AIM and IMPALA react to PIAS sale to UMG

21 October 2024 - Press release

On behalf of AIM's interim CEO 

Dear AIM Member

We are contacting you today following the news reports earlier this week that long standing independent music business group, [PIAS], had been fully acquired by Universal Music Group (UMG).  UMG had held a 49% stake in [PIAS] since late 2022 and the two have been acting in partnership for some operations.

IMPALA's executive committee, including AIM, has today issued a public statement, which you can see below, thanking [PIAS] co-founders Michel Lambot and Kenny Gates for their work for the independent sector over many years, recognising that this move away from being an independent music business leaves a huge hole in the sector and flagging regulatory concerns about UMG's increasing market dominance.  IMPALA is the European independents' body.

AIM's interim CEO, Gee Davy, echoed some of these sentiments during her welcome address at the Independent Music Awards last night, at which [PIAS] and UMG personnel were present:

"I find myself with conflicting feelings.  I celebrate the work that Kenny and Michel, the founders of PIAS, have done in helping to build the structures that underpin the independent music community, and Jason Rackham, who has served a number of times on AIM's board and offered his support and wise counsel on many occasions.  I congratulate [PIAS] on making a move that they believe will work well for them, their business, their staff, and the artists, labels and music they work with.  At the same time, I am saddened to see PIAS move into a different part of the music landscape, and one which is still sometimes at odds with the values and practices that independents hold as important."

As a result of the sale, Jason Rackham has resigned his position on AIM's board, as [PIAS] are no longer an independent music business.  AIM's board thank Jason for his excellent service to the independent community.

[PIAS], represented by Richard Sefton, were one of those who helped to create the first ever code of best practice in distribution, the Digital Distribution Switch Code, which sets out clear distributor commitments when artists or labels move to a new distributor and offers guidance around this. [PIAS]'s Adrian Pope has also often advised in to AIM on digital business and AI matters.

If you or your business is impacted by this and you need any support or advice, please contact AIM on info@aim.org.uk.

 

Read IMPALA's statement below:

Helen Smith, executive chair of IMPALA, commented: "[PIAS] is an inspiration for all entrepreneurs in music. We will miss Michel and Kenny in so many ways. We congratulate them on their achievements and thank them for their leadership. This will leave a huge hole in the independent sector and at IMPALA, with Michel on our board for 24 years and instrumental in achieving all our milestones. We thank [PIAS] for being one of the first members to contribute to IMPALA's carbon calculator, also stepping up for our digital work, our EDI task force and other groups. To hear [PIAS]' story check their 20MinutesWith podcast with the late Juliana Koranteng."

Speaking on behalf of IMPALA's executive committee, Dario Draštata, IMPALA Chair and Chair of RUNDA Adria added: "[PIAS] will remain a true inspiration across Europe and its imprint on the sector will continue through various bodies the company were instrumental in establishing, from Merlin to IMPALA as well as WIN. More recently the company promoted telling the story of labels and the value of music, a role that has been taken on by the think tank ORCA." 

Chair of IMPALA's streaming group and CEO of Everlasting Records and Popstock Distribuciones, Mark Kitcatt continued: "Michel Lambot has been one of the keenest and most insightful participants in our plan to reform streaming to make it fairer, to place artists at the centre of the streaming ecosystem and encourage platforms to highlight support and fairly reward the whole, diverse range of musical creation, with Adrian Pope also playing a key role in developing our strategy on digital issues. We all look forward to news of Michel's new company Emotions and wish both Kenny and Adrian well with the new chapter for [PIAS]. IMPALA's work on the RAAP case is another great example, with Michel a staunch believer in fairness and the need for reciprocity in trade rules to raise the level of protection worldwide." 

IMPALA's executive committee also discussed how unchecked concentration in the music market continues to be a serious problem. The move by UMG squeezes the independents further in an already very concentrated market. It also goes against the principle established by the European Commission over ten years ago during UMG's takeover of EMI that UMG is already too big.

Helen Smith, IMPALA's Executive Chair commented: "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. We would expect both physical and digital markets to be assessed including for distribution services, as well as the impact on competitors, digital services, artists and fans. A share deal is one thing, this is something else."

UMG's ability to expand through acquisitions has been on ice as it had a ten year ban imposed on it by the European Union following UMG's attempt to buy EMI in 2012, which ended in UMG being forced to sell over a third of EMI. The bottom line is UMG's acquisition of [PIAS] will increase the power of UMG across Europe and beyond, including the UK and the USA, and IMPALA expects regulators in these jurisdictions to take action. The pursuit of key independent players by all three majors has been happening in national markets across Europe and elsewhere and there is a serious risk of this continuing and posing real disruption for the independent sector.

