The President of Dutch indie label trade group STOMP, Kees van Weijen, has urged the European Union to block Universal Music’s acquisition of Downtown Music, insisting that both national and EU competition regulators have a duty to “step in before consolidation erodes competition and weakens cultural diversity irreversibly”.
Alongside his role at STOMP, Van Weijen also sits on the board of pan-European indie label trade group IMPALA, which has strongly opposed Universal’s bid to buy Downtown, an acquisition that would give the major control of FUGA, Songtrust, CD Baby and Curve, businesses that millions of independent artists and labels rely on.
IMPALA’s opposition to the deal has been the subject of strong criticism from a number of quarters, both direct and indirect, from a range of Universal’s subsidiaries, allies and surrogates.
That includes outspoken op-eds and memos from the bosses of formerly independent music companies that the mega-major has acquired, as well as criticism from commentators writing in publications that carry significant numbers of ads for both Universal and Downtown. Despite that, van Weijen says he won’t be “silenced” from expressing his personal opposition to the Downtown deal.
“This acquisition follows a troubling precedent” he says, noting that “earlier this year, UMG quietly took over 8Ball, another Dutch independent, without notifying regulators or even announcing it”. That in turn followed Universal’s higher profile takeover of another European indie distributor, [PIAS].
Van Weijen also criticises Universal for trying to talk up its independent credentials, partly by using its Virgin Music brand when communicating about the Downtown deal, “even though Virgin is fully owned by UMG”. In the music sector, he says, “independent means not being owned or controlled by a major, and misusing that undermines public trust and causes confusion”.
Downtown’s key FUGA business was founded in Amsterdam, where it continues to have its HQ, while Universal Music – although ultimately run out of the US – is listed on the Dutch stock exchange. So Universal’s bid to buy Downtown has a big Dutch element to it, and it was the national competition regulator in the Netherlands that referred the case to the EU’s competition regime.
In his new op-ed piece, van Weijen says that this deal “strikes at the very heart” of the Netherlands music business, but that Universal seeking to control ever more of the digital music pipeline also impacts on music communities across Europe.
“In the Netherlands and elsewhere in Europe it is the independents who invest deeply in local artistic risk”, he writes, adding that it’s indie labels that “nurture the voices, genres and stories that major labels may overlook”.
Those independent businesses need access to fully independent distribution to properly compete in a market already dominated by the three majors, and especially Universal.
“When distribution becomes increasingly concentrated it’s dangerous”, van Weijen says, and “the ability for independents to switch providers or access fair terms with digital streaming platforms is limited and costly”.
Many critics of the Downtown deal have honed in on the fact that Universal is already exploiting its market dominance to pressure the streaming services to change their business models in a way that favours big catalogue owners and superstar artists over independent labels and smaller artists.
If Universal controls the Downtown businesses too, it will have even more market power to help it further push what it calls its ‘streaming 2.0’ strategy.
Van Weijen notes that the changes to the streaming business model already forced through by Universal – usually via secret negotiations in the US – are already having a big impact in Europe, especially in smaller and developing markets.
“Through my work in IMPALA’s Central And Eastern Europe task force, I see how precarious music scenes are outside the major hubs”, he explains. “If distribution diminishes and independents are squeezed, entire national music ecosystems risk collapse, giving market leaders outsized control of the sector”.
“This is not theoretical”, he adds, “it is already happening. Just look at how UMG pushed through so-called ‘streaming 2.0’ – the impact is huge for developing artists and labels in small countries or niche genres”.
Van Weijen has experience of both the major and indie label worlds, having had a long career at Universal and its predecessor Polygram before moving into the independent sector.
“My time at Universal was amazing and I look back on those years with great appreciation and admiration”, he writes. And in more recent times, he says, “I have seen great collaboration between Universal and IMPALA on important issues such as TikTok and artificial intelligence”.
However, he insists, “my work today is dedicated to ensuring the health and diversity of the wider market”, and to achieve that “we need multiple, robust distribution channels with operational resilience”.
The European Union began a ‘phase two’ investigation into Universal’s Downtown deal in July. It was meant to be completed by 10 Dec, however yesterday the EU regulator announced it has paused its investigation while it awaits the delivery of important information from parties involved in the acquisition. A new deadline will be announced once that information has been provided.
