Executive Vice-President Teresa Ribera European Commission
Rue de la Loi / Wetstraat 200
1049 Brussels
Belgium

30 June 2025

Dear Ms. Ribera,

I am writing regarding the investigation by the Directorate-General for Competition into the proposed acquisition of Downtown Music Holdings LLC (Downtown) by Universal Music Group N.V. (UMG) – M.11956 – UMG / DOWNTOWN.

I write from Madrid, where the Worldwide Independent Network (WIN) is based. WIN is the international umbrella organization that brings together 37 independent music trade associations (25 of them European), which represent thousands of SMEs and entrepreneurs in the recorded music industry worldwide. Independents make up 99% of recorded music companies operating in Europe. They create more than 80% of the sector jobs, drive local culture, diversity and exports, and boost other related industries.

UMG is already the world's largest music company. Through the acquisition of the Downtown group of companies, it will solidify its role as a critical intermediary in the recorded music market, integrating several business lines to control the essential infrastructure on which its competitors depend. This will enable UMG to influence the market by imposing terms on the main monetization channels. It will also allow it to exploit the data it gathers from rival companies that use its services to undermine them.

The deal cannot be analyzed merely as a market share acquisition, but rather by looking at the structure of the music industry as a whole in the context of power control in a globalized digital markets economy. In Europe, streaming accounts for more than two-thirds of recorded music revenues, making anti-competitive dynamics affecting the digital sphere particularly dangerous. Especially in a sector where three multinationals hold more than 70% of the global market and 80% of the European. We believe that the medium and long-term effects of this acquisition on SMEs and entrepreneurs in relation to barriers to entry, conflicts of interest, and use and control of data, as well as UMG's bargaining power over streaming services, should be carefully examined.

In addition to being a record label that owns and exploits recorded music rights, UMG has its tentacles spread throughout the entire value chain: wholesale or distribution (both physical and digital), retail (UMG has stakes in Spotify), music publishing, artist management (in Spain it recently acquired RLM, a leading booking agency representing among others Raphael), merchandising, and audiovisual, as well as making inroads into real estate (for example, building luxury hotels in downtown Madrid), For the most part, UMG has expanded into these areas by acquiring existing companies. With the acquisition of Downtown, UMG will integrate several interrelated business lines such as digital distribution (FUGA and CD Baby), music publishing (Songtrust, Sheer Music and Downtown Music Publishing) and royalty management services (Curve), all of which are valuable to the independent sector.

The question is how all these lines of business interact and their dependencies. UMG will not only control more market share, but also key infrastructure that underpins how

music is distributed, promoted, consumed and monetized. This vertical integration means that, in many cases, UMG's rivals are also its customers.

Digital distributors are essential to deliver music to digital platforms (Spotify, Apple Music, Meta, etc.) who work with a limited number of suppliers. UMG operates its own distribution, which gives it a competitive advantage over independent labels, who rely on third parties to distribute, with the associated cost involved. UMG owns Virgin Music, has recently acquired PIAS, and will now be integrating FUGA and CD Baby. This acquisition strategy contributes to creating more barriers to entry by limiting the options available. By operating distribution for the independents, UMG receives business from its rivals and becomes the trading partner of the very companies that seek to compete with it. It also positions UMG to favor its own products over those of its competitors, creating a potential conflict of interest. And, since UMG also controls other lines of business, it can leverage this to tie in services. For example, by allowing access to its digital distribution services (or at certain prices) only if the independent label also hires its physical distribution or uses its rights management services.

UMG's own Chairman & CEO, Sir Lucian Grainge CBE, made it clear in his stakeholders presentation last September that the company is using its distribution subsidiary Virgin Music to “to capture value from the large independent sector through label services” and in a letter to staff in January that “this year we will continue to aggressively grow our presence in high potential markets through organic A&R, artist and label services agreements, and M&A.”

UMG has translated its dominance as the largest owner of music repertoire (both recorded and publishing) and as a distributor – using the aggregated added value of the independent labels and artists’ repertoire it distributes – into significant bargaining power in the digital marketplace to secure favorable terms from streaming services and creating anti-competitive dynamics.

In the last two years, several streaming services have introduced changes to their remuneration systems that have clearly been led or influenced by the “artist-centric” model originally proposed by UMG in January 2023. An agreement with Deezer was announced in September 2023, followed by agreements with Spotify and Amazon. Although UMG negotiated these deals behind the backs of the other record labels, streaming services subsequently and unilaterally changed the terms for all their customers based on the UMG deal.

The “artist-centric” model is part of UMG's “Streaming 2.0” strategy and one of its consequences is that streaming services stop paying artists who do not reach an arbitrary threshold of annual plays or listeners and reallocate revenues to those that have more popularity or financial backing, an anti-competitive policy that clearly hurts small artists and independent labels. This, coupled with high consolidation in the recorded music sector, is creating a two-tier market, as Dan Fowler and Katherine Bassett's recent study Combating the Emergence of a Two-Tier Music Streaming Market: Analysis and recommendations to support a future industry of innovation, inclusivity, and sustainable growth exposes.

Another key aspect is the competitive advantage UMG has by collecting data from rival companies using its services, which it can use to harm them as competitors, further strengthening its dominant position. In addition to the crucial statistics UMG obtains through distribution, such as artists and songs performance on digital platforms, with the acquisition of Curve UMG will have access to privileged and critical business information about its competitors, including pricing, contractual terