Virgin Music Group is having its say.
To this point, JT Myers and Nat Pastor, the co-CEOs of the worldwide providers firm, have publicly avoided discussing opposition to Virgin’s proposed $775 million takeover of Downtown Music Holdings.
That simply modified.
In a brand new letter to VMG employees, obtained by MBW, Myers and Pastor handle a number of accusations made about Virgin – and its mum or dad firm, Common Music Group – from events who need regulators to dam the Downtown acquisition.
Myers and Pastor, who co-founded mtheory earlier than becoming a member of Virgin, don’t title specific people or corporations of their letter.
Nonetheless, they reply to quite a lot of particular public statements, together with:
- An accusation from IMPALA, which represents the pursuits of a gaggle of unbiased labels in Europe, that Virgin will exploit the shopper knowledge of Downtown (and subsidiary FUGA) to feed UMG a market benefit. Myers and Pastor reply: “Betraying the belief our shoppers have bestowed on us can be self-destructive: they’d shortly, and fairly rightly, finish the connection. Which is why we’re proud to say that for the reason that day we entered this enterprise, we’ve by no means had a single criticism of misuse of consumer info of any sort.”
- A shocking current declare from IMPALA’s Helen Smith – citing an unnamed knowledge supply – that Common gained recorded music market share in Europe (ex-UK) between 2012 and 2023. For a full decade throughout this era, UMG was legally blocked from making important acquisitions within the EU, a situation of its 2012 buyout of EMI Music. Throughout the identical decade, EU-based distributors equivalent to Imagine and Amuse quickly grew, whereas rival Sony went on an acquisition tear, shopping for indies like Phonofile (Norway), finetunes (Germany), and Century Media (Germany). Pastor and Myers argue: “There may be ZERO credible knowledge to help [Smith’s market share claim]… and for an excellent purpose: It’s not true. The truth is that in this era the unbiased sector’s marketshare has grown materially, whereas UMG’s marketshare has not.”
- A warning from Beggars Group boss Martin Mills, issued in December, that Virgin’s proposed Downtown acquisition can be “one other step on the highway of UMG’s pretence to be the independents’ fairy godmother. However there’s a wolf beneath that cape”. To this, Myers takes specific umbrage. He writes: “Nat and I are used to a little bit of name-calling. However the insinuation that Virgin is something however a constructive pressure within the unbiased market is an insult to all of you who comprise the Virgin Music Group household… Any assertions on the contrary are juvenile, offensive, and are simply falsehoods being unfold by those that are prepared say something to harm the probabilities of this deal taking place.”
Myers and Pastor’s letter was despatched to Virgin staff earlier immediately (July 3).
You possibly can learn it in full under.
To the Virgin Music Group staff:
As you all know by now, we’re tremendously excited in regards to the pending mixture of Downtown and Virgin.
Given the daring visions of the long run and the mutual respect our corporations share, we’re assured our mixed enterprise will be capable of ship huge added worth to our shoppers.
We’re scripting this notice to you now for 2 causes: first, to briefly replace you on the regulatory standing of the proposed acquisition, and second, to clear up a number of the falsehoods that opponents of the deal are perpetuating, which I’m positive would possibly even be complicated or regarding to you.
First, an replace on the standing of the merger: Final month, the European Fee initiated ‘Part I’ of its overview of Virgin’s acquisition of Downtown. Within the coming weeks, the Fee is anticipated to announce whether or not it has no objection to the deal, during which case we’ll then proceed to shut the transaction, or whether or not the Fee has determined to afford itself extra time to overview the case – for instance by transferring into “Part II”.
Now to these falsehoods:
Whereas the merger has rightly been beneath regulatory overview world wide for the final six months, our precedence has naturally been to current to the regulators our place on the transaction. We however wish to carry fact to bear towards a number of the fictions and falsehoods being unfold by the acquainted forged of characters, together with skilled lobbyists, who oppose our corporations’ coming collectively.
Listed here are a number of examples:
1. FICTION: Virgin will exploit Downtown’s buyer knowledge to realize a aggressive edge for UMG.
FACT: Virgin won’t exploit Downtown’s buyer base for any purpose.
Virgin won’t solely uphold Downtown’s knowledge privateness insurance policies, we may also develop and strengthen them. Virgin already handles – with the care and confidentiality they deserve – the delicate consumer knowledge of a whole lot of companions.
Betraying the belief our shoppers have bestowed on us can be self-destructive: they’d shortly, and fairly rightly, finish the connection. Which is why we’re proud to say that for the reason that day we entered this enterprise, we’ve by no means had a single criticism of misuse of consumer info of any sort.
2. FICTION: Virgin will prohibit or shut down providers equivalent to FUGA, Curve, CD Child, Downtown Music Publishing, or Songtrust.
FACT: Virgin is doing this deal for precisely the alternative purpose. We see the extraordinary worth of investing in and increasing entry to those and different platforms.
