Rockol Tracks: Eagle Rock’s unforeseen flight to the Universal Music empire

In 1979, American rock star Steve Miller sang: “I want to fly like an eagle till I’m free, Oh, Lord, it’s a revolution” in one of that year’s biggest hits.

Did Terry Shand and Lucian Grainge have that song looping in their heads when Eagle Rock Entertainment Group, the well-established UK independent music-video producer/distributor, was sold in a revolutionary deal to Universal Music Group (UMG) on 8 April?

The acquisition was radical because it was hard to imagine UMG, the world’s largest music company by revenue, repertoire size and decibels, needing anything more in its arsenal for industry domination.

Revolutionary strategies in today’s digitally oriented business usually involve music brands with names like YouTube, Dailymotion, Spotify, Beats Music, and Deezer. They are the next-generation music-entertainment services that bring the volatile white heat of new technology into the fold should they hook up with established corporations like UMG.

Instead, Eagle Rock, launched in 1997, comes with reliable slow-burning music videos and concert footage of heritage acts like The Rolling Stones, Pink Floyd, The Doors, Queen and Paul McCartney. Even recent releases from its record-label division were albums by such veterans as Styx, Gary Moore and Ronnie Wood.

UMG also bought out the stake held by Detroit-based private-equity firm Beringea, which first invested in Eagle Rock in 2007. Beringea retains its interests in Eagle-I Music, a music-publishing division that operates as an autonomous enterprise and does not seem to be part of the UMG deal.

So, why Eagle Rock? Why buy this potential dinosaur at a time when CEO Lucian Grainge has expanded his empire with the $1.9 billion acquisition of UMG rival EMI Music in 2012. And it is not as if UMG has not been keeping its fingers on the pulse of digital developments. It has stakes in leading online music-video platform Vevo and Spotify, the world’s biggest music-streaming service.

Whatever else might be happening in the digital-technology space, it has no value without talent and content. Eagle Rock, as Universal recognized, has trucks full of both.

It is a Grammy-award winner with When You’re Strange, the 2010 documentary about The Doors. It has also snapped up 38 multi-platinum awards, 50 platinums, and 100 gold discs in recognition of its phenomenal sales.

Several artists featured on Eagle Rock DVDs and music videos, like The Rolling Stones, are signed to UMG. And, as Billboard magazine pointed out, it already has a steady relationship with UMG, which distributes its music recordings. So any potential cultural clashes following the merger will be minimized.

Once the acquisition is completed, Shand will continue to run Eagle Rock, for the time being at least. The company, however, will have access to UMG’s global financial and creative resources to produce more audio-visual music entertainment.

The demise of MTV as the premier music-video TV channel (it now focuses on mostly reality-TV shows) had raised concerns about what future there is in owning a chest full of music videos.

But digitally distributed video entertainment is a soaring business. YouTube, a subsidiary of search-engine giant Google, now boasts more than 1 billion active monthly visits. It is also one of the biggest sources of music for today’s young fans.

Dailymotion, a subsidiary of French telecommunications group Orange, generates an average of 2.5 billion views a month. Vimeo, part of the IAC kingdom ruled by former Hollywood mogul Barry Diller, is the US’ third biggest video website after YouTube and Netflix.

YouTube owner Google, like UMG, is a shareholder in Vevo, which generated more than 55 billion views in 2013 alone. Baby, one of the music videos from UMG teen star Justin Bieber, recently became “the most watched clip” on Vevo with more than one billion views.

And it isn’t even only music videos that are in demand. Entertainment giant Walt Disney Company has made a $950 million offer to take over Maker Studios, a digital-only video-production studio and YouTube multi-channel network. By chance, Maker Studios recently formed a partnership with hip-hop guru Will.i.am to create original video content.

All the above-mentioned digital-video entertainment enterprises are generating revenues from advertising. With this trend in mind, Eagle Rock’s catalog of video content will be joining the substantial music videos of UMG artists. All this is happening while global sales of audio-only music recordings saw sales collapse nearly 4% last year to $15 billion.

So, don’t take your eyes off music videos, if you want to understand why Universal Music Group bought Eagle Rock now. Unlike Steve Miller’s eagle, the once independent Eagle Rock is no longer free. But expect to find more of its videos flying everywhere - on TV, PCs, tablets, smartphones, multi-device services, multi-platform devices.

[Juliana Koranteng]