Downtown Music Holdings
Several more players in the independent music community have called on regulators to block the acquisition of Downtown Music Holdings by Universal Music Group (UMG) announced this week, arguing the deal “would seriously distort the global music market” and “reduce competition and the independents’ bargaining power.”
Virgin Music Group, which is owned by UMG, announced Monday (Dec. 16) that it had agreed to buy Downtown Music Holdings for $775 million in a deal that would beef up the music giant’s market share by absorbing Downtown’s stable of indie distributors, publishing and rights administrators including FUGA, CB Baby, AdRev and Songtrust. The deal came just two months after UMG acquired the remaining shares of indie label group [PIAS], including its services division, Integral — an agreement that was similarly criticized by indie trade groups, who have asked regulators to launch an investigation into the pact.
In a joint release Thursday (Dec. 19), several indie music leaders said the deal, if allowed to go through, would result “in fewer options for smaller companies to negotiate fair terms and compete on equal footing, leading to higher costs and less choice.”
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“We are the global independent music community,” said Noemí Planas, CEO of Worldwide Independent Network (WIN), in a statement. “UMG trying to present this as an investment in the independent ecosystem is fooling no one. This is wealth extraction from the independents, another step in UMG’s relentless path to dominance and stifling competition. Independent music is the lifeblood of cultural innovation and market consolidation threatens the diversity that makes music so rich and compelling around the world. We call on regulatory bodies to block the deal.”
Also speaking out against the acquisition was A2IM CEO Richard James Burgess, who stated: “Universal Music Group’s acquisition of Downtown Music’s assets continues a troubling trend of consolidating independent music infrastructure, following acquisitions of InGrooves, MTheory, and PIAS. This increasing level of market concentration chips away at the competitive landscape, making it increasingly difficult for truly independent artists and companies to operate freely and equitably. These acquisitions risk silencing the independent voices that drive innovation and creativity in the music industry.”
Added Darius Van Arman, CEO of Secretly Distribution and co-founder of Secretly Group, “When near-monopolist Universal acquires Downtown, one of the largest independent music ecosystems, and does so in the name of independence, it cheapens what the word means. Market consolidation at this scale is not only anti-competitive, it is a fundamental threat to true independence.”
Virgin’s purchase of Downtown is just the latest in a string of similar acquisitions by major labels over the last several years. In 2024 alone, UMG acquired Outdustry, a label services and rights management firm that works across China, India, and other Asian markets; Thailand-based recorded music catalog RS Group; Nigerian record label Mavin Global; and a minority stake in U.S.-based Chord Music Partners, among others. Two years ago, Sony Music made a splash when it acquired AWAL and Kobalt Neighbouring Rights from Kobalt Music Group, followed by the more recent acquisitions of companies like Spanish label and distributor Altafonte and Greek independent label Cobalt Music. And Warner Music Group has snapped up minority stakes in European indie labels of late, including Dancing Bear Music (Croatia), NIKA (Slovenia) and Mascom (Serbia); it also fully acquired the Dutch label Cloud 9 Recordings in October.
“Whilst we are in favour of free enterprise, monopolies dominate market forces and remove the ability to compete,” said Maria Amato, CEO of Australian Independent Record Labels Association (AIR), in a statement on the Downtown deal. “There must be regulation to ensure that Universal who is already the largest music business in the world with a large stake in Spotify does not dictate prices and the ability for artists and labels to negotiate fair and equitable terms.”
“The recent acquisition by large corporations of companies that until recently were independent is a red alert for the entire global independent music community,” added Felippe Llerena, president of Brazilian trade association ABMI. “The Orchard, AWAL, Som Livre, Proper Music, Altafonte and now Downtown Music are examples of how multinational capital is reshaping the sector. ABMI believes that it is our duty to protect and promote an independent ecosystem, where artists, labels and companies can create freely and sustainably. Our fight is for the appreciation of music as art, culture and expression, not as a simple market product.”
In her own statement, Cecilia Crespo, GM of the association of Argentinian record labels ASIAr, said: “Concentration not only has a negative impact in the way platforms distribute royalties to artists and rights holders (based on market share), but also due to the unregulated use of data and intelligence from the analysis of the data and the behavior of all actors involved (artists, audiences, and users).”
