Europe’s trade association for indie labels, IMPALA, has criticized Virgin Music Group’s planned acquisition of Downtown Music Holdings in a $775 million deal.
This morning (December 17), IMPALA said that news of the deal, announced by VMG parent company Universal Music Group yesterday (December 16), “raises concerns about concentration and reducing independent routes to market”.
The acquisition, which is subject to regulatory approvals, is expected to close in the second half of 2025.
IMPALA noted in its statement shared with the media today that VMG’s move to buy Downtown comes “hot on the heels” of Universal’s 100% acquisition of [PIAS] Group.
IMPALA, whose membership includes prominent independent companies like Beggars Group and Domino, argues that Universal’s latest “move is part of a clear commercial strategy to target independent distribution to gain market share and control”.
Added IMPALA in its statement today: “Having already bought [PIAS], this is now the digital equivalent, accounting for a significant portion of the independent sector’s delivery to digital services.”
“This is another land grab,” said Helen Smith, Executive Chair IMPALA, commenting on the deal. “We expect competition authorities in key jurisdictions to carry out thorough investigations and block these deals.”
“This is a huge market share grab by UMG and seriously reduces independent routes to market.”
Helen Smith, IMPALA
Added Smith: “The time has come for cutting UMG’s market position back to what was already set. This is a huge market share grab by UMG and seriously reduces independent routes to market. We look to the new European commission to set the standard internationally.”
“This is another step on the road of UMG’s pretence to be the independents fairy godmother. But there’s a wolf under that cape.”
Martin Mills, Beggars Group
Martin Mills, founder of IMPALA member Beggars Group, said: “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.
“Paradoxically UMG’s artist-centric stance means it has already disenfranchised millions of artists whose rights they are now acquiring. This is another step on the road of UMG’s pretence to be the independents’ fairy godmother. But there’s a wolf under that cape.”
IMPALA claimed on Tuesday that UMG’s latest move “squeezes the independents further in an already very concentrated market and helps UMG move further into the market for distribution and services for labels and artists,” which, it argued “means more market share and gives UMG control over the opposition.”
IMPALA alleges that “another part of the strategy” is Universal Music Group’s $500 million lawsuit against Believe, filed last month, over allegations of copyright infringement, which Believe and its subsidiary TuneCore say they “strongly refute“.
The org claimed further that the Virgin/Downtown deal “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.”
That so-called “principle” IMPALA alleges was established by the EC is a reference to Universal Music Group’s 10-year ban in Europe on re-acquiring any asset – or re-signing any artist – involved in its EMI-related divestments. That ban expired on September 21, 2022, which meant that Universal was legally free to acquire [PIAS]. Downtown is a US-headquartered company.
IMPALA’s Helen Smith added this morning that the org “expects regulators to investigate the [Downtown] 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”.
Added Smith: “Both physical and digital markets must be assessed including for distribution services, as well as the impact on competitors, digital services, artists and fans. This is on top of the [PIAS] deal which we understand regulators are also interested in.”
“This would create a fundamental shift in the competitive dynamics of the music market.”
Dario Draštata, IMPALA
IMPALA chair Dario Draštata, said: “This is a sea change for the independent music sector with UMG leading charge at the independents and other majors following.
“Let’s all remember that UMG already reached the maximum size. When it tried to buy EMI in 2012, UMG was forced by the EC 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 independent[s] in Europe. This would create a fundamental shift in the competitive dynamics of the music market.”
“As IMPALA has pointed out before, it is not just a question of an arithmetical increase of market share points by one major, but a huge loss to the independents which has a compound effect.”
Francesca Trainini, IMPALA
IMPALA president Francesca Trainini added: “The EC must lead the way here. It is the opportunity for the new Commission to establish a clear agenda on concentration in the music market.
“As well as strengthening UMG in terms of market share, it eliminates another principal distribution competitor on top of PIAS and should be stopped. It narrows route to market options for artists and labels. As IMPALA has pointed out before, it is not just a question of an arithmetical increase of market share points by one major, but a huge loss to the independents which has a compound effect. It weakens competition and completely changes the competitive dynamics of the music market, to the severe detriment of competitors, artists and fans.”
“The potential sale of Downtown Music – including FUGA, a longstanding favourite with independents – to Universal’s Virgin Music Group is more concerning news for the global independent music community.”
Gee Davy, AIM
Gee Davy, CEO of AIM, commented: “The potential sale of Downtown Music – including FUGA, a longstanding favourite with independents – to Universal’s Virgin Music Group is more concerning news for the global independent music community.
“Following on from the recent PIAS/Integral acquisition, it plays into a continuing trend towards over-consolidation and reduction of independent routes to market. It is vital to uphold a true choice of partners for artists and labels and ensure that negotiating power does not become unbalanced. Only in this way can homegrown artists and businesses access fair deals, investment and growth.”
In its press release on Tuesday, IMPALA also claimed that Universal rivals Sony Music and Warner Music are “following the same path, buying stakes in leading independent music companies in national markets across Europe and elsewhere”.
“Recent examples include Sony buying Altafonte another key distributor in Spain and Latin America, Cobalt in Greece and Warner acquiring Cloud 9 in the Netherlands in the last few weeks,” claimed IMPALA.
IMPALA’s statement continued: “When we look at how the market has evolved, it’s clear that the majors are carving up the world between them. IMPALA calls on regulators to intervene and stop this trend. This goes beyond the independent sector. It’s diversity as a whole that is at stake and this will impact fans in Europe and across the world.”
Music Business Worldwide