Global Independent Music Community Warns of Consolidation Risks as UMG Expands

19 December 2024 - Press release

 

Independent music organizations worldwide are raising the alarm about the potential negative consequences that UMG-Virgin Music's acquisition of Downtown would have on the music ecosystem.

The operation combines Downtown’s extensive portfolio—comprising services like FUGA, CD Baby, Songtrust, and others, collectively serving over 5000 business clients and more than 4 million creators across 145 countries—with the global operations of Virgin Music, which is part of Universal Music Group (UMG). This creates huge consolidation in music distribution, licensing, and rights management that would seriously distort the global music market.

The deal, which is subject to regulatory scrutiny, would reduce competition and the independents’ bargaining power across the music supply chain, resulting in fewer options for smaller companies to negotiate fair terms and compete on equal footing, leading to higher costs and less choice.

UMG is already the biggest company in the global recorded music market. Just  this year, it has already acquired European leading independent group [PIAS]/Integral; Outdustry, a leader in label services and rights management across China, India, and other Asian markets; Thailand’s second biggest recorded music catalogue RS Group; UK-Based South Asian Label Oriental Star Agencies; Nigerian label Mavin Global; US-based label Saban Music Latin; Chabaka Music, a UAE-based digital distributor; and a minority stake in Chord Music Partners (U.S.).

Noemí Planas, CEO of WIN, says: “We are the global independent music community. UMG trying to present this as an investment in the independent ecosystem is fooling no one. This is wealth extraction from the independents, another step in UMG’s relentless path to dominance and stifling competition. Independent music is the lifeblood of cultural innovation and market consolidation threatens the diversity that makes music so rich and compelling around the world. We call on regulatory bodies to block the deal.”

A2IM CEO Dr. Richard James Burgess MBE, comments: “Universal Music Group’s acquisition of Downtown Music’s assets continues a troubling trend of consolidating independent music infrastructure, following acquisitions of InGrooves, MTheory, and PIAS. This increasing level of market concentration chips away at the competitive landscape, making it increasingly difficult for truly independent artists and companies to operate freely and equitably. These acquisitions risk silencing the independent voices that drive innovation and creativity in the music industry.” 

“When near-monopolist Universal acquires Downtown, one of the largest independent music ecosystems, and does so in the name of independence, it cheapens what the word means. Market consolidation at this scale is not only anti-competitive, it is a fundamental threat to true independence”, adds Darius Van Arman, Secretly Distribution CEO and Secretly Group Co-Founder.

IMPALA, the organization that represents independent music businesses across Europe, has voiced significant concerns, warning that this acquisition is part of a broader trend of market consolidation by UMG. “Following on from the recent [PIAS]/Integral acquisition, it plays into a continuing trend towards over-consolidation and reduction of independent routes to market”, says Gee Davy, CEO of AIM. Martin Mills, founder of Beggars Group adds: “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.” 

“Let’s all remember that UMG already reached the maximum size. When it tried to buy EMI in 2012, UMG was forced by the European Commission 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 ten 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”, continues IMPALA chair Dario Draštata. “We expect competition authorities in key jurisdictions to carry out thorough investigations and block these deals”, comments Helen Smith, Executive Chair of IMPALA.

“Whilst we are in favour of free enterprise, monopolies dominate market forces and remove the ability to compete. There must be regulation to ensure that Universal who is already the largest music business in the world with a large stake in Spotify does not dictate prices and the ability for artists and labels to negotiate fair and equitable terms” says Maria Amato, CEO of Australian Independent Record Labels Association (AIR).

“The recent acquisition by large corporations of companies that until recently were independent is a red alert for the entire global independent music community”, says Felippe Llerena, President of Brazilian trade association ABMI. “The Orchard, AWAL, Som Livre, Proper Music, Altafonte and now Downtown Music are examples of how multinational capital is reshaping the sector. ABMI believes that it is our duty to protect and promote an independent ecosystem, where artists, labels and companies can create freely and sustainably. Our fight is for the appreciation of music as art, culture and expression, not as a simple market product.” 

Cecilia Crespo, General Manager of the association or Argentinian record labels ASIAr, adds: “Concentration not only has a negative impact in the way platforms distribute royalties to artists and rights holders (based on market share), but also due to the unregulated use of data and intelligence from the analysis of the data and the behavior of all actors involved (artists, audiences, and users).

As the acquisition awaits regulatory scrutiny, the independent sector is calling for authorities to block the deal. For the global independent music community, this move underscores the urgent need to protect the spaces that foster creativity, diversity, and innovation in music worldwide.