European independent trade association IMPALA has raised concerns about concentration and the reduction of independent routes to market, following the announcement that Downtown is being sold to Virgin Music.
The acquisition of Downtown by UMG-owned Virgin is subject to regulatory approval.
That deal comes in the wake of Universal Music Group acquiring PIAS, a major player in the independent sector.
Helen Smith, executive chair, IMPALA, said: “This is another land grab. We expect competition authorities in key jurisdictions to carry out thorough investigations and block these deals. The time has come for cutting UMG’s market position back to what was already set. This is a huge market share grab by UMG and seriously reduces independent routes to market. We look to the new European commission to set the standard internationally.”
According to IMPALA’s response, Downtown is responsible for “a significant portion of the independent sector's delivery to digital services”.
Martin Mills, founder of Beggars Group, added: "The cynical use of the Virgin brand, once synonymous with independent entrepreneurship, should not hide the fact that this is about utter dominance and control. Paradoxically UMG’s artist-centric stance means it has already disenfranchised millions of artists whose rights they are now acquiring. This is another step on the road of UMG's pretence to be the independents’ fairy godmother. But there’s a wolf under that cape.”
“The latest move by UMG squeezes the independents further in an already very concentrated market and helps UMG move further into the market for distribution and services for labels and artists,” said IMPALA’s statement.
UMG has not responded to the comments by the independent trade body.
IMPALA chair Dario Drastata said: "This is a sea change for the independent music sector with UMG leading the charge at the independents and other majors following. Let’s all remember that UMG already reached the maximum size. When it tried to buy EMI in 2012, UMG was forced by the EC to make the biggest set of divestments of any merger ever approved in any sector. On top, its digital deals were supervised for 10 years, and it faced a no buy back ban for 10 years. And now UMG – still the biggest music company in the world – is acquiring one of the biggest indie distributors, just after acquiring one of the biggest independents in Europe. This would create a fundamental shift in the competitive dynamics of the music market.”
This is a sea change for the independent music sector
Dario Drastata
IMPALA president Francesca Trainini called on the European Commission to “establish a clear agenda on concentration in the music market”.
Gee Davy, CEO of AIM, said: “The potential sale of Downtown Music – including Fuga, a longstanding favourite with independents – to Universal’s Virgin Music Group is more concerning news for the global independent music community. Following on from the recent PIAS/Integral acquisition, it plays into a continuing trend towards over-consolidation and reduction of independent routes to market. It is vital to uphold a true choice of partners for artists and labels and ensure that negotiating power does not become unbalanced. Only in this way can homegrown artists and businesses access fair deals, investment and growth."
Helen Smith concluded: “We can be in no doubt what these deals mean about UMG's intention. IMPALA expects regulators to investigate the acquisition and answer the question the industry is asking about how it is possible for UMG to gain more market share after it was already considered too big. Both physical and digital markets must be assessed including for distribution services, as well as the impact on competitors, digital services, artists and fans. This is on top of the PIAS deal which we understand regulators are also interested in.”
IMPALA has highlighted what it calls the “creeping dominance” of all the majors for a number of years across Europe and elsewhere.
Recent examples it cites include Sony buying Altafonte, another key distributor in Spain and Latin America, Cobalt Music in Greece and Warner acquiring Cloud 9 in the Netherlands in the last few weeks.
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