Europe’s commerce affiliation for indie labels, IMPALA, has criticized Virgin Music Group’s deliberate acquisition of Downtown Music Holdings in a $775 million deal.
This morning (December 17), IMPALA mentioned that information of the deal, introduced by VMG guardian firm Common Music Group yesterday (December 16), “raises considerations about focus and decreasing unbiased routes to market”.
The acquisition, which is topic to regulatory approvals, is anticipated to shut within the second half of 2025.
IMPALA famous in its assertion shared with the media as we speak that VMG’s transfer to purchase Downtown comes “scorching on the heels” of Common’s 100% acquisition of [PIAS] Group.
IMPALA, whose membership consists of outstanding unbiased corporations like Beggars Group and Domino, argues that Common’s newest “transfer is a part of a transparent business technique to focus on unbiased distribution to realize market share and management”.
Added IMPALA in its assertion as we speak: “Having already purchased [PIAS], that is now the digital equal, accounting for a good portion of the unbiased sector’s supply to digital providers.”
“That is one other land seize,” mentioned Helen Smith, Govt Chair IMPALA, commenting on the deal. “We anticipate competitors authorities in key jurisdictions to hold out thorough investigations and block these offers.”
“It is a enormous market share seize by UMG and severely reduces unbiased routes to market.”
Helen Smith, IMPALA
Added Smith: “The time has come for slicing UMG’s market place again to what was already set. It is a enormous market share seize by UMG and severely reduces unbiased routes to market. We glance to the brand new European fee to set the usual internationally.”
“That is one other step on the street of UMG’s pretence to be the independents fairy godmother. However there’s a wolf below that cape.”
Martin Mills, Beggars Group
Martin Mills, founding father of IMPALA member Beggars Group, mentioned: “The cynical use of the Virgin model, as soon as synonymous with unbiased entrepreneurship, mustn’t conceal the truth that that is about utter dominance and management.
“Paradoxically UMG’s artist-centric stance means it has already disenfranchised hundreds of thousands of artists whose rights they’re now buying. That is one other step on the street of UMG’s pretence to be the independents’ fairy godmother. However there’s a wolf below that cape.”
IMPALA claimed on Tuesday that UMG’s newest transfer “squeezes the independents additional in an already very concentrated market and helps UMG transfer additional into the marketplace for distribution and providers for labels and artists,” which, it argued “means extra market share and provides UMG management over the opposition.”
IMPALA alleges that “one other a part of the technique” is Common Music Group’s $500 million lawsuit towards Imagine, filed final month, over allegations of copyright infringement, which Imagine and its subsidiary TuneCore say they “strongly refute“.
The org claimed additional that the Virgin/Downtown deal “goes towards the precept established by the European Fee over ten years in the past throughout UMG’s takeover of EMI, that UMG is already too large.”
That so-called “precept” IMPALA alleges was established by the EC is a reference to Common Music Group’s 10-year ban in Europe on re-acquiring any asset – or re-signing any artist – concerned in its EMI-related divestments. That ban expired on September 21, 2022, which meant that Common was legally free to accumulate [PIAS]. Downtown is a US-headquartered firm.
IMPALA’s Helen Smith added this morning that the org “expects regulators to research the [Downtown] acquisition and reply the query the business is asking about how it’s potential for UMG to realize extra market share after it was already thought of too large”.
Added Smith: “Each bodily and digital markets have to be assessed together with for distribution providers, in addition to the impression on opponents, digital providers, artists and followers. That is on prime of the [PIAS] deal which we perceive regulators are additionally all in favour of.”
“This might create a basic shift within the aggressive dynamics of the music market.”
Dario Draštata, IMPALA
IMPALA chair Dario Draštata, mentioned: “It is a sea change for the unbiased music sector with UMG main cost on the independents and different majors following.
“Let’s all keep in mind that UMG already reached the utmost measurement. When it tried to purchase EMI in 2012, UMG was compelled by the EC to make the most important set of divestments of any merger ever accepted in any sector. On prime, its digital offers have been supervised for 10 years, and it confronted a no purchase again ban for ten years.
“And now UMG – nonetheless the most important music firm on the planet – is buying one of many greatest indie distributors, simply after buying one of many greatest unbiased[s] in Europe. This might create a basic shift within the aggressive dynamics of the music market.”
“As IMPALA has identified earlier than, it isn’t only a query of an arithmetical enhance of market share factors by one main, however an enormous loss to the independents which has a compound impact.”
Francesca Trainini, IMPALA
IMPALA president Francesca Trainini added: “The EC should cleared the path right here. It’s the alternative for the brand new Fee to determine a transparent agenda on focus within the music market.
“In addition to strengthening UMG by way of market share, it eliminates one other principal distribution competitor on prime of PIAS and ought to be stopped. It narrows path to market choices for artists and labels. As IMPALA has identified earlier than, it isn’t only a query of an arithmetical enhance of market share factors by one main, however an enormous loss to the independents which has a compound impact. It weakens competitors and fully modifications the aggressive dynamics of the music market, to the extreme detriment of opponents, artists and followers.”
“The potential sale of Downtown Music – together with FUGA, a longstanding favorite with independents – to Common’s Virgin Music Group is extra regarding information for the worldwide unbiased music group.”
Gee Davy, AIM
Gee Davy, CEO of AIM, commented: “The potential sale of Downtown Music – together with FUGA, a longstanding favorite with independents – to Common’s Virgin Music Group is extra regarding information for the worldwide unbiased music group.
“Following on from the current PIAS/Integral acquisition, it performs into a unbroken pattern in direction of over-consolidation and discount of unbiased routes to market. It’s critical to uphold a real selection of companions for artists and labels and make sure that negotiating energy doesn’t turn into unbalanced. Solely on this approach can homegrown artists and companies entry honest offers, funding and development.”
In its press launch on Tuesday, IMPALA additionally claimed that Common rivals Sony Music and Warner Music are “following the identical path, shopping for stakes in main unbiased music corporations in nationwide markets throughout Europe and elsewhere”.
“Current examples embody Sony shopping for Altafonte one other key distributor in Spain and Latin America, Cobalt in Greece and Warner buying Cloud 9 within the Netherlands in the previous few weeks,” claimed IMPALA.
IMPALA’s assertion continued: “After we have a look at how the market has advanced, it’s clear that the majors are carving up the world between them. IMPALA calls on regulators to intervene and cease this pattern. This goes past the unbiased sector. It’s range as a complete that’s at stake and this may impression followers in Europe and internationally.”
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