IMPALA chair Dario Draštata commented: "This type of creeping power is an issue across Europe. Apart from strengthening UMG in terms of market share, it eliminates a principal competitor and should be investigated. It also narrows options for artists and labels. It is not a question of an arithmetical increase of market share points by one major, but rather a sea change in the competitive dynamics of the music market, to the severe detriment of competitors and consumers. Sony has been doing the same and we see similar moves in Central and Eastern Europe with Warner Music Group buying stakes in several leading independent music companies across the region. The loss of such big players for the independent sector compounds the competitive impact and the risk is that this trend will continue. We have been signalling the problem of creeping dominance for many years and it's time for a new competition approach to address this question."

Geert de Blaere, IMPALA treasurer and chair of Belgian association BIMA added: "The Belgian market owes a debt of gratitude to [PIAS], which shows all entrepreneurs what is possible and this will also always be the case. However the impact in the independent sector will be structural, significant and long lasting. This is completely different to a share deal as UMG takes over the market share of [PIAS]. Scale and stability in the whole independent sector will be lost. Incremental shifts in the market across the majors leverages disproportionate influence in the hands of a few companies. Each time that happens the result is more control over how the market develops."

IMPALA also flagged that this is not just a regulatory question, it is a strategic issue for the sector and for all decision makers about growth and competition generally. President of 

IMPALA Francesca Trainini commented: "One of the challenges is to consider not just the impact of this consolidation, but whether the market conditions and finance options are there to support the growth of the next generation of companies bringing scale and power to the independent sector. Growing Europe's "missing middle" was identified as a top priority by IMPALA in its very first action plan and it remains vital for the sector. We urge the new European legislature entering office now to take a fresh strategic approach. IMPALA has been working on this with its finance group and the board meeting next month will look at this further." 

IMPALA highlights how ongoing work in the sector will now be even more crucial. The question of independent distribution and access to market is just one example. IMPALA's executive committee recognises the great work done over the years by [PIAS] as well as other independent distributors and also welcomed the recent news about Cargo Independent Distribution which provides scaled distribution options internationally for the sector.

Addressing other market developments that have been highlighted by IMPALA as a priority is also important. This includes addressing the risk of a two speed market following moves to reform how streaming revenues are allocated, as well as monetising TikTok and stopping their attempt to boycott Merlin, see here and here. This is on top of other factors which must be tackled to avoid haemorrhaging cash for music companies and artists across Europe, including the RAAP case. Control over collecting societies is also a concern and again will be exacerbated, both by the growing market share of UMG, and by the loss of strong independent voices on collecting society boards across Europe. 

IMPALA also points to ongoing work on innovative solutions on the finance side to provide independents with different options, as well as opportunities to develop new approaches. This includes possible projects inspired by previous work, such as the divestment process carried out by IMPALA and Merlin, and also basic measures like tax credits. 

Gee Davy, Interim CEO of AIM, added: "Kenny and Michel are fully deserving of the appreciation of the whole independent community for all they have done to champion and support the sector over many years. I am encouraged by their stated determination to continue in their support, albeit in a different way from within their new parent company, even while I am sad to see a great independent music business find that the only way to achieve further scale and survival leads them away from independence. Further consolidation is deeply concerning in reducing options and diminishing collective independent market share, impacting on fair competition and choice. However, I also appreciate that with increasing pressures from all sides it is more and more difficult to see how independents can achieve necessary scale for global success and find business exit options which protect staff and legacy. This is why in the UK, AIM continues to work with regulators to ensure an open market and is calling on the new Labour government to encourage investment in new music across all regions and nations of the UK through a tax credit scheme similar to the successful scheme in the UK film sector and similar schemes in other nations." 

Helen Smith summed up: "We are looking at this from multiple angles. We want to see more independent companies like [PIAS] not fewer. We need a revamp of exit strategy options, new solutions to access finance, provide tax incentives and grow our market share. A review of whether competition is fit for purpose in today's music market is also in order, and proper solutions for issues like the RAAP case. Above all, it's about a combination of strategies that put diversity at the top of the pyramid. There are plenty of solutions and we urge the whole market to join us on this exercise. It is credit to Michel and Kenny that the [PIAS] example is the springboard to re-opening these discussions." 

You can read the full IMPALA statement here.