On Tuesday (Dec. 17), several other indie music players came out in opposition to the Downtown acquisition, including indie labels trade body IMPALA, the U.K.-based Association of Independent Music (AIM) and global indie music publishers trade body IMPF.
UMG didn’t immediately respond to Billboard‘s request for comment on the latest statements of opposition.
Independent record labels and publishers are urging regulators to block the acquisition of Downtown Music Holdings by Universal Music Group (UMG) over fears that the deal weakens competition, to the “severe detriment” of artists and fans.
UMG-owned Virgin Music Group announced on Monday (Dec. 16) that it had agreed to buy Downtown Music Holdings for $775 million cash. The deal, which is subject to regulatory approval, bolsters UMG’s share of the music market by bringing a number of independent distributors, publishing and rights administration businesses owned by Downtown under its control. Those businesses include distributors CD Baby and FUGA, publishing administrator Songtrust and Los Angeles-based rights management company AdRev.
UMG’s purchase of Downtown comes two months after it acquired full ownership of European indie label group [PIAS] — a deal that also prompted indie trade groups to issue calls for regulators to intervene.
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“This is another land grab,” said Helen Smith, executive chair of independent labels trade body IMPALA — which represents more than 6,000 indie labels and music companies in Europe, including Beggars Group, Cooking Vinyl, Domino and Epitaph — in a statement about the Virgin-Downtown deal.
“We expect competition authorities in key jurisdictions to carry out thorough investigations and block these deals,” Smith added. She also pressed the European Union’s executive branch, the European Commission, “to set the standard internationally.”
“The cynical use of the Virgin brand, once synonymous with independent entrepreneurship, should not hide the fact that this is about utter dominance and control,” added Beggars Group founder Martin Mills in a statement. “This is another step on the road of UMG’s pretence to be the independents’ fairy godmother,” he continued. “But there’s a wolf under that cape.”
The acquisition of [PIAS] and Downtown in rapid succession by UMG follows a flurry of dealmaking over the past several years that has seen both traditional music companies and outside investors snap up firms, labels and distributors that cater to the fast-growing global independent sector.
Major label acquisitions in that time include Sony Music’s 2022 purchase of artist services company AWAL and Kobalt Neighbouring Rights from Kobalt Music Group. More recently, Sony acquired Spanish label and distributor Altafonte, followed last month by a deal for Greece indie label Cobalt Music.
Meanwhile, Warner Music Group has been steadily growing its recorded music interests in Central and Eastern Europe, buying minority stakes in Croatia’s Dancing Bear Music, Slovenian independent label NIKA and Serbia’s Mascom; and acquiring Dutch label Cloud 9 Recordings.
UMG’s deals for [PIAS] and Downtown followed a decade-long ban on the music giant acquiring certain music companies or catalogs in Europe that expired in September 2022. Those restrictions, imposed by the European Commission in 2012 following the company’s $1.9 billion takeover of EMI, prevented UMG from re-acquiring any of the assets it had sold or re-sign any artists who had signed with labels from which it had divested, such as Parlophone Label Group or Chrysalis, for 10 years.
Although Downtown Music Holdings was founded and is headquartered in New York, the scale of its multifaceted business, representing over 50 million songs across more than 145 countries and spanning publishing, distribution, artist and label services, and royalty administration, makes it a major player in the global indie sector. As such, the company’s acquisition by UMG would create a “fundamental shift in the competitive dynamics of the music market,” warned IMPALA chair Dario Draštata in a statement on the acquisition.
The Brussels-based trade association said the sale of Downtown and [PIAS] would further squeeze the independents in an already highly concentrated market and help UMG move further into the market for distribution and services for labels and artists.
“This means more market share and gives UMG control over the opposition,” said IMPALA in a press release. It added, “UMG suing Believe is another part of the strategy,” referencing last month’s $500 million lawsuit filed by UMG, ABKCO and Concord Music Group against Believe and its distribution company TuneCore that accused them of “massive ongoing infringements” of their sound recordings.
