A new paper published by IMPALA predicts that the proposed Downtown acquisition by UMG’s Virgin Music carries “significant risks for both the quantity and diversity of independent releases”.
Entitled Universal/Downtown – Why does it matter from a cultural diversity perspective?, IMPALA’s paper gathers various indicators of the independent sector’s contribution to diversity, including new release genres and investment in marketing. Factors making the market less open to developing new artists are also assessed.
It follows an intervention today on Music Week by music industry veterans Marc Marot and Nick Steward, who accuse the campaigners opposing the UMG deal of “fearmongering”.
The IMPALA paper, which refers to economic modelling by Professor Amelia Fletcher, is adapted from a confidential submission shared with the European Commission, which is currently investigating the proposed deal.
IMPALA’s note concluded: "The impact of UMG buying Downtown on cultural diversity is an essential part of the competition assessment. Independent record companies have always been the promoters of cultural diversity and champions of new music. Professor Fletcher's model is clear and the music market itself is even more vulnerable to concentration than before. If UMG buys Downtown, there will be a material detrimental impact on artistic cultural diversity within the EEA as a result of the independent labels generating less income and having less money to spend on new music.”
The conclusions point to the risk of the independent sector losing revenue as a result and that means fewer and less diverse releases
Helen Smith
A spokesperson for Universal Music Group rejected the findings.
“IMPALA continues to promote analysis from its affiliates that is inaccurate and misleading,” said the spokesperson. “We’ve seen similar claims in the past regarding market share data, which we have publicly clarified and refuted.
“UMG has a long-standing commitment to cultural diversity in Europe and values the vital role of the independent sector. The combination of Downtown and Virgin Music will strengthen the services available to independent labels, supporting their growth and contribution to Europe’s cultural landscape.
“We remain confident that the European Commission will recognise the benefits of this transaction for artists, labels, and independent music in Europe.”
Helen Smith, IMPALA’s executive chair said: “It’s about balance. Big companies are important and so is collaboration, with the joint AI licensing project with Spotify as an example. At the same time, concerns have been raised about the health of the digital market and the ecosystem if the leader is allowed to become too big. The conclusions point to the risk of the independent sector losing revenue as a result and that means fewer and less diverse releases.”
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