Arguments each for and in opposition to Common Music Group‘s proposed $775 million acquisition of Downtown are getting louder.
On the ‘in opposition to’ facet, through lobbying physique IMPALA, we’ve seen the thorny topic of UMG’s market share in Europe rear its head twice in latest weeks.
Two separate claims about UMG’s European market share from IMPALA have contradicted my very own calculation from earlier this yr.
In that calculation, based mostly on IFPI knowledge, I instructed Common’s distribution market share in Europe in 2024 stood “near 31%“.
A number of of you’ve got contacted me to ask if I acquired my numbers improper. (Spoiler: No, I didn’t!)
So I believed I’d do the smart factor: get much more granular on the maths(s) behind my IFPI-informed methodology, and present you the working.
First, although, let’s cowl IMPALA’s two claims:
IMPALA Declare 1 (ex-UK): Helen Smith, June 25
IMPALA chief, Helen Smith (pictured inset), claimed in an op/ed, citing an unnamed knowledge supply, that “UMG’s share [in Europe was] 18% increased” in 2023 than it was in 2012.
Smith stated these figures represented Europe “excluding the UK”, and did not mirror latest additions to UMG’s steady, together with [PIAS].
Smith’s stats stunned many – significantly as Common has been fiercely challenged by the fast development of indie distributors in Europe within the streaming period. (For instance: Consider throughout the EU, and Amuse in its dwelling nation of Sweden).
What’s extra, in 2012, regulators blocked UMG from shopping for many important indies within the EU for a full decade — a situation of Common’s buy of EMI Music.
Final week, the co-CEOs of Virgin Music Group, Nat Pastor and JT Myers, publicly denounced Smith’s numbers, stating: “There’s ZERO credible knowledge to help [Smith’s market share claim]… It’s not true.
“The truth is that in this era [in Europe] the impartial sector’s market share has grown materially, whereas UMG’s market share has not.”
IMPALA Declare 2 (inc UK): Open letter, July 7
Earlier this week, IMPALA issued an open letter, addressed to the EC, that contained extra market share stats.
Knowledge was cited from Omdia, the oft-quoted firm behind the Music & Copyright publication.
In response to IMPALA, Omdia’s new stats recommend that Common Music Group “controls over 40% of the recorded music market [in Europe] – almost double the second largest participant”.
This can be a notable declare as a result of… guess what? The EC says: “If an organization has a market share of lower than 40%, it’s unlikely to be dominant.”
Curiously, the small print of the IMPALA letter confirmed that Omdia’s dataset differed from that of Helen Smith’s.
Omdia’s stats, it stated, have been for 2024 (moderately than 2023), and have been based mostly on the commerce revenues of seven European nations together with the UK.
The opposite nations coated have been Germany, France, Italy, Spain, the Netherlands, and Sweden.
How I acquired to ‘near 31%’…
Now permit me to clarify why I proceed to consider a ~31% market share estimate for UMG in Europe (2024) relies on stable knowledge.
Step One
UMG has beforehand revealed a statistic for its annual Recorded Music (RM) revenues generated in Europe in 2024.
Some fast issues to know:
- MBW has confirmed that ‘Europe’ right here contains the EU plus the UK.
- The truth is, ‘Europe’ in UMG’s 2024 numbers actually refers to EMEA: Europe, the Center East & Africa. (Or, to be completely correct: Europe + the UK + these nations within the Center East and Africa the place UMG has working corporations.)
- The non-Europe/UK contribution to this EMEA income determine is nominal.
In response to UMG’s annual report, this Europe/EMEA territory generated 28% of UMG’s Recorded Music revenues in 2024.
Certainly, Common has supplied traders with the exact annual income determine it generated on this territory final yr: EUR €2.525 billion.
Step Two
This bit’s simple.
First we’ve to transform the EUR €2.525 billion that UMG generated in Europe (EMEA) final yr into USD – based mostly on the IFPI’s chosen common annual trade charge for 2024: 0.92 USD per 1.0 EUR.
