Virgin's Branson Returns To Music Business

By Keith Weir

LONDON (Reuter) - British entrepreneur Richard Branson returned to his roots in the music business Wednesday, launching a new record company aimed at rivaling the five major labels that dominate the industry.

The V2 Music Group is Branson's first foray into the recording industry since he sold Virgin Records to Thorn EMI for $940 million four years ago.

Branson said the sale had been unavoidable because he needed the money to support his Virgin Atlantic airline but added that he had regretted the decision "almost from the word go."

"For the last three years or more I have felt like a dog without a bone," Branson told a news conference. The sale terms prevented Branson from returning to the business for 30 months.

Branson, a multi-millionaire whose Virgin Group is active in a range of sectors from travel to financial services, said V2 aimed to combine the artist-friendly approach of independent labels with the financial muscle of the majors.

"All the good independent labels have sold out ... what are left are five enormous conglomerates and it has become big business," he said.

Global music sales total around $40 billion, and the big five -- EMI, PolyGram, Sony, Warner and Bertelsmann -- account for some 70 percent of that.

V2 has so far signed two obscure bands to its British label but has also sealed deals with a number of independent companies and is establishing a network of foreign affiliates.

Virgin Records' first signing in the 1970s was Mike Oldfield, whose Tubular Bells album went on to become one of the top-sellers of the decade.

Success continued throughout the 1980s with bands like Culture Club. International stars such as Janet Jackson and The Rolling Stones were part of Virgin's roster when it was sold.

"We want to prove ourselves with new bands at the start and maybe in six months or a year we will bring in some of the major bands," said Branson, adding he was prepared to spend "what it takes" to build V2 into a force.

Branson, who has made a career out of challenging the corporate heavyweights in a host of fields, revealed V2 had made an audacious bid to recruit top-selling American rock band R.E.M. earlier this year.

"We had a quiet go for R.E.M. and were only a couple of million out," he said. R.E.M. recently signed a new five-album deal with Warner which is worth a reported $80 million.

Bearded showman Branson conceded that, at the age of 46, his second venture into the music business would not be as hectic as the first.

"It won't be quite like 20 years ago when we were out clubbing a lot," he joked.

Reuters/Variety