IMPALA has taken various potshots at Universal Music Group‘s proposed $775 million acquisition of Downtown Music Holdings.
Previous concerns have included claims about UMG’s market share, access to commercially sensitive information from rival labels, and warnings about reduced competition in the independent sector.
Now the trade body has switched to yet another angle, suggesting that UMG’s acquisition would damage “cultural diversity” by reducing revenues for independent labels, leading to fewer and less diverse music releases across Europe.
The deal is currently under investigation by European competition authorities.
In a newly published paper titled “Universal/Downtown – Why does it matter from a cultural diversity perspective?”, IMPALA presents economic modeling by Professor Amelia Fletcher arguing that even small revenue reductions for independent labels would decrease the total number of releases and harm artist income.
The paper, which you can read in full here, claims that lost releases would disproportionately affect smaller genres and countries, including non-English language music.
IMPALA says that its analysis concludes that if UMG acquires Downtown, there will be “a material detrimental impact on artistic cultural diversity within the EEA as a result of the independent labels generating less income and having less money to spend on new music.”
A UMG spokesperson has dismissed the claims.
They told us in a statement today (October 24) that “IMPALA continues to promote analysis from its affiliates that is inaccurate and misleading”.
They added: “We’ve seen similar claims in the past regarding market share data, which we have publicly clarified and refuted. UMG has a long-standing commitment to cultural diversity in Europe and values the vital role of the independent sector. The combination of Downtown and Virgin Music will strengthen the services available to independent labels, supporting their growth and contribution to Europe’s cultural landscape.”
“We remain confident that the European Commission will recognize the benefits of this transaction for artists, labels, and independent music in Europe.”
“IMPALA continues to promote analysis from its affiliates that is inaccurate and misleading”.
UMG
Helen Smith, IMPALA’s Executive Chair said: “It’s about balance. Big companies are important and so is collaboration, with the joint AI licensing project with Spotify as an example.
“At the same time, concerns have been raised about the health of the digital market and the ecosystem if the leader is allowed to become too big. The conclusions point to the risk of the independent sector losing revenue as a result and that means fewer and less diverse releases.”
The cultural diversity argument represents IMPALA’s latest strategy in opposing the deal, which is currently under Phase II investigation by the European Commission.
IMPALA notes that assessing impact on cultural diversity falls under the EC’s obligations under European treaty and UNESCO convention.
“If UMG buys Downtown, there will be a material detrimental impact on artistic cultural diversity within the EEA.”
IMPALA
IMPALA’s latest paper follows the organization’s “100 Voices” campaign launched earlier this month, featuring testimonies from indie reps 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.
Last week, Music Business Worldwide published a collection of views from leaders in the global independent music distribution space on the topic of Universal‘s proposed $775 million takeover of Downtown.
The EC escalated its review of the UMG/Downtown transaction to a Phase II investigation earlier this year, citing potential concerns that the acquisition could enable UMG to access commercially sensitive data from Downtown subsidiaries FUGA and Curve Royalty Systems.
The EC’s investigation deadline was originally set for December 10 but has been suspended while awaiting requested information, with a new timeline yet to be confirmed.
UMG’s Virgin Music Group announced the transaction in December 2024.Music Business Worldwide
