathan anymore that can control a disproportionate share of the record market," said Nicoli, who will share the title "co-chairman" of the combined company with Time Warner President Richard D. Parsons. "There are so many outlets now where people can play and publish music," Nicoli went on, "that the notion that we could stop talent from finding the consumer is ridiculous."
One of the key new outlets for pop music, of course, is the Internet. Parsons said today that there is "no doubt" that digital distribution--that is, putting music tracks on the Internet for customers to download--will be a key element of the industry in a few years. AOL provides Warner EMI the Internet connections and know-how it will need to sell products online.
Despite that clear fit, EMI executives said they didn't know about the AOL-Time Warner deal when they decided to the venture with Warner Music. "We had our agreement essentially in place before we ever heard about the AOL involvement," Nicoli said.
Executives predicted the deal would be completed in the third quarter. They brushed aside suggestions that antitrust authorities in the United States or Europe might block it.
If the deal goes through, the new company will have a play list that spans the decades. The two firms control rights to stars of yesteryear such as Frank Sinatra, Ray Charles, the Eagles, Pink Floyd and the Beach Boys.
Golden oldies like that are pure gold for a music company these days. The advent of new technology, such as DVD disks, "memory sticks" and MP3 players, means the record companies can sell the same song to the same customer in different formats.
For all the high-tech sound expertise the two record companies boast about, they were bested by a pair of microphones today. Their executives were repeatedly interrupted by a steady buzzing, something like feedback, and none of them could make it stop.
Business: Music recording and retailing company for a variety of music types. Also the world's largest music publisher, controlling more than a million copyrights. Owns 40 percent of online music seller Musicmaker.com.
Selected record labels: Blue Note, Capitol Records, Chrysalis, Priority, Virgin
Selected artists: The Beatles, Garth Brooks, Lenny Kravitz, the Rolling Stones, Diana Ross, Frank Sinatra, Smashing Pumpkins, Spice Girls
Origins: Electric & Musical Industries was established in 1931 as a successor to a 19th-century gramophone producer.
1999 sales: $3.83 billion (fiscal year ended in March)
1999 net income: $235.2 million
Web address: www.emigroup.com
SOURCES: Bloomberg News, Hoover's
CAPTION: Roger Ames, left, chairman of Warner Music Group, and Ken Berry, his counterpart at EMI, field questions.