Virgin Music Group co-CEOs JT Myers and Nat Pastor have hit out at “juvenile, offensive” insinuations about the company’s role in the independent sector amid the ongoing Downtown deal.
In a memo to colleagues seen by Music Week, the senior execs at the Universal Music company have addressed criticisms of the Virgin/UMG acquisition of Downtown Music.
The $775 million deal was announced late last year and expected to close in the second half of 2025.
Now we have reached that point and the proposed acquisition is subject to a competition probe by the European Commission.
It follows calls from the independent sector, including European trade body IMPALA, for regulatory intervention on the deal.
In their memo, JT Myers and Nat Pastor confirmed that the European Commission is expected to announce whether it has objections to the deal or not in the coming weeks. If the Commission opts for more time to review the case it will move to Phase II of the process.
“While the merger has rightly been under regulatory review around the world for the last six months, our priority has naturally been to present to the regulators our position on the transaction,” the co-CEOs told staff. “We nevertheless want to bring truth to bear against some of the fictions and falsehoods being spread by the familiar cast of characters, including professional lobbyists, who oppose our companies coming together.”
In the memo, they outlined their responses to what they called ‘fiction’ being spread across the industry:
FICTION: Virgin will exploit Downtown’s customer data to gain a competitive edge for UMG.
FACT: Virgin will not exploit Downtown’s customer base for any reason.
“Virgin will not only uphold Downtown’s data privacy policies, we will also expand and strengthen them,” stated the memo. “Virgin already handles – with the care and confidentiality they deserve – the sensitive client data of hundreds of partners. Betraying the trust our clients have bestowed on us would be self-destructive: they would quickly, and quite rightly, end the relationship. Which is why we’re proud to say that since the day we entered this business, we have never had a single complaint of misuse of client information of any kind.”
We want to bring truth to bear against some of the fictions and falsehoods
JT Myers and Nat Pastor
FICTION: Virgin will restrict or shut down services such as Fuga, Curve, CD Baby, Downtown Music Publishing, or Songtrust.
FACT: Virgin is doing this deal for exactly the opposite reason. We see the extraordinary value of investing in and expanding access to these and other platforms.
“Over the last three years, we’ve been building Virgin within UMG as a standalone, global services business with its own leadership, tech stack, and autonomy,” stated the memo. “The deal with Downtown will strengthen the foundation we’ve built thus far. Our motivation for the merger and our excitement about it are rooted in this singular opportunity: by combining Downtown’s and Virgin’s unique capabilities, the unified company will offer an even more robust and flexible suite of services to independent labels everywhere."
FICTION: UMG’s market share in Europe (ex-UK) has skyrocketed by 18 percentage points since the EMI acquisition in 2012.
FACT: There is ZERO credible data to support this … and for a very good reason: It’s not true. The reality is that during this period the independent sector’s market share has grown materially, while UMG’s market share has not.
“Why? Well, the growth of the independent community has been the product of several factors: private and venture capital has poured into both indie labels and services providers; artists have more tools than ever; streaming has democratized music; and a new generation of companies has flourished,” continued the memo. “Competition among the services businesses is thriving precisely because of the continued investment in them and the flood of new entrepreneurs – label executives and artists themselves – into the marketplace.
“The more investment that flows into the services businesses, the more independent labels benefit, because more investment means better resources and greater competition among services providers. Today, approximately one hundred services companies are competing to partner with independent labels and artists. The stronger the provider of services, the greater the chance that the independent label and artist has to succeed in today’s market.”
Myers and Pastor also addressed attacks levelled at Virgin by a lobbying effort.
“We have been called ‘wolves behind the cape’ – that is, that we’re secretly preying on the very community we claim to serve,” they wrote. “Nat and I are used to a bit of name-calling. But the insinuation that Virgin is anything but a positive force in the independent marketplace is an insult to all of you who comprise the Virgin Music Group family, who work tirelessly every day to help independent labels and artists achieve their goals. Any assertions to the contrary are juvenile, offensive, and are just falsehoods being spread by those who are willing to say anything to hurt the chances of this deal happening.”
Noting that the independent sector “isn’t monolithic”, they asserted that the industry has evolved considerably since the traditional divide was in place between indie and major.
“We personally think that in an independent space this dynamic – comprised of the legendary ‘old guard’ of iconic independent labels as well as a generation building the iconic companies of the future; of bootstrapped companies alongside ones backed by some of the largest private equity, venture capital and technology companies in the world; of artists just beginning their careers next to some of the largest global superstars – that things just aren’t that simple anymore,” they stated, adding that “every member of the independent community gets to make their own choice, based on their own value system”.
Companies can choose Virgin, Downtown or any of the many other potential partners, independent or major, based on their commercial needs and preferences, the memo continued.
“With the acquisition of Downtown, we see a significant opportunity to provide independents with something even more effective to advance their commercial and creative goals,” Myers and Pastor concluded. “We also know that we will be competing every day with dozens of other global service providers, so in order to win we will have to be the best partners the indie community can work with. And that is exactly what we are going to be.”
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