Other executives and organizations voicing concern over UMG’s latest acquisition include global independent music publishers trade body IMPF, which said the potential sale would “ultimately reduce choice for songwriters and publishers alike,” and the U.K. Association of Independent Music (AIM), whose CEO, Gee Davy, said the deal reduces independent routes to market.
“It is vital to uphold a true choice of partners for artists and labels and ensure that negotiating power does not become unbalanced,” said Davy in a statement.
Representatives for UMG did not respond to requests for comment when contacted by Billboard.
Three years after Downtown Music sold its 145,000-song catalog — including works performed by Aretha Franklin, David Bowie, Bruno Mars and Beyoncé — the president of its publishing division says it makes more money than it did when it owned copyrights.
That reveal comes amid Monday’s announcement that Universal Music Group’s Virgin Music Group is buying Downtown Music Holdings for $775 million in an all-cash deal expected to close by mid-next year.
Emily Stephenson, who since 2023 has been president of Downtown’s suite of publishing companies (Downtown Music Publishing, Songtrust and Sheer), says her division will generate more than $200 million in revenue in 2024, a 40% increase from last year and a higher gross than it had in 2020, the year before Concord bought its catalog.
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“We are in the middle of extreme growth mode right now,” says Stephenson, who has overseen client acquisition, business development, A&R, rights management and client services for Downtown since March 2023.
Since Stephenson took the lead, the publishing division has signed deals with indie rockers The National, Spirit Music Group and Peso Pluma’s Double P Records. According to the company, it now serves some 2 million songwriters and clients in over 60 countries — more than 40% of them outside the United States — manages over 1.5 million copyrights and has distributed over $100 million in royalties through Songtrust.
Access to additional funds has helped. In May, Downtown announced it secured another $500 million in credit from Bank of America — on top of its previous $200 million credit facility — to finance advances.
“We have been earnestly and aggressively putting that money to work,” Stephenson says, by offering competitive advances without forcing independent creators to give up any rights. As a result, “We think we’re growing at nearly twice the rate of the rest of the industry,” she says.
That growth is one of Downtown’s draws. The combined market share held by independent distribution and music companies — i.e. non-major labels and self-releasing artists — rose to 36.7% in 2023, up from 28.6% in 2015, according to MIDiA Research. As a result, the majors have made acquisitions and investments to defend their market share. Downtown’s scale and position of dominance in this segment made it an attractive way for UMG to grow.
However, Downtown’s growth has also led to customer complaints of long wait times at Songtrust and concerns that the platform is becoming more exclusive. Stephenson says there are no plans to restrict who can sign up for Songtrust, adding that over the past year, Songtrust has cut the average response time to customer complaints from 33 days to 17 hours.
Stephenson, 35, has spent more than a decade at Downtown and previously served as Downtown Music vp of business operations, and she says roughly 70% of the managers in her division have similarly long tenures.
That experience has helped with client retention and led to facilitating opportunities. This past summer, “Parade” by French composer Victor le Masne, a Downtown client, became the official theme song for the Paris Olympic and Paralympic Games. This holiday season, the team landed Griff’s cover of the Willy Wonka & The Chocolate Factory classic “Pure Imagination” in Target’s Christmas campaign.
“We are the only player doing this at scale for indie songwriters globally,” Stephenson says. “I think our future is bright.”
A version of this story appears in the Dec. 14, 2024, issue of Billboard.
Universal Music Group’s Virgin Music Group said on Monday it agreed to buy Downtown Music Holdings for $775 million cash in a deal that will bolster the world’s largest music company’s slice of the independent music segment. Founded in 2007 in New York, Downtown Music Holdings is the parent company of the direct-to-creator distributor CD Baby, […]
The board of directors of Downtown Music Holdings is exploring a sale of the nearly 20-year-old music company in part because the family of its longtime backer, the late Sir Douglas Myers, is considering winding down its stake. But who was Douglas Myers and how did he get involved in Downtown?
Before Myers’ investment in what was then known as Downtown Records helped catapult Gnarls Barkley‘s 2006 hit “Crazy” to No. 2 on the Billboard Hot 100 and earn the duo a Grammy nomination for record of the year, he was the heir of one Australasia’s most successful brewing dynasties.
