MBW Reacts is a series of analytical commentaries from Music Business Worldwide written in response to major recent entertainment events or news stories. Only MBW+ subscribers have unlimited access to these articles.
Since UMG’s Virgin Music Group announced the transaction in December, it has attracted regulatory scrutiny from European authorities, while triggering competing industry narratives about what the merger will mean for the music business.
Over 200 people signed a letter in July objecting to the acquisition. Around 20 of them worked for Beggars Group or Secretly Group and their affiliates; a further 30 worked for trade bodies that are members of WIN (the Worldwide Independent Network), an affiliate of the deal’s most vocal opponent, IMPALA.
Earlier this month, a shorter list of indie reps backed a different campaign, ‘100 Voices‘, also urging the EC to block the deal. Signatories included the heads of Beggars, Secretly Group, and Exceleration Music, plus several smaller indie labels, and a collection of reps from trade bodies.
Despite this opposition, UMG has maintained its confidence that the European Commission (EC) will eventually clear the transaction.
Earlier this year, the EC escalated its review of the UMG/Downtown transaction to a Phase II investigation, citing potential concerns that the acquisition could enable UMG to access commercially sensitive data from Downtown subsidiaries FUGA and Curve Royalty Systems.
In the past few months, MBW has asked prominent leaders in the global independent distribution space what they think of the deal.
Emmanuel Zunz (OneRPM), Konrad Von Löhneysen (Zebralution), and Denis Ladegaillerie (Believe) have all emphasized their confidence in competing with a combined Virgin/Downtown/FUGA entity.
Zunz told MBW: “I responded to the European Commission’s questionnaire [about the deal], and I basically said to them, over and over again: there are plenty of alternatives [to UMG/Downtown] for independent artists and labels in the market.”
Like others, the OneRPM founder sees potential client acquisition opportunities if the deal is passed, and if independent labels currently affiliated with Downtown/FUGA/Curve grow uncomfortable with UMG ownership.
“I responded to the European Commission’s questionnaire [about the deal], and I basically said to them, over and over again: there are plenty of alternatives [to UMG/Downtown] for independent artists and labels in the market.”
Emmanuel Zunz, OneRPM
Zebralution’s Von Löhneysentold MBW: “I think there’s a lot of competition… there’s definitely a lot of capable, good distribution companies out there.”
He added: “We have our own supply chain, so we’re not fazed about FUGA being taken over by Universal… if the FUGA/Virgin/Downtown setup isn’t an appealing offering for some independent labels, we’ll make sure they know about us.”
Believe’s Ladegaillerie was similarly unflustered by the prospect of a combined UMG and Downtown/FUGA.
He commented: “Do I think [UMG buying Downtown] is going to change anything for us? I can’t speak for the industry, but as CEO of Believe, as a company, we feel very good about our ability to compete.”
“we’re not fazed about FUGA being taken over by Universal, because we control our own delivery.”
Konrad Von Löhneysen, Zebralution
Against this backdrop of regulatory scrutiny and industry discussion, MBW has now contacted multiple other executives leading prominent independent distribution platforms.
Their companies will not only be competing directly with a combined Virgin/Downtown/FUGA, but are also (a) Scaled global distribution players in the independent space and/or (b) Indie distributors specifically recommended by Merlin to its members.
We asked them all the same two questions:
Does the prospect of Virgin/Downtown/FUGA merging, and its impact on competition in the sector, give you cause for alarm?
Do you see a potential opportunity here for client acquisition?
Here’s what they said…
Steve Stoute, Founder & CEO, UnitedMasters
“Independent music is the fastest-growing sector in this business, authenticated by the price of Universal’s potential acquisition of this asset.
“As a result of independent music’s success and growth, there will be consolidation. From that perspective, I feel good about it: it shows we’re all doing the right thing.
“From a competition perspective, yes, the [Downtown acquisition] does provide UMG with a competitive advantage. Any independent company is no longer truly independent if they’re owned by Universal.
“If the independent labels want to leave FUGA when it becomes part of a major, they have that option.They’re not stuck.”
“But if independent labels want to leave FUGA when it becomes part of a major, they have that option. They’re not stuck; their independence allows them freedom. They can come to UnitedMasters, or others.
“Whether it’s independent artists or independent labels, they are free to make that decision. I don’t think Universal, or any law, could stand in the way of anybody if they have the option to make that decision.”
JORGE BREA, FOUNDER & CEO, SYMPHONIC
“The prospect of Virgin, Downtown, and FUGA merging doesn’t give us cause for concern.
“At Symphonic, we’ve built best-in-class technology and expanded significantly — both internationally and domestically — to serve a growing and diverse roster of clients.
“The prospect of Virgin, Downtown, and FUGA merging doesn’t give us cause for concern… We see moments like this as opportunities to reaffirm what makes Symphonic different.”
“Our independence has always been our strength, allowing us to move quickly, innovate, and provide a level of service and transparency that larger corporate structures often can’t.
