Independent record labels and publishers are urging regulators to block Universal Music Group's (UMG) takeover of Downtown Music Holdings over fears the deal weakens competition, to the “severe detriment” of artists and fans.
UMG-owned Virgin Music Group announced on Monday (December 16) that it has agreed to buy Downtown Music Holdings for $775 million in cash. The deal, which is subject to regulatory approval, strengthens UMG's share of the music market by bringing under its control a number of Downtown-owned independent distributors, labels and rights management businesses. These businesses include distributors CD Baby and FUGA, publishing manager Songtrust and Los Angeles-based rights management company AdRev.
UMG's purchase of Downtown comes two months after it acquired full ownership of the European indie label group [PIAS] — a deal that also prompted independent trade groups to issue calls for regulatory intervention.
“This is another land grab,” he said Helen Smithexecutive chairman of independent label trade body IMPALA — which represents more than 6,000 indie labels and music companies in Europe, including Beggars Group, Cooking Vinyl, Domino and Epitaph — in a statement about the Virgin-Downtown deal.
“We expect competition authorities in key jurisdictions to conduct thorough investigations and block these deals,” Smith added. He also pressed the European Union's executive branch, the European Commission, to “set the standard internationally.”
“The cynical use of the Virgin brand, once synonymous with independent entrepreneurship, should not obscure the fact that it is about absolute dominance and control,” added the Beggars Group founder. Martin Mills in a statement. “This is another step down the road of UMG pretending to be the fairy godmother of independents,” he continued. “But there is a wolf under this cape.”
His acquisition [PIAS] and Downtown in quick succession from UMG follows a flurry of deals in recent years that has seen both traditional music companies and outside investors snap up companies, labels and distributors serving the fast-growing global independent sector.
Notable record label acquisitions at that time include Sony Music's purchase of artist services company AWAL in 2022 and Kobalt Neighboring Rights from Kobalt Music Group. Most recently, Sony acquired Spanish label and distributor Altafonte, followed last month by a deal for Greek indie label Cobalt Music.
Meanwhile, Warner Music Group has been steadily growing its recorded music interests in Central and Eastern Europe, buying minority stakes in Croatia's Dancing Bear Music, Slovenian independent label NIKA and Serbia's Mascom. and the acquisition of the Dutch company Cloud 9 Recordings.
UMG Offers for [PIAS] and Downtown followed a ten-year ban on acquisitions of certain music companies or the music giant's catalogs in Europe, which expired in September 2022. These restrictions, imposed by the European Commission in 2012 after the company's takeover of EMI by 1.9 billions of dollars, prevented UMG from reacquiring any of the assets it had sold or signing off new any artists who were signed to labels he had divested from, such as Parlophone Label Group or Chrysalis, for 10 years.
Although Downtown Music Holdings was founded and is headquartered in New York, the scale of its multifaceted business, representing over 50 million songs in more than 145 countries and spanning publishing, distribution, artist and label services and rights management, makes it an important player. in the global indie sector. As such, UMG's takeover of the company will create a “fundamental change in the competitive dynamics of the music market,” IMPALA's president warned Dario Draštata in a statement about the acquisition.
The Brussels-based trade association said the sale of Downtown and [PIAS] it would further squeeze independents into an already highly concentrated market and help UMG move further into the distribution and services market for labels and artists.
“This means more market share and gives UMG control over the opposition,” IMPALA said in a press release. He added that “UMG suing Believe is another part of the strategy,” referring to last month's $500 million lawsuit by UMG, ABKCO and Concord Music Group against Believe and its distribution company TuneCore that accused them of ” massive ongoing infringements” of their recordings. .
Other executives and organizations expressing concern over UMG's latest takeover include global independent music publishers' trade body IMPF, which said the potential sale would “ultimately reduce options for both songwriters and publishers”, and the UK Association of Independent Music (AIM), of which the CEO Gee Davysaid the deal reduces independent routes to market.
“It is vital that we maintain a true choice of partners for artists and record companies and ensure that bargaining power does not become unbalanced,” Davey said in a statement.
UMG representatives did not respond to requests for comment when contacted Bulletin board.
