A group of over 200 people representing independent music companies is pushing back against a proposed acquisition of Downtown Music in a new open letter to the European Commission (EC) issued on Monday. IMPALA, a European trade group for independent music companies, issued the letter.
Virgin Music Group, a Universal Music Group (UMG) subsidiary, first floated the $775 million takeover of Downtown Music in December.
“Across Europe, UMG already controls over 40% of the recorded music market,” the letter reads in part. “By absorbing Downtown’s distribution, royalty accounting, and rights management capabilities – services used by thousands of companies and artists across the independent sector – UMG would further entrench its already significant market power.”
Organizations and companies represented in the letter include 4AD, Beggars Group, K7!, Secretly Group, Sub Pop, Cargo Independent Distribution, the Association of Independent Music, and Cooking Vinyl, among many others.
The deal is already being scrutinized by European regulators, who said in April that “the transaction threatens to significantly affect competition in certain markets of the music value chain, where both companies [Virgin Music Group and Downtown Music] are active, in Austria and in the Netherlands, as well as in many other Member States” and that the EC would be “examining the transaction.”
As such, the Monday letter urges “the European Commission to open a detailed phase two investigation to examine the deeper structural consequences of this transaction. The proposed acquisition poses a clear threat to effective competition, innovation, and the growth of the music industry across the EU and globally.”
Downtown was founded as a music publisher in 2007 and quickly grew to one of the largest indies in the industry, but sold its portfolio to Concord in 2021 for some $400 million and pivoted to become more of an artist-services company, with a clientele of more than 5,000 businesses and 4 million artists across nearly 150 countries.
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