MBW Reacts is a sequence of analytical commentaries from Music Enterprise Worldwide written in response to main latest leisure occasions or information tales. Solely 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 business narratives about what the merger will imply for the music enterprise.
Over 200 individuals signed a letter in July objecting to the acquisition. Round 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 Impartial Community), an affiliate of the deal’s most vocal opponent, IMPALA.
Earlier this month, a shorter record of indie reps backed a distinct 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 group of reps from commerce our bodies.
Regardless of this opposition, UMG has maintained its confidence that the European Fee (EC) will finally clear the transaction.
Earlier this yr, the EC escalated its evaluation of the UMG/Downtown transaction to a Section II investigation, citing potential considerations that the acquisition might allow UMG to entry commercially delicate information from Downtown subsidiaries FUGA and Curve Royalty Methods.
Previously few months, MBW has requested outstanding leaders within the international unbiased distribution house what they consider the deal.
Emmanuel Zunz (OneRPM), Konrad Von Löhneysen (Zebralution), and Denis Ladegaillerie (Imagine) have all emphasised their confidence in competing with a mixed Virgin/Downtown/FUGA entity.
Zunz instructed MBW: “I responded to the European Fee’s questionnaire [about the deal], and I mainly stated to them, time and again: there are many alternate options [to UMG/Downtown] for unbiased artists and labels available in the market.”
Like others, the OneRPM founder sees potential consumer 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 Fee’s questionnaire [about the deal], and I mainly stated to them, time and again: there are many alternate options [to UMG/Downtown] for unbiased artists and labels available in the market.”
Emmanuel Zunz, OneRPM
Zebralution’s Von Löhneyseninstructed MBW: “I feel there’s quite a lot of competitors… there’s positively quite a lot of succesful, good distribution firms on the market.”
He added: “Now we have our personal provide chain, so we’re not fazed about FUGA being taken over by Common… if the FUGA/Virgin/Downtown setup isn’t an interesting providing for some unbiased labels, we’ll be certain that they learn about us.”
Imagine’s Ladegaillerie was equally unflustered by the prospect of a mixed UMG and Downtown/FUGA.
He commented: “Do I feel [UMG buying Downtown] goes to alter something for us? I can’t communicate for the business, however as CEO of Imagine, as an organization, we really feel excellent about our skill to compete.”
“we’re not fazed about FUGA being taken over by Common, as a result of we management our personal supply.”
Konrad Von Löhneysen, Zebralution
In opposition to this backdrop of regulatory scrutiny and business dialogue, MBW has now contacted a number of different executives main outstanding unbiased distribution platforms.
Their firms is not going to solely be competing instantly with a mixed Virgin/Downtown/FUGA, however are additionally (a) Scaled international distribution gamers within the unbiased house and/or (b) Indie distributors particularly really helpful 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, provide you with trigger for alarm?
Do you see a possible alternative right here for consumer acquisition?
Right here’s what they stated…
Steve Stoute, Founder & CEO, UnitedMasters
“Impartial music is the fastest-growing sector on this enterprise, authenticated by the worth of Common’s potential acquisition of this asset.
“Because of unbiased music’s success and development, there might be consolidation. From that perspective, I be ok with it: it reveals we’re all doing the precise factor.
“From a contest perspective, sure, the [Downtown acquisition] does present UMG with a aggressive benefit. Any unbiased firm is not actually unbiased in the event that they’re owned by Common.
“If the unbiased labels wish to go away FUGA when it turns into a part of a serious, they’ve that choice.They’re not caught.”
“But when unbiased labels wish to go away FUGA when it turns into a part of a serious, they’ve that choice. They’re not caught; their independence permits them freedom. They will come to UnitedMasters, or others.
“Whether or not it’s unbiased artists or unbiased labels, they’re free to make that call. I don’t assume Common, 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 expertise and expanded considerably — each internationally and domestically — to serve a rising and various roster of purchasers.
“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 completely different.”
“Our independence has at all times been our energy, permitting us to maneuver shortly, innovate, and supply 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 completely different. Our platform and infrastructure are prepared to simply welcome any artist or label searching for a brand new house constructed round independence, flexibility, and partnership.”