That leaves us with UMG’s whole annual USD Recorded Music revenues in Europe/EMEA final yr: USD $2.744 billion.
Another fast issues to know:
- UMG’s RM revenues do not embody merchandise. They embody streaming, downloads, bodily gross sales, and ‘Licensing & Different’*.
- The latter class is primarily comprised of sync revenues and public efficiency revenues, which the IFPI additionally contains in its commerce revenues.
Step Three
Subsequent up, we’d like the whole recorded music commerce income determine for Europe in 2024 from the IFPI, which is printed within the commerce physique’s newest International Music Report.
The GMR is a paid-for premium report. Being delicate to that, I’ll solely print a rounded approximation right here: USD $8.7 billion.
(In actuality, I’ve a extra exact quantity for whole commerce income for Europe from IFPI, overlaying 27 territories together with: UK, Germany, France, Italy, Netherlands, Spain, Sweden, Switzerland, Poland, Belgium, Denmark, Austria, Norway, Finland, Eire, Czechia, Greece, and Portugal.)
Step 4
Practically there!
Now we simply need to calculate UMG’s 2024 recorded music revenues in Europe (USD $2.744 billion) as a proportion of the IFPI’s official whole commerce revenues in Europe.
That comes out to… 31.5%.
That’s my market share estimate for Common Music Group in Europe in 2024, based mostly on IFPI knowledge.
(And keep in mind, technically that’s UMG’s share of EMEA: Europe + UK + chosen territories within the Center East and Africa. Which suggests the actual UMG market share quantity for simply Europe + the UK can be barely decrease.)
The subsequent steps…
I’ve additionally adopted the above course of for a couple of different related years to illustrate how UMG’s European market share has declined over the previous decade, not least due to the rise of indie distributors.
Let’s begin with 2023 – the yr earlier than UMG acquired [PIAS].
Supplying you with the fast model of the identical steps I walked you thru above:
- Common Music Group’s recorded music division generated USD $2.60bn (EUR 2.392bn) in Europe in 2023***;
- That $2.60 billion was value a 32.5% market share of Europe (together with the UK) in 2023, based mostly on IFPI’s annual commerce income whole for the area ($8.0bn).
Now, for completeness, let’s go proper again to 2013: the yr after Common acquired EMI Music.
- In response to the IFPI International Music Report for that yr, Europe’s recorded music enterprise in 2013 generated USD $5.4 billion in commerce revenues;
- In response to then-UMG proprietor Vivendi, Common Music Group’s annual revenues (world) weighed in at USD $5.322 billion (EUR €3.992bn);
- Of that world determine, stated Vivendi, 40% was generated in Europe, equal to USD $2.129 billion;
- Based mostly on the related IFPI determine, this equated to an approximate 39.4% market share in Europe for UMG.
Yeah, like, inform me all of that in a sentence…
In response to these stats, Common Music Group’s annual Recorded Music market share in Europe (together with the UK) within the eleven years between 2013-2024 declined by roughly 790 foundation factors.
On the finish of this era, in 2024, Common’s market share in the EU plus the UK stood at 31.5% – an extended shot from the EC’s self-established 40% market dominance threshold for M&A exercise in Europe.
Notes:
* UMG’s ‘License & Different’ class in its reported Recorded Music revenues additionally contains ticketing, sponsorship, movie and TV manufacturing, and sure different income. This could solely serve to inflate UMG’s market share within the estimates above.
** In every new version of its International Music Report, the IFPI retrospectively adjusts trade income outcomes from earlier years to point out fixed forex development/decline within the trade. Common Music Group doesn’t do that in its fiscal outcomes (clearly), so each IFPI-based estimate used on this evaluation relies on the most recent IFPI figures from the GMR within the yr in query.
*** For 2023, Common Music Group revealed a income determine for its RM turnover in Europe of EUR €2.392bn. This has been transformed into USD on the charge given within the related IFPI International Music Report.Music Enterprise Worldwide