Myers was a fourth-generation brewer and the descendant of Polish Jewish immigrants to New Zealand. In 1965, he joined the brewing company that would become Lion Nathan and eventually spend around 15 years there as MD, CEO and ultimately chairman, a post he ascended to in 1997, according to 2007 biography The Myers by Michael Bassett and Paul Goldsmith. In 1998, Myers sold the majority of his Lion Nathan share to Japan’s Kirin Brewery Company.
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In retirement, Myers threw himself into philanthropy and some alternative investments, including, at 69, Downtown.
The success of Gnarls Barkley’s led to Douglas attending the 2007 Grammys, where he saw the duo, which was composed of Cee Lo Green and Danger Mouse, pick up two awards: best urban/alternative performance for “Crazy” and best alternative music album for St. Elsewhere. In a subsequent interview on the New Zealand TV evening news show Sunday, Douglas described feeling starstruck.
“It’s not my thing,” Douglas said, describing the event as “amazing. Lionel Richie was there, Tony Bennet, Sting was there….Beyoncé was there.”
Myers reportedly invested in Downtown because of his son Campbell Myers‘ love of music. Campbell Myers later served as Downtown’s director of business development for a year from 2009-2010, according to his LinkedIn profile, and more recently founded and served as co-CEO of CreateMe, a San Francisco-based technology-focused clothing manufacturer.
Douglas died in 2017 after a long battle with cancer.
The board of Downtown Music Holdings, the parent company of independent distributors CD Baby and FUGA as well as a number of other publishing and rights administration businesses, is exploring a sale, sources familiar with the deal tell Billboard.
The publishing administrator for the catalogs of John Lennon and Yoko Ono, Miles Davis and the Wu-Tang Clan, among many others, Downtown has held talks with private equity firms and at least one major music company, as its longtime backer, the family of the late Douglas Myers, looks to exit its investment, according to two of those sources who spoke on condition of anonymity because the talks are private.
The fast-growing independent sector of the music industry has seen a flurry of dealmaking activity in the past year, as both outside investors and traditional music companies shop for ways to control more of the market that services and distributes the music of do-it-yourself artists, songwriters and indie labels.
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In June, the consortium composed of Denis Ladegaillerie, EQT and TCV bought 95% of the outstanding shares of of French music company Believe after Warner Music Group backed out of an acquisition bid the major floated earlier in the year. Later that same month, the Chicago-based private equity firm Flexpoint Ford bought a stake in Create Music Group for $165 million. Last year, Apple veteran Larry Jackson raised about $1 billion and purchased distributor Vydia as the engine to launch his new company gamma, while Exceleration Music bought indie distributor Redeye for an undisclosed sum.
Downtown declined to comment on a possible sale beyond an emailed statement that said, “There has always been strong market interest in and excitement for our platform. We remain steadfastly focused on serving our clients and expanding our business by continuing to drive innovation across the global music industry.”
The market share of recorded music revenue generated by labels and artists that release music outside of the major-label system has been growing globally for around a decade. Non-major labels and self-releasing artists’ collective share of the recorded music revenue market grew from 28.6% in 2015 to 36.7% in 2023, according to research by MIDiA.
Founded by Justin Kalifowitz in 2007 as a publisher in New York, Downtown quickly grew into a global company with more than 20 offices around the world, and its scale makes it among the more attractive acquisition targets in this segment of the music industry. It reaches more than 4 million creators and services some 50 million tracks from 5,000 business clients.
Downtown has explored a sale before, and that process led it to sell its 145,000-song publishing catalog in 2021 to Concord for around $400 million. In recent years, Downtown has transformed from a leading indie publisher to a full-stack music company.
It has made over a dozen acquisitions in recent years, including the direct-to-creator distributor CD Baby, and the direct-to-business technology and distribution platform FUGA, as well as rights management company AdRev and service providers DashGo, Soundrop, Simbals, Found.ee, Curve and Sheer Music Publishing.
