MBW Reacts is a sequence of analytical commentaries from Music Business Worldwide written in response to main latest leisure occasions or information tales. Only MBW+ subscribers have limitless entry to those articles.
Since UMG’s Virgin Music Group introduced the transaction in December, it has attracted regulatory scrutiny from European authorities, whereas triggering competing trade narratives about what the merger will imply for the music enterprise.
Over 200 folks signed a letter in July objecting to the acquisition. Around 20 of them labored for Beggars Group or Secretly Group and their associates; an extra 30 labored for commerce our bodies which can be members of WIN (the Worldwide Independent Network), an affiliate of the deal’s most vocal opponent, IMPALA.
Earlier this month, a shorter record of indie reps backed a special marketing campaign, ‘100 Voices‘, additionally urging the EC to dam the deal. Signatories included the heads of Beggars, Secretly Group, and Exceleration Music, plus a number of smaller indie labels, and a set of reps from commerce our bodies.
Despite this opposition, UMG has maintained its confidence that the European Commission (EC) will ultimately clear the transaction.
Earlier this 12 months, the EC escalated its assessment of the UMG/Downtown transaction to a Phase II investigation, citing potential considerations that the acquisition might allow UMG to entry commercially delicate information from Downtown subsidiaries FUGA and Curve Royalty Systems.
In the previous few months, MBW has requested distinguished leaders within the world unbiased distribution house what they think of the deal.
Emmanuel Zunz (OneRPM), Konrad Von Löhneysen (Zebralution), and Denis Ladegaillerie (Believe) have all emphasised their confidence in competing with a mixed Virgin/Downtown/FUGA entity.
Zunz informed MBW: “I responded to the European Commission’s questionnaire [about the deal], and I mainly mentioned to them, over and over once more: there are lots of alternate options [to UMG/Downtown] for unbiased artists and labels available in the market.”
Like others, the OneRPM founder sees potential shopper acquisition alternatives if the deal is handed, and if unbiased labels at the moment affiliated with Downtown/FUGA/Curve develop uncomfortable with UMG possession.
“I responded to the European Commission’s questionnaire [about the deal], and I mainly mentioned to them, over and over once more: there are lots of alternate options [to UMG/Downtown] for unbiased artists and labels available in the market.”
Emmanuel Zunz, OneRPM
Zebralution’s Von Löhneyseninformed MBW: “I think there’s rather a lot of competitors… there’s undoubtedly rather a lot of succesful, good distribution firms on the market.”
He added: “We have our personal provide chain, so we’re not fazed about FUGA being taken over by Universal… if the FUGA/Virgin/Downtown setup isn’t an interesting providing for some unbiased labels, we’ll be certain they know about us.”
Believe’s Ladegaillerie was equally unflustered by the prospect of a mixed UMG and Downtown/FUGA.
He commented: “Do I think [UMG buying Downtown] goes to alter something for us? I can’t communicate for the trade, however as CEO of Believe, as an organization, we really feel excellent about our potential to compete.”
“we’re not fazed about FUGA being taken over by Universal, as a result of we management our personal supply.”
Konrad Von Löhneysen, Zebralution
Against this backdrop of regulatory scrutiny and trade dialogue, MBW has now contacted a number of different executives main distinguished unbiased distribution platforms.
Their firms won’t solely be competing immediately with a mixed Virgin/Downtown/FUGA, however are additionally (a) Scaled world distribution gamers within the unbiased house and/or (b) Indie distributors particularly beneficial by Merlin to its members.
We requested all of them the identical two questions:
Does the prospect of Virgin/Downtown/FUGA merging, and its influence on competitors within the sector, offer you trigger for alarm?
Do you see a possible alternative right here for shopper acquisition?
“Independent music is the fastest-growing sector on this enterprise, authenticated by the value of Universal’s potential acquisition of this asset.
“As a consequence of unbiased music’s success and development, there might be consolidation. From that perspective, I really feel good about it: it exhibits we’re all doing the suitable factor.
“From a contest perspective, sure, the [Downtown acquisition] does present UMG with a aggressive benefit. Any unbiased firm is not really unbiased in the event that they’re owned by Universal.
“If the unbiased labels wish to go away FUGA when it turns into half of a serious, they’ve that possibility.They’re not caught.”
“But if unbiased labels wish to go away FUGA when it turns into half of a serious, they’ve that possibility. They’re not caught; their independence permits them freedom. They can come to UnitedMasters, or others.
“Whether it’s unbiased artists or unbiased labels, they’re free to make that call. I don’t think Universal, or any legislation, might stand in the best way of anyone if they’ve the choice to make that call.”
JORGE BREA, FOUNDER & CEO, SYMPHONIC
“The prospect of Virgin, Downtown, and FUGA merging doesn’t give us trigger for concern.
“At Symphonic, we’ve constructed best-in-class know-how and expanded considerably — each internationally and domestically — to serve a rising and various roster of shoppers.
“The prospect of Virgin, Downtown, and FUGA merging doesn’t give us trigger for concern… We see moments like this as alternatives to reaffirm what makes Symphonic totally different.”
“Our independence has all the time been our power, permitting us to maneuver shortly, innovate, and present a stage of service and transparency that bigger company buildings typically can’t.
“We see moments like this as alternatives to reaffirm what makes Symphonic totally different. Our platform and infrastructure are prepared to simply welcome any artist or label in search of a brand new dwelling constructed round independence, flexibility, and partnership.”
