Proper Music Group
LONDON — Proper Music Group, the U.K.’s leading physical distributor for independent labels and artists, has been acquired by Netherlands-based Artone, bringing an end to a tumultuous three-year period during which the firm was owned by Swiss fintech company Utopia Music.
Completion of Artone’s acquisition of Proper Music Group was announced by the company Friday (Feb. 28), one day after Proper was placed in administration (roughly equivalent to Chapter 11 bankruptcy protection).
The new ownership structure sees Proper’s longstanding managing director, Drew Hill, take a minority stake in the British firm, which handles physical distribution for more than 5,000 indie labels, as well as provide a range of digital distribution, publishing and artist and label services for artists and music companies.
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Proper’s clients include Absolute Label Services, Believe, Cherry Red, Concord, Epitaph, FUGA, The Orchard in addition to Warner Music Group-owned ADA and Sony Music Group-owned AWAL. The company says its clients collectively make up around 13% of the United Kingdom’s physical music market, which totaled £330 million ($412 million) in 2024, up 6.2% on the previous year, and accounting for nearly 14% of music revenues, according to figures from the Digital Entertainment and Retail Association (ERA).
Announcing the acquisition of Proper, Artone CEO Jan Willem Kaasschieter said the company plays “a vital role in the supporting independent labels and artists in the U.K. By bringing Proper Music Distribution into the Artone family, we ensure its continued success and provide stability for its partners.”
“We now have some certainty about the future,” a relieved Hill tells Billboard. He describes the past three years of Proper being owned by Swiss fintech firm Utopia as being like a “pantomime rollercoaster” that has seen the company often existing “under a cloud” of negativity. “I’m glad it’s finally over,” says Hill, who continues as managing director of Proper Music Distribution.
Got records? A wide view of the Proper warehouse in Dartford.
Proper Music Group
Utopia Music had originally acquired Proper for an undisclosed sum in January 2022 as part of a frenetic buying spree that saw the Swiss fintech firm rapidly acquire 15 companies spanning music tech, finance, publishing, marketing and distribution over a two-year period.
A just-as-quick downsizing followed, encompassing multiple rounds of job cuts, company divestments, numerous legal actions and successive executive departures, including the exit of co-founder Mattias Hjelmstedt.
Early last year, Utopia rebranded as Proper Group AG, named after its core physical music distribution business, but the widespread changes failed to turn the company around. In September, the firm was placed into bankruptcy by a Swiss court over an unpaid debt of 23,000 Swiss Francs ($25,000).
As a result of the court action, Utopia’s two main U.K. physical distribution businesses were placed up for sale with both attracting multiple bidders. Utopia Distribution Services, which was formerly known as Cinram Novum and whose clients include Universal Music Group, Sony Music Entertainment and [PIAS], was acquired by DP World Logistics for an undisclosed sum in December.
Artone and Hill’s subsequent joint acquisition of Proper Music Group is “fantastic news for the independent community,” says Gee Davy, CEO at U.K. trade body the Association of Independent Music (AIM).
“Drew’s 18 years’ experience at the helm of Proper Music Distribution combined with Artone’s pan-European expertise will no doubt ensure that the U.K.’s physical music sector continues to thrive,” says Davy in a statement.
“It’s an ownership structure absolutely rooted in what is our core business,” Hill tells Billboard, pointing to Artone’s range of physical music solutions, which includes its own vinyl pressing plant, the Netherlands’-based Record Industry, capable of pressing 40,000 to 60,000 records per day, as well as Bertus Distribution, one of Europe’s largest independent distributors. Artone additionally operates several indie labels, including Music On Vinyl and V2 Benelux, and last year acquired U.K. D2C e-commerce music retailer and distributor Townsend Music.
The production line at the Proper warehouse in Dartford.
Proper Music Group
“Utopia never really understood what Proper was or what we did or maybe even why they bought us,” says Hill. “Day-to-day, operationally nothing really changed under their control but what was always difficult was the negative association. It just became a PR disaster and I was constantly having to reassure labels that whatever they were reading about the parent company, their money and their stock was safe. It’s great that I no longer have to do that.”
Hill says the financial losses suffered by Proper Music Group, which was a profitable company prior to 2022, over the past several years are spun out of Utopia’s kamikaze approach to business, which prioritized turnover over profit. According to its most recent Companies House figures, Proper made a loss of £1.9 million in the year ending Dec. 31, 2022. There will be further losses to be reported in 2023, says Hill.
“Now we can go back to making sure we’re growing as a sustainable business rather than just growing for growth’s sake,” he states. “The physical music business is in a very healthy place right now and Proper will continue to be right at the heart of it.”
Utopia Music has no plans to sell either of its U.K. distribution businesses, Proper Music Group and Utopia Distribution Services, according to the Swiss-based tech company’s co-founder/interim CEO, as it attempts to transition from a hyper-growth company to a profitable one.
