EC seeks reaction to large-scale entertainment ventures

The European Commission has contacted small record labels to gauge industry feeling prior to the mergers of major entertainment groups AOL and Time Warner and EMI and Time Warner.

These mergers mean the industry will be ruled by three giant organisations - Time Warner-EMI; Sony and Universal - with smaller firms unlikely to be able to compete against the large companies' vast marketing and promotional budgets.

The Commission will decide on the mergers in October.

One independent record label, Poptones, has responded positively to the post-mergers threat by utilising the potential of the internet and distributing downloadable digital music - as well as using traditional channels of sale for its artists.

Poptones plans to move quickly in a market which major labels have been slow to exploit.

Alan McGee, CEO of Poptones, said in a statement: "There is a huge market out there just waiting to be tapped. The majors are out of their depth. It is going to take a visionary young company to take the plunge, exploiting the true commercial potential of music on the internet combined with a traditional retail approach."

McGee will be hoping Poptones can mirror the success of his previous label, Creation, where he discovered and signed 24 million album selling band Oasis.