Operated in four divisions — artist & label services, which includes CD Baby; distribution services, which includes FUGA; publishing services, which includes administrator Songtrust; and royalty and financial services, which includes Curve — Downtown is expected to generate about $40 million in EBITDA on about $130 million in net revenue, or $900 million in total revenues, according to three sources familiar with the company’s financials.
Sources say Downtown uses the agency accounting model to record its financials, which counts only the fees from companies like FUGA toward the company’s overall revenue.
Sir Douglas Myers was a New Zealand businessman and longtime chief executive of the beverage company Lion Nathan, who sold his stake in that company to Japanese brewer Kirin in 1998. Myers, who died in 2017, reportedly invested in Downtown because of his son Campbell Myers‘ love of music. Cambell Myers served as Downtown’s director of business development for a year from 2009-2010, according to his LinkedIn profile.
Billboard was unable to determine which companies are in talks with Downtown. But Warner Music Group CEO Robert Kyncl told investors in May it is exploring mergers and acquisitions that could expand its “lower-touch” services for independent creators and labels, and in June, it hired Goldman Sachs’ global head of music & live entertainment investment banking Michael Ryan-Southern to lead M&A.
Kyncl said on a conference call discussing WMG’s quarterly earnings on May 9, “We have a clear plan to develop this area of our ecosystem, and we’re building solutions in-house while staying vigilant about M&A opportunities, which could accelerate our capabilities.”
Downtown Music launched Curve Royalty Services on Thursday for labels, publishers, and distributors that are hoping to find a third party to handle the laborious work of accounting on their behalf. Downtown had previously acquired the company Curve Royalty Systems in 2023.
“It has always been our goal to make royalties better and easier,” Richard Leach, managing director at Curve, said in a statement. “Now our royalty services team can take on those parts of the process [that] clients would like to outsource.”
Curve was launched in 2019. “We ingest data from the likes of Spotify, Apple Music, any physical distributors, 1,000+ different sources,” co-founder Tom Allen explained in 2022. “We then allow labels and publishers to input the contract details, and we output the artist statements.”
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“In its simplest form,” he added, “it is just a bit of math.”
But it can be a lot of math in the streaming era. Back in 2012, when streaming services began acquiring more users, “statements that we were used to seeing, maybe we would hit hundreds of thousands of lines on a statement, and you could still manage that on Excel,” Leach added in the same interview. “Suddenly we were getting millions and millions of lines of data every month. Anyone who’s familiar with Excel knows it collapses at a million lines.”
In this new landscape, some labels and distributors were “really struggling,” Leach continued. “And that was really the genesis for Curve. We struggled to find the software to deal with the scale. Suddenly processes were taking days instead of hours. We couldn’t find a solution” — until “Tom thought he’d have a crack at building it.”
Curve expanded into the U.S. in 2021. The following year, the company said it processed close to $1 billion in revenue. It currently serves around 1,500 clients, including notable independent labels like Domino, Epitaph, and Armada.
Downtown acquired Curve in January 2023. “We have been admirers of the technology and service quality that Tom and Richard have been building,” Downtown CEO Andrew Bergman said at the time.
Tracy Maddux, chief commercial officer at Downtown Music Holdings, is stepping down from his role effective immediately, the company announced Sunday (Nov. 19). Maddux was previously CEO at CD Baby, whose parent company, AVL Digital Group, was acquired by Downtown in 2019. According to a press release announcing his exit, Maddux most recently contributed to […]
Downtown Music Holdings announced layoffs across the company’s CD Baby, Downtown Music Publishing, Songtrust, and Downtown Music Holdings (DMH) divisions on Wednesday (March 22).
Downtown Music Holdings chief executive Andrew Bergman emailed staff early Wednesday to share the news. Notably, many of the lay offs affect those working in publishing roles. Neither the email, which was obtained by Billboard, nor a company representative would confirm how many jobs were affected.
Bergman also noted in the email that there are also “a number of cost-saving measures… underway” already at Downtown apart from the reduction in team size. The Downtown rep also declined to explain what these measures were.
