Independent music giant [PIAS] revealed on Wednesday (November 30), that Universal Music Group has made a minority investment in the company.
The deal, which sees UMG acquire a 49% stake in the [PIAS] Group for an undisclosed sum, follows the formation of a strategic global alliance between the two companies in June 2021.
In a letter sent to [PIAS]’s partners on Tuesday (November 29), the day before the deal was announced, the indie firm’s founders, Kenny Gates and Michel Lambot, outlined the background and reasoning behind their decision to strike the deal with UMG.
In the note, now obtained by MBW, Gates and Lambot wrote that they have “built a productive and mutually trustworthy working relationship with UMG” over the last 18 months since entering into their global alliance in June last year.
UMG has “clearly demonstrated to us that they understand and value the importance of [PIAS] in the marketplace as an autonomous global music company servicing independent labels and artists,” added Gates and Lambot.
“In light of this, we recently approached UMG about them making an investment into [PIAS] that would allow us to retain majority control of the company.”
The duo explained that they “felt this was a sensible option in the context of what is an increasingly challenging economy and an uncertain geo-political environment”.
“We recently approached UMG about them making an investment into [PIAS] that would allow us to retain majority control of the company. We felt this was a sensible option in the context of what is an increasingly challenging economy and an uncertain geo-political environment.”
Kenny Gates and Michel Lambot, [PIAS]
Commenting further on the reasoning behind the deal, [PIAS]’s founders wrote: “It is also clear to us that the battle lines in our industry have been redrawn.”
They continued: “These days we are competing with tech and financial giants who do not value the cultural importance of the artists and labels we work so hard for, but rather see music merely as an ‘asset class’ to be ruthlessly exploited in exchange for a quick return,” they added in their letter.
According to the press release issued on Wednesday (November 30), under their new agreement, “[PIAS] will remain fully independent, and its founders Kenny Gates and Michel Lambot will retain majority control of the company”.
The release confirmed that “UMG will have no seats on the company’s board”.
You can read their letter to [PIAS]’s partners in full below.
Dear Partner,
Tomorrow morning, we will be announcing that Universal Music Group have invested in a minority shareholding of the [PIAS] Group.
We wanted to make sure you as our partner were informed about this before the announcement went out. We also wanted to take this opportunity to share some context and reasoning about our decision to bring UMG in as a minority shareholder.
As shared with you last June, we initially agreed a strategic partnership with UMG that gave us access to funding and enabled UMG to utilize our international distribution network for some of their own repertoire.
Over the last 18 months we have built a productive and mutually trustworthy working relationship with UMG who have clearly demonstrated to us that they understand and value the importance of [PIAS] in the marketplace as an autonomous global music company servicing independent labels and artists.
In light of this, we recently approached UMG about them making an investment into [PIAS] that would allow us to retain majority control of the company. We felt this was a sensible option in the context of what is an increasingly challenging economy and an uncertain geo-political environment.
It is also clear to us that the battle lines in our industry have been redrawn. These days we are competing with tech and financial giants who do not value the cultural importance of the artists and labels we work so hard for, but rather see music merely as an ‘asset class’ to be ruthlessly exploited in exchange for a quick return.
We are pleased therefore to confirm that UMG are now our partners and investors and that [PIAS] will remain fully independent with Kenny and Michel retaining majority control of the company.
Additionally, it is important to clarify that UMG will not have any seats on the [PIAS] board.
This investment by UMG will mean that we can continue to build our offering and provide an even better service to our partners in what is still a challenging, aggressive and acquisitive marketplace. As one of the few remaining, globally operating and privately owned music companies in this industry, we are committed to providing independent labels and artists with the best possible service through our unrivalled international network run by passionate and experienced music lovers.
We will continue to go above and beyond to be a trusted and valued partner for you and for all of the other great labels, artists and their managers who we are privileged to work with through both our distribution company [Integral] and the [PIAS] Label Group.
Nothing changes – it will remain business as usual at [PIAS].
Should you have any questions about this announcement or our plans for the foreseeable future, please do not hesitate to reach out.
We want to sincerely thank you for your trust and look forward to continuing our long-term partnership.
Kenny, Michel and the [PIAS] Management Team Music Business Worldwide