MBW Reacts is a collection of analytical commentaries from Music Enterprise Worldwide written in response to main current 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 additional 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 set 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 Part II investigation, citing potential considerations that the acquisition may allow UMG to entry commercially delicate knowledge from Downtown subsidiaries FUGA and Curve Royalty Techniques.
Prior to now few months, MBW has requested outstanding leaders within the world 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 principally mentioned to them, again and again: there are many alternate options [to UMG/Downtown] for unbiased artists and labels out there.”
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 principally mentioned to them, again and again: there are many alternate options [to UMG/Downtown] for unbiased artists and labels out there.”
Emmanuel Zunz, OneRPM
Zebralution’s Von Löhneyseninstructed MBW: “I feel there’s loads of competitors… there’s positively loads of succesful, good distribution firms on the market.”
He added: “We now 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 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 vary something for us? I can’t communicate for the business, however as CEO of Imagine, as an organization, we really feel superb about our potential 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
Towards 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 world distribution gamers within the unbiased house and/or (b) Indie distributors particularly advisable by Merlin to its members.
We requested all of them the identical two questions:
Does the prospect of Virgin/Downtown/FUGA merging, and its impression on competitors within the sector, offer you trigger for alarm?
Do you see a possible alternative right here for consumer acquisition?
Right here’s what they mentioned…
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.
“On account of unbiased music’s success and progress, there will probably be consolidation. From that perspective, I be ok with it: it exhibits we’re all doing the correct 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 depart FUGA when it turns into a part of a serious, they’ve that choice.They’re not caught.”
“But when unbiased labels wish to depart 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 suppose Common, or any legislation, may stand in the way in which 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 totally different.”
“Our independence has at all times been our energy, permitting us to maneuver shortly, innovate, and supply a degree of service and transparency that bigger company constructions typically can’t.
“We see moments like this as alternatives to reaffirm what makes Symphonic totally different. Our platform and infrastructure are prepared to simply welcome any artist or label searching for a brand new dwelling constructed round independence, flexibility, and partnership.”
IAIN CATLING, Founder & CEO, AUDIOSALAD
“The companies and distribution house is now mature and gives many various routes to marketplace for artists, labels who want to stay unbiased of the key label programs.
“Moreover, in any wholesome market, firms should have the liberty to accomplice, develop, or exit. The gaps these exits create permit for brand new alternatives for smaller firms and drive innovation.
“Limiting this by way of anti-competitive measures sends a deeply unfavorable sign to entrepreneurs and innovators within the sector. This runs totally counter to the very ethos of the selection and independence that we worth on this business.”
“In any wholesome market, firms should have the liberty to accomplice, develop, or exit… Limiting this by way of anti-competitive measures sends a deeply unfavorable sign to entrepreneurs and innovators within the sector.”
Does the prospect of Virgin/Downtown/FUGA merging, and its impression on competitors within the sector, give your organization trigger for alarm?
“It doesn’t give us trigger for alarm.”
Do you see a attainable alternative right here for potential consumer acquisition?
“Any present FUGA purchasers that take difficulty with the acquisition have quite a few various choices.”
“I don’t imagine 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 imagine consolidation improves service for artists, so mergers like Virgin/Downtown/FUGA don’t concern me… At Ditto, we’ve stayed totally unbiased, constructing instruments that actually serve artists.”
“At Ditto, we’ve stayed totally unbiased, constructing instruments that actually serve artists whereas sustaining sustainable 100% year-on-year progress. In the end, the perfect service comes from firms that put artists earlier than shareholders.”
“The broader pattern of consolidation throughout the music business is regarding for the well being of the unbiased sector. When just a few major-owned firms management an rising share of rights and distribution pipelines, competitors and variety inevitably endure. Within the case of distribution, there are nonetheless sturdy unbiased alternate options, so selection stays for labels and artists.
“Nevertheless, 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 additionally unbiased labels, in addition to the long-term sustainability and progress of the complete 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 favor to work with actually unbiased distributors as a result of they’ve understood that that is the place they may discover the steadiness and sustainability they want. There may be additionally concern about what the mixing interval may appear like – merging provide chains and groups on this scale throughout 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 would impression the market, although each as a optimistic and a unfavorable – as all change does. We don’t see this as a motive 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 will probably be proud of Common/Virgin/Downtown/FUGA all taking part ultimately with the income streams earlier than they get their share. Appears loads of mouths to be fed.
“We don’t see this as a motive 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 targeted, ‘arms 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 chance 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 assorted new Downtown belongings, apart from Curve.
“We as independents mustn’t [waste time on] politics. As an alternative, we should concentrate on creating enticing choices for purchasers: a worldwide DSP portfolio, extra exact knowledge, reasonably priced campaigns, advance budgets, gathering publishing royalties on the supply – issues that assist rights-owners keep unbiased, achieve information, construct up their asset/possession, and earn extra money.
“Indies ought to ask themselves, is it actually price spending loads of time, cash, and assets on combating the deal as a substitute of fixing the AI downside?”
“What we overlook to speak about is that within the AI house, there isn’t a ‘main’ or ‘indie’ – we’re in a united business struggle in opposition to copyright theft. Indies ought to ask themselves, is it actually price spending loads of time, cash, and assets on combating this deal as a substitute of fixing the AI downside?
“That’s why Paradise Worldwide concentrates on the AIxchange and our AI rules, for moral AI and an attribution mannequin that offers 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 subsequent degree.”Music Enterprise Worldwide