IAIN CATLING, Founder & CEO, AUDIOSALAD
“The providers and distribution house is now mature and provides many different routes to marketplace for artists, labels who want to stay unbiased of the foremost label methods.
“Furthermore, in any wholesome market, firms should have the liberty to accomplice, develop, or exit. The gaps these exits create permit for brand spanking new alternatives for smaller firms and drive innovation.
“Restricting this by means of anti-competitive measures sends a deeply unfavourable sign to entrepreneurs and innovators within the sector. This runs fully counter to the very ethos of the selection and independence that we worth on this trade.”
“In any wholesome market, firms should have the liberty to accomplice, develop, or exit… Restricting this by means of anti-competitive measures sends a deeply unfavourable sign to entrepreneurs and innovators within the sector.”
Does the prospect of Virgin/Downtown/FUGA merging, and its influence on competitors within the sector, give your organization trigger for alarm?
“It doesn’t give us trigger for alarm.”
Do you see a doable alternative right here for potential shopper acquisition?
“Any present FUGA shoppers that take concern with the acquisition have quite a few different choices.”
“I don’t imagine consolidation improves service for artists, so mergers like Virgin/Downtown/FUGA don’t concern me. Too many firms chase numbers over folks, specializing in market share as a substitute of innovation.
“I don’t imagine consolidation improves service for artists, so mergers like Virgin/Downtown/FUGA don’t concern me… At Ditto, we’ve stayed absolutely unbiased, constructing instruments that really serve artists.”
“At Ditto, we’ve stayed absolutely unbiased, constructing instruments that really serve artists whereas sustaining sustainable 100% year-on-year development. Ultimately, one of the best service comes from firms that put artists earlier than shareholders.”
“The broader development of consolidation throughout the music trade is regarding for the well being of the unbiased sector. When just a few major-owned firms management an rising share of rights and distribution pipelines, competitors and variety inevitably undergo. In the case of distribution, there are nonetheless robust unbiased alternate options, so alternative stays for labels and artists.
“However, Universal is already the worldwide market chief, and its successive acquisitions – first [PIAS], and now FUGA – additional strengthen its market dominance.
“This rising leverage with DSPs will give it disproportionate bargaining energy on the negotiating desk. That imbalance is the true threat: it threatens not solely competitors in distribution, but in addition unbiased labels, in addition to the long-term sustainability and progress of the complete music ecosystem. In the quick time period, consolidation typically creates alternatives for really unbiased gamers like IDOL.
“Universal’s rising leverage with DSPs will give it disproportionate bargaining energy on the negotiating desk. That imbalance is the true threat… [However] consolidation typically creates alternatives for really unbiased gamers like IDOL.”
“Many labels and artists desire to work with really unbiased distributors as a result of they’ve understood that that is the place they’ll discover the steadiness and sustainability they want. There can be concern about what the mixing interval may seem like – merging provide chains and groups on this scale inside the Universal eco-system will inevitably create disruption.
“But whereas that will generate new enterprise for us within the short-term, the long-term well being and variety of the market is what really issues. Fewer unbiased choices will in the end hurt everybody, together with the majors themselves.”
“Of course it should influence the market, although each as a optimistic and a unfavourable – as all change does. We don’t see this as a purpose to panic; we see it as proof that the indie sector wants its personal world-class stack.
“When supply and analytics sit inside major-owned platforms, independents commerce autonomy and management for comfort. I’m undecided labels and artists might be proud of Universal/Virgin/Downtown/FUGA all collaborating ultimately with the income streams earlier than they get their share. Seems rather a lot of mouths to be fed.
“We don’t see this as a purpose to panic; we see it as proof that the indie sector wants its personal world-class stack.”
“The unbiased sector is powerful, ingenious, entrepreneurial, and agile and provides a much better, extra centered, ‘fingers on’ service than any main can.
“[Absolute’s] Anthology is a cutting-edge agnostic service we’ve got invested closely in and developed, providing superior analytics, supply-chain reliability, transparency, and enterprise administration with full possession and portability of information and I see this as a possibility for us to empower and strengthen the unbiased sector.”
Credit: Katja Ruge
RALPH BÖGE, Founder & MD, PARADISE WORLDWIDE
“An organization like UMG wants market share as a result of of causes associated to its enterprise mannequin. I can hardly think about how UMG would combine the assorted new Downtown belongings, with the exception of Curve.
“We as independents shouldn’t [waste time on] politics. Instead, we should give attention to creating enticing choices for shoppers: a worldwide DSP portfolio, extra exact information, inexpensive campaigns, advance budgets, gathering publishing royalties on the supply – issues that assist rights-owners keep unbiased, acquire data, construct up their asset/possession, and earn extra money.
“Indies ought to ask themselves, is it really value spending rather a lot of time, cash, and sources on preventing the deal as a substitute of fixing the AI downside?”
“What we overlook to speak about is that within the AI house, there isn’t any ‘main’ or ‘indie’ – we’re in a united trade combat towards copyright theft. Indies ought to ask themselves, is it really value spending rather a lot of time, cash, and sources on preventing this deal as a substitute of fixing the AI downside?
“That’s why Paradise Worldwide concentrates on the AIxchange and our AI rules, for moral AI and an attribution mannequin that provides energy to the creator.
“I’m not jealous of UMG’s place: think about you wish to spend this quantity of cash, the deal doesn’t undergo, whereas AI attribution has developed to the subsequent stage.”Music Business Worldwide