The email labels this downsizing as “reorganization” that “harmonizes the past several years of strategic investments and divestitures.” As detailed in a recent Billboard profile of the firm, Downtown pivoted from a traditional publishing firm with 145,000 songs in its catalog to selling off all intellectual property in favor of repositioning as a service-focused company instead.
To further bolster their service offerings, in the last few years Downtown acquired CD Baby, FUGA, AdRev, Soundrop and DashGo, and then last September announced the combination many of its B2B services under the name “Downtown Music.” Downtown Music now includes staff from FUGA, Downtown Neighbouring Rights, AdRev and Downtown Music Services artist, label services and publishing administration units.
In October, Billboard reported that Downtown’s CD Baby and Soundrop had laid off 28 employees, citing “economic conditions” and “uncertain times” in a company-wide email from chief people officer Love Whelchel.
“This reorganization harmonizes the past several years of strategic investments and divestitures, better positioning us for the future by aligning our talent, resources, technology and services to meet the evolving needs of the music community while at the same time taking into account this period of economic uncertainty,” said a Downtown rep in a statement.
Read the full email to Downtown Music Holdings’ staff below:
Team,
Today we’re sharing some difficult news with all of you. Downtown’s management team has made the decision to reduce the size of our team in certain areas of the organization, specifically CD Baby, Publishing, Songtrust and DMH. Later this morning, we will be meeting with those employees and informing them that their roles will be impacted.
Along with reducing our team size overall and a number of cost-saving measures we have underway, we hope to be able to offer and place some impacted members of our team in other positions within Downtown that will give them a chance to apply their skills and expertise in new ways.
This reorganization harmonizes the past several years of strategic investments and divestitures, better positioning us for the future by aligning our talent, resources, technology and services to meet the evolving needs of the music community while at the same time taking into account this period of economic uncertainty.
We are committed to continuing to communicate about our plans, our business performance, and the results of these changes and remain accountable to all of you for the improvements and the long-term health and strength of our work at Downtown.
Our management, people, operations, legal and communications teams have made every effort to manage this process with as much thoughtfulness, consideration and empathy as possible. We will be meeting with all of you in the coming days to share more directly, plans for each division and will be ready to answer any questions you may have.
Sincerely,
AB
Additional Reporting by Dan Rys
Downtown Music Holdings has acquired Curve Royalty Systems, a company that specializes in royalty processing for digital income, it was announced Thursday (Jan. 5). Curve will now be a part of Downtown Music, a division that focuses on servicing the professional music industry.
In recent years, Downtown has pivoted away from its previous role as a traditional publisher and rights holder by selling off its 145,000-song catalog and putting its efforts into building a service-focused music company to tap into the growing cohort of DIY artists and professionals. The company has quickly amassed a suite of service tools via acquisitions including Curve, FUGA, CD Baby, Soundrop, AdRev and more. Downtown is also an active investor in companies like Beatbread and Vampr.
Though Downtown is integrating Curve into its suite of offerings for distribution and monetization, the royalty processing firm — which can distill multiple royalty statements into one cohesive report — will continue to serve its existing client base of over 1,000 labels and publishers worldwide. This includes Warp Records, Ingrooves, Mad Decent, MRC, Royalty Solutions Corp, Domino Recording Company, Hospital Records/Songs in the Key of Knife, Cal Financial and Alta Financial. Since its inception in January 2019 by co-founders Tom Allen, Richard Leach and Ray Bush, the company says it has processed nearly $4 billion in revenue.
Downtown Music president Pieter van Rijn said of the deal, “In Downtown Music, we’ve combined innovative technology and industry-leading services to create an offering that empowers music businesses and their creators. Curve perfectly complements our mission to be the leading music industry platform and their past work speaks to their high standards and pioneering technology.”
Downtown CEO Andrew Bergman added, “For some time, we have been admirers of the technology and service quality that Tom and Richard have been building at Curve. As we got to know them and their team, it became ever more obvious that their dedication and forward-thinking vision were a great fit for Downtown. Accuracy, precision, timeliness, and innovation in royalty services are core to Downtown’s mission of supporting creators and the businesses that serve them. Welcoming the Curve team to Downtown is another important step in furtherance of our mission.”
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