Utopia Music acquired Proper Music Group, the United Kingdom’s leading independent physical music distributor, in January 2022 amid a frenetic two-year buying spree that saw the firm rapidly buy up 15 companies spanning distribution, artist and label services, publishing and fintech.
Utopia Distribution Services was launched in September when Utopia acquired the assets of Cinram Novum, one of the United Kingdom’s biggest physical home entertainment suppliers that provides warehouse, fulfillment and distribution services to a range of labels, including Universal Music Group, Sony Music Entertainment and [PIAS].
The past 12 months have, however, seen Utopia undertake a series of extensive cost-cutting measures, including several rounds of layoffs and the divestment of three companies: U.S.-based music database platform ROSTR, United Kingdom-based publisher Sentric and, most recently, distribution and music services company Absolute Label Services.
Last week, Utopia, which is headquartered in the Swiss town of Zug, announced the closure of its research and development offices in the United Kingdom and Finland, resulting in the loss of another 25 jobs. In under one year, the firm’s global workforce has been trimmed from approximately 1,200 staff to around 440.
The company’s recent troubles also include legal action from U.S. music technology company SourceAudio over a stalled acquisition deal (Utopia says it hopes to settle the dispute in the coming weeks) and reports of unpaid tax bills in Sweden and employees not being paid on time (a spokesperson for the company says the tax debt was cleared in the spring and late payments for staff are all being resolved).
“It’s been quite painful,” co-founder/interim CEO Mattias Hjelmstedt tells Billboard in a rare interview. “Any type of readjustment is hard. I would be lying if I said it isn’t hard to take a hyper-growth company [and turn it into] a sustainable-going-into-profitability company. It’s not something you turn around in one day.”
Hjelmstedt says the streamlining measures he and the company’s board have implemented over the past year are having the desired effect and Utopia is now on a “clear path to profitability,” although he declines to discuss financial figures. (Earlier this year, Hjelmstedt told Billboard that the company generates over €100 million [$110 million] in revenue a year, although this was prior to it offloading Sentric and Absolute).
Key to its future growth, Hjelmstedt says, will be its two main physical music distribution entities: Proper Music Group, which provides distribution services for over 5,000 indie labels and service companies, and Utopia Distribution Services (formerly Cinram Novum).
“Those are fantastic businesses for us and they are actually golden when it comes to industry insight and relations,” says Hjelmstedt. He insists neither company is up for sale and says the ongoing importance of physical music distribution is often overlooked by other parts of the music industry.
“Physical distribution is still a substantial part of the business and a very big part of what makes a hit [album] today. When it comes to revenues, for us those are two of our golden companies,” says Hjelmstedt, a serial entrepreneur who co-founded Utopia in 2016 with Thomas Gullberg and has been acting as interim chief executive since former CEO Markku Mäkeläinen exited the company in January.
According to its most recent financial filings, Proper Music Group generated revenue of £42.1 million ($54.4 million) and a loss after tax of £1.2 million ($1.5 million) in the year ended March 31, 2022. The company said the loss was “mainly due to increased operating costs” and was “taking steps to return the group to profitability.” Financial figures for Utopia Distribution Services are yet to be filed.
Evidence of Utopia’s commitment to physical music came in May when it announced a long-term partnership with UAE-headquartered DP World to provide warehousing and logistics for physical music in the United Kingdom and its export markets. As part of the £100 million-plus ($125 million) deal, the two companies have opened a new 25,000-square-meter warehouse in the U.K. that is able to distribute over 30 million units a year.
Addressing the recent reacquisition of Absolute Label Services by its original owners from Utopia, Hjelmstedt says both parties amicably reached an agreement that “the company will probably operate better outside Utopia,” although says he is unable to discuss the terms of the deal. That includes confirming if Absolute’s owners paid any money to Utopia to regain control of the business — or, as indicated to Billboard by music industry sources, whether Absolute changed hands after Utopia failed to meet the financial obligations of its original acquisition deal.
“They were able to reacquire it on good terms between ourselves, so it’s good for them and good for us,” is all Hjelmstedt will say. Absolute Label Services declined to comment.
Referring to Utopia’s recent downsizing, the interim CEO dismisses the idea that mistakes were made during Utopia’s busy buying spree but concedes that some of the companies it bought “didn’t really glue together with the rest to be able to actually serve the industry as we wanted.”
Looking ahead, Hjelmstedt refuses to rule out further cost-cutting measures but says there are no immediate plans for more layoffs or streamlining. “We’re very data-driven now, which means that part of what we have to optimize and implement is performance versus cost.” He says the company’s recent actions have significantly reduced outgoings but warns that if more savings need to be made the company will “take action to get there, but right now that’s not the case.”
“The idea and concept of [our] acquisition strategy was never just to scale up to build value,” says Hjelmstedt. “It’s always been about the long game when it comes to Utopia. We’re not naive enough to think that you can change the music industry in one year. It’s going to take time.”
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