IAIN CATLING, Founder & CEO, AUDIOSALAD
“The providers and distribution house is now mature and gives many various routes to marketplace for artists, labels who want to stay unbiased of the most important label programs.
“Moreover, in any wholesome market, firms will need to have the liberty to associate, develop, or exit. The gaps these exits create enable for brand new alternatives for smaller firms and drive innovation.
“Limiting this via anti-competitive measures sends a deeply detrimental sign to entrepreneurs and innovators within the sector. This runs solely counter to the very ethos of the selection and independence that we worth on this business.”
“In any wholesome market, firms will need to have the liberty to associate, develop, or exit… Limiting this via anti-competitive measures sends a deeply detrimental 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 potential alternative right here for potential consumer acquisition?
“Any present FUGA purchasers that take problem with the acquisition have quite a few various choices.”
“I don’t consider consolidation improves service for artists, so mergers like Virgin/Downtown/FUGA don’t concern me. Too many firms chase numbers over individuals, specializing in market share as a substitute of innovation.
“I don’t consider 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. Finally, one of the best service comes from firms that put artists earlier than shareholders.”
“The broader development of consolidation throughout the music business is regarding for the well being of the unbiased sector. When a couple of major-owned firms management an growing share of rights and distribution pipelines, competitors and variety inevitably undergo. Within the case of distribution, there are nonetheless sturdy unbiased alternate options, so alternative stays for labels and artists.
“Nonetheless, Common 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 actual threat: it threatens not solely competitors in distribution, but in addition unbiased labels, in addition to the long-term sustainability and progress of the whole music ecosystem. Within the quick time period, consolidation typically creates alternatives for actually unbiased gamers like IDOL.
“Common’s rising leverage with DSPs will give it disproportionate bargaining energy on the negotiating desk. That imbalance is the actual threat… [However] consolidation typically creates alternatives for actually unbiased gamers like IDOL.”
“Many labels and artists desire to work with actually unbiased distributors as a result of they’ve understood that that is the place they may discover the soundness and sustainability they want. There may be additionally concern about what the combination interval may appear like – merging provide chains and groups on this scale inside the Common eco-system will inevitably create disruption.
“However whereas which will generate new enterprise for us within the short-term, the long-term well being and variety of the market is what actually issues. Fewer unbiased choices will finally hurt everybody, together with the majors themselves.”
“In fact it can influence the market, although each as a constructive and a detrimental – as all change does. We don’t see this as a cause 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 pleased with Common/Virgin/Downtown/FUGA all collaborating not directly with the income streams earlier than they get their share. Appears quite a lot of mouths to be fed.
“We don’t see this as a cause to panic; we see it as proof that the indie sector wants its personal world-class stack.”
“The unbiased sector is powerful, creative, entrepreneurial, and agile and gives a much better, extra centered, ‘fingers on’ service than any main can.
“[Absolute’s] Anthology is a cutting-edge agnostic service now we have 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 score: Katja Ruge
RALPH BÖGE, Founder & MD, PARADISE WORLDWIDE
“An organization like UMG wants market share due to causes associated to its enterprise mannequin. I can hardly think about how UMG would combine the varied new Downtown property, apart from Curve.
“We as independents shouldn’t [waste time on] politics. As an alternative, we should give attention to creating engaging choices for purchasers: a worldwide DSP portfolio, extra exact information, inexpensive campaigns, advance budgets, accumulating publishing royalties on the supply – issues that assist rights-owners keep unbiased, acquire information, construct up their asset/possession, and earn extra money.
“Indies ought to ask themselves, is it actually value spending quite a lot of time, cash, and sources on combating the deal as a substitute of fixing the AI drawback?”
“What we overlook to speak about is that within the AI house, there is no such thing as a ‘main’ or ‘indie’ – we’re in a united business battle towards copyright theft. Indies ought to ask themselves, is it actually value spending quite a lot of time, cash, and sources on combating this deal as a substitute of fixing the AI drawback?
“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 sum of money, the deal doesn’t undergo, whereas AI attribution has developed to the following stage.”Music Enterprise Worldwide
