IMPALA, Europe’s independent record label trade association, has criticized Virgin Music Group’s planned $775 million acquisition of Downtown Music Holdings.
This morning (December 17th), Impala It said that the transaction news was announced by VMG’s parent company universal music group Yesterday (December 16), it “raised concerns about concentration and a less independent route to the market”.
The acquisition is subject to regulatory approval and is expected to be completed in the second half of 2025.
IMPALA noted in a statement shared with the media today that VMG’s acquisition of Downtown follows the 100% acquisition by Universal Pictures. [PIAS] group.
IMPALA, whose members include prominent independents such as Beggars Group and Domino, believes Universal’s latest move “is part of a clear business strategy to gain market share and control of independent distribution.”
IMPALA added in today’s statement: “Having purchased [PIAS]which is now the digital equivalent and accounts for a large proportion of digital services provided by the independent sector.
Commenting on the deal, IMPALA executive chair Helen Smith said: “This is yet another land grab. “We hope competition authorities in key jurisdictions will investigate thoroughly and stop these deals.”
“UMG has captured significant market share and severely reduced independent avenues to market.”
Helen Smith, Impala
Smith added: “It is now time to reduce Universal Music Group’s market position back to established levels. This is a massive market share capture by UMG and a serious reduction in independent access to the market. We look forward to the new European Commission setting international standards.”
“This is another step forward for UMG in pretending to be the fairy godmother of independence. But there’s a wolf under the cloak.
Martin Mills, Beggars Group
Martin Mills, founder of IMPALA member Beggars Group, said: “The cynical use of the Virgin brand, once synonymous with independent entrepreneurship, should not obscure the fact that this is absolute domination and control.
“Paradoxically, UMG’s artist-centric stance means it has disenfranchised millions of artists whose rights they are now acquiring. This is Universal Music Group’s path to becoming the fairy godmother of independent musicians. Another step forward but there is a wolf under the cloak.
IMPALA claimed on Tuesday that UMG’s latest move “further squeezes independent musicians in an already very concentrated market and helps UMG move further into the distribution and services market for labels and artists,” which it believes “means more market share and give UMG control” over the opposition. “
IMPALA claims “another part of the strategy” is a $500 million copyright infringement lawsuit filed against Universal Music Group believe, The filing last month was “strongly rebutted” by Believe and TuneCore.
The group further claims that the Virgin/Downtown deal “violates the European Commission’s principle established more than a decade ago during UMG’s acquisition of EMI that UMG has become too big.”
IMPALA claims that the so-called “principles” set out by the European Commission refer to Universal Music Group’s ban in Europe from reacquiring any assets (or re-signing any artists) involved in its EMI-related divestments. The ban expires on September 21, 2022, meaning universal can be obtained legally and freely [PIAS]. Downtown is a company based in the United States.
IMPALA’s Helen Smith added this morning that the group “wants regulators to investigate [Downtown] Acquisition and answers the question posed by the industry: How can it gain more market share as UMG is already considered too big”.
Smith added: “The physical and digital markets, including distribution services, must be assessed, as well as the impact on competitors, digital services, artists and fans. This is at a time when [PIAS] We understand that regulators are also interested.
“This will create a fundamental shift in the competitive dynamics of the music market.”
Dario de la Statata, IMPALA
IMPALA President Dario Draštata said: “This is a sea change for the independent music scene, with UMG leading the way and other professional music following closely behind.
“Let us all remember that UMG had already reached its maximum size. In 2012, when UMG tried to acquire EMI, the European Commission forced UMG to make the largest divestment ever approved for a merger in any industry. On top of that, Its digital transactions are subject to regulation for up to 10 years and it faces a 10-year ban on buybacks.
“Now, UMG – still the largest music company in the world – is acquiring one of the largest independent publishers, right after acquiring one of the largest independent publishers.[s] in Europe. This will bring about a fundamental shift in the competitive dynamics of the music market.
“As IMPALA has pointed out before, this is not just a matter of arithmetic gains in major market share, but huge losses for independent companies, which has a compounding effect.”
Francesca Terranini, Impala
IMPALA President Francesca Trainini added: “The European Commission must take the lead in this regard. This is an opportunity for the new Commission to set a clear agenda on the concentration of the music market.
“In addition to strengthening UMG’s market share, it eliminates another major distribution competitor besides PIAS and should be discontinued. It narrows the market options for artists and labels. As IMPALA has previously pointed out, this is not just A matter of arithmetically increasing market share, but of huge losses to independent companies, this has a compounding effect that weakens competition and completely changes the competitive dynamics of the music market, severely damaging competitors, artists and fans. .
“For the global independent music community, the possible sale of Downtown Music (including FUGA, a long-time favorite of independent musicians) to Universal Pictures’ Virgin Music Group is even more worrying.”
Kat David, AIM
Gee Davy, CEO of AIM, commented: “The potential sale of Downtown Music (including FUGA, which has long been a favorite among independent musicians) to Universal’s Virgin Music Group is even more exciting for the global independent music community. Worrying news.
“Following the recent acquisition of PIAS/Integral, it has shown an ongoing trend towards over-consolidation and a reduction in the independent market route. It is vital to insist that artists and labels truly choose their partners and ensure that negotiating power does not become unbalanced. Only then can local Artists and businesses get a fair deal, invest and grow.
In a press release on Tuesday, IMPALA also claimed that Universal rivals Sony Music and Warner Music “are following the same path, buying stakes in market-leading independent music companies in Europe and other countries.”
“Recent examples include Sony’s acquisition of Altafonte, another major distributor in Spain and Latin America, Greece’s Cobalt and Warner’s acquisition of the Netherlands’ Cloud 9 in the past few weeks,” IMPALA said.
IMPALA’s statement continued: “As we watch the evolution of the market, it is clear that the major players are carving up the world. IMPALA calls on regulators to intervene and stop this trend. This goes beyond the independent sector. Overall diversity is at stake, This will impact fans in Europe and around the world.
global music business