Over the past three years, we’ve been constructing Virgin inside UMG as a standalone, international providers enterprise with its personal management, tech stack, and autonomy. The take care of Downtown will strengthen the muse we’ve constructed up to now.
Our motivation for the merger and our pleasure about it are rooted on this singular alternative: by combining Downtown’s and Virgin’s distinctive capabilities, the unified firm will supply an much more strong and versatile suite of providers to unbiased labels all over the place.
3. FICTION: UMG’s market share in Europe (ex-UK) has skyrocketed by 18 share factors for the reason that EMI acquisition in 2012.
FACT: There may be ZERO credible knowledge to help this … and for an excellent purpose: It’s not true. The truth is that in this era the unbiased sector’s marketshare has grown materially, whereas UMG’s marketshare has not.
Why? Properly, the expansion of the unbiased group has been the product of a number of elements: personal and enterprise capital has poured into each indie labels and providers suppliers; artists have extra instruments than ever; streaming has democratized music; and a brand new era of corporations has flourished.
“In the present day, roughly 100 providers corporations are competing to accomplice with unbiased labels and artists”
Competitors among the many providers companies is flourishing exactly due to the continued funding in them and the flood of recent entrepreneurs – label executives and artists themselves – into {the marketplace}. The extra funding that flows into the providers companies, the extra unbiased labels profit, as a result of extra funding means higher assets and larger competitors amongst providers suppliers.
In the present day, roughly 100 providers corporations are competing to accomplice with unbiased labels and artists. The stronger the supplier of providers, the larger the possibility that the unbiased label and artist has to achieve immediately’s market.
Lastly, we wish to handle a collection of private assaults which were levelled towards Virgin and us throughout this lobbying effort within the press. We now have been referred to as “wolves behind the cape” – that’s, that we’re secretly preying on the very group we declare to serve.
Nat and I are used to a little bit of name-calling. However the insinuation that Virgin is something however a constructive pressure within the unbiased market is an insult to all of you who comprise the Virgin Music Group household, who work tirelessly on daily basis to assist unbiased labels and artists obtain their targets. Any assertions on the contrary are juvenile, offensive, and are simply falsehoods being unfold by those that are prepared say something to harm the probabilities of this deal taking place.
“[These assertions are] juvenile, offensive, and are simply falsehoods being unfold by those that are prepared say something to harm the probabilities of this deal taking place.”
The unbiased sector isn’t monolithic, as you recognize. It’s comprised of hundreds of labels and artists all around the world. Some subscribe to the reductive “main = dangerous, indie = good” worldview, others don’t. We personally suppose that in an unbiased house this dynamic – comprised of the legendary “previous guard” of iconic unbiased labels in addition to a era constructing the long-lasting corporations of the long run; of bootstrapped corporations alongside ones backed by a number of the largest personal fairness, enterprise capital and expertise corporations on the earth; of artists simply starting their careers subsequent to a number of the largest international superstars – that issues simply aren’t that straightforward anymore.
However that’s simply our opinion. We don’t get to determine for the entire unbiased house, however neither does anyone else. Each member of the unbiased group will get to make their very own alternative, based mostly on their very own worth system. And that goes for his or her alternative of service supplier – corporations can select Virgin, Downtown or any of the scores of different companions, unbiased or main, based mostly on their business wants and preferences.
“The unbiased sector isn’t monolithic, as you recognize. It’s comprised of hundreds of labels and artists all around the world. Some subscribe to the reductive ‘main = dangerous, indie = good’ worldview, others don’t.”
That’s why, in 2022 the 2 of us joined Virgin to attempt to develop one other alternative – one which we felt can be a very good one for entrepreneurs like us, one which we didn’t suppose was being supplied by the various present gamers available in the market. With the acquisition of Downtown, we see a major alternative to supply independents with one thing much more efficient to advance their business and artistic targets. We additionally know that we’ll be competing on daily basis with dozens of different international service suppliers, so in an effort to win we should be one of the best companions the indie group can work with. And that’s precisely what we’re going to be.
We’re so enthusiastic about every little thing to return, and I do know all of us at Virgin look ahead to talking instantly with all of our Downtown colleagues very quickly.
Wishing you all one of the best,
Nat & JT
Pastor and Myers’ letter follows a widely-read op/ed from Kenny Gates as regards to IMPALA vs. UMG/Downtown, printed on MBW yesterday (July 2).
Gates is co-founder of each IMPALA and [PIAS]. Common totally acquired the latter firm final yr.
He wrote: “I’ve all the time been a proud co-founder of IMPALA (there’s a purpose it’s headquartered in Brussels). But it’s an ideal disgrace that it’s turn out to be a small-minded, inward-looking group, extra involved with specializing in imaginary issues than contributing options that truly assist the music trade.
“The instances, they’re a-changing… and make no mistake: the instances have modified.
“Unbiased music rightsholders – whether or not artists or labels – are thriving in a brand new ecosystem. The entire binary ‘indies vs. majors’ narrative is passé.”Music Enterprise Worldwide