“We see moments like this as opportunities to reaffirm what makes Symphonic different. Our platform and infrastructure are ready to easily welcome any artist or label looking for a new home built around independence, flexibility, and partnership.”
IAIN CATLING, Founder & CEO, AUDIOSALAD
“The services and distribution space is now mature and offers many alternative routes to market for artists, labels who wish to remain independent of the major label systems.
“Furthermore, in any healthy market, companies must have the freedom to partner, grow, or exit. The gaps these exits create allow for new opportunities for smaller companies and drive innovation.
“Restricting this through anti-competitive measures sends a deeply negative signal to entrepreneurs and innovators in the sector. This runs entirely counter to the very ethos of the choice and independence that we value in this industry.”
“In any healthy market, companies must have the freedom to partner, grow, or exit… Restricting this through anti-competitive measures sends a deeply negative signal to entrepreneurs and innovators in the sector.”
Does the prospect of Virgin/Downtown/FUGA merging, and its impact on competition in the sector, give your company cause for alarm?
“It does not give us cause for alarm.”
Do you see a possible opportunity here for potential client acquisition?
“Any current FUGA clients that take issue with the acquisition have numerous alternative options.”
“I don’t believe consolidation improves service for artists, so mergers like Virgin/Downtown/FUGA don’t concern me. Too many companies chase numbers over people, focusing on market share instead of innovation.
“I don’t believe consolidation improves service for artists, so mergers like Virgin/Downtown/FUGA don’t concern me… At Ditto, we’ve stayed fully independent, building tools that truly serve artists.”
“At Ditto, we’ve stayed fully independent, building tools that truly serve artists while maintaining sustainable 100% year-on-year growth. Ultimately, the best service comes from companies that put artists before shareholders.”
“The broader trend of consolidation across the music industry is concerning for the health of the independent sector. When a few major-owned companies control an increasing share of rights and distribution pipelines, competition and diversity inevitably suffer. In the case of distribution, there are still strong independent alternatives, so choice remains for labels and artists.
“However, Universal is already the global market leader, and its successive acquisitions – first [PIAS], and now FUGA – further strengthen its market dominance.
“This growing leverage with DSPs will give it disproportionate bargaining power at the negotiating table. That imbalance is the real risk: it threatens not only competition in distribution, but also independent labels, as well as the long-term sustainability and progress of the entire music ecosystem. In the short term, consolidation often creates opportunities for truly independent players like IDOL.
“Universal’s growing leverage with DSPs will give it disproportionate bargaining power at the negotiating table. That imbalance is the real risk… [However] consolidation often creates opportunities for truly independent players like IDOL.”
“Many labels and artists prefer to work with truly independent distributors because they have understood that this is where they will find the stability and sustainability they need. There is also concern about what the integration period might look like – merging supply chains and teams on this scale within the Universal eco-system will inevitably create disruption.
“But while that may generate new business for us in the short-term, the long-term health and diversity of the market is what really matters. Fewer independent options will ultimately harm everyone, including the majors themselves.”
“Of course it will impact the market, though both as a positive and a negative – as all change does. We don’t see this as a reason to panic; we see it as proof that the indie sector needs its own world-class stack.
“When delivery and analytics sit inside major-owned platforms, independents trade autonomy and control for convenience. I’m not sure labels and artists will be happy with Universal/Virgin/Downtown/FUGA all participating in some way with the revenue streams before they get their share. Seems a lot of mouths to be fed.
“We don’t see this as a reason to panic; we see it as proof that the indie sector needs its own world-class stack.”
“The independent sector is strong, inventive, entrepreneurial, and agile and offers a far better, more focused, ‘hands on’ service than any major can.
“[Absolute’s] Anthology is a cutting-edge agnostic service we have invested heavily in and developed, offering advanced analytics, supply-chain reliability, transparency, and business management with full ownership and portability of data and I see this as an opportunity for us to empower and strengthen the independent sector.”
Credit: Katja Ruge
RALPH BÖGE, Founder & MD, PARADISE WORLDWIDE
“A company like UMG needs market share because of reasons related to its business model. I can hardly imagine how UMG would integrate the various new Downtown assets, with the exception of Curve.
“We as independents should not [waste time on] politics. Instead, we must focus on creating attractive offerings for clients: a worldwide DSP portfolio, more precise data, affordable campaigns, advance budgets, collecting publishing royalties at the source – things that help rights-owners stay independent, gain knowledge, build up their asset/ownership, and earn more money.
“Indies should ask themselves, is it really worth spending a lot of time, money, and resources on fighting the deal instead of fixing the AI problem?”
“What we forget to talk about is that in the AI space, there is no ‘major’ or ‘indie’ – we’re in a united industry fight against copyright theft. Indies should ask themselves, is it really worth spending a lot of time, money, and resources on fighting this deal instead of fixing the AI problem?
“That’s why Paradise Worldwide concentrates on the AIxchange and our AI principles, for ethical AI and an attribution model that gives power to the creator.
“I am not jealous of UMG’s position: imagine you want to spend this amount of money, the deal does not go through, while AI attribution has developed to the next level.”Music Business Worldwide
