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Consolidation of the supermarkets sector didn’t end with the recent merger of Somerfield and Kwik Save, it says. Somehow or other, the number four in the sector, Safeway, is also going to get carved up or taken over. “The merger between Seagram and Polygram may look bad news for the independent sector,” says Ajax Scott, editor of Music Business International, the industry bible. “But increased competition between the majors means they will invest more safely, leaving a niche for the independents.”Not all industry observers accept the status quo, however. Having already made one fortune setting up and selling a record label, Richard Branson recently set up another, calling it V2. His aim is to create a global music player from scratch, investing in offices and distribution facilities around the world Observers are not yet sure whether his gamble will pay off “They’ve had some success,” says one industry insider. “But they have probably only got another two years to justify that level of investment.”.

VAUX, the North Eastern brewer and hotel group, yesterday appointed Martin Grant, the head of Allied Domecq’s leisure business, as its new chief executive to replace Sir Paul Nicholson. The appointment of an outsider marks an end to the Nicholson family dynasty which has controlled the group since it was founded Sir Paul will become non-executive chairman of the group. Mr Grant is responsible for developing brands such as Big Steak pub, Wacky Warehouses and Firkin.. IS SAFEWAY heading for an ignominious demise, its portfolio of stores broken up and parcelled off to its rivals, or can it hope to survive and prosper independently once more? The City rumour mill has been working overtime all this month. But when its founders made it clear they did not want to be part of a huge music conglomerate, Sony was forced to back down.Still, the growing consolidation between the largest music groups could turn out to be good news for smaller labels. Large groups will regularly find themselves competing with smaller labels to sign acts. Sometimes the rivalry even extends to groups that normally work together.What’s more, the majors have to handle their relationship with smaller labels carefully.

Sony recently tried to exercise an option it held to take full control of Creation. “Bands can work with a small team but then be marketed by a huge organisation.”However, the relationship is not free of tension. “The beauty is that we are seen as a place where bands can develop at their own pace,” says Andy Saunders, head of communications at Creation. That’s when Island, the label which nurtured bands like U2, was taken over by PolyGram while Richard Branson sold his Virgin record label to EMI.So the major and independent labels seem to made for each other.

The trick is to pick acts that will continue to be popular, thereby picking up lucrative profits on their second and third releases.This is a complete change of fortune for the independent labels, many of which were swallowed up in a welter of consolidation in the late 1980s. Industry executives admit that the cost of promoting new bands means that their first album rarely makes money. Internet music retailers such as Music Boulevard are now selling CDs for as little as $12 – a large discount to retail prices in Europe. As Nick Ward, an analyst at Credit Lyonnais Laing, points out, this will eventually force music groupsto cut prices and squeeze margins.All this means that large music groups need to be sure of success when they promote a band. They secure the copyrights but don’t have to take on the overhead,” says Mr Steemson.In a market where growth is slowing and competition becoming ever more intense, that can be of great benefit to the big labels. In recent years, the global music industry has been slowing down as the one-off boom caused by people replacing their vinyl records with compact discs drops away.While the world music market expanded by 17 per cent as recently as 1993, growth in the next few years is forecast at about 4 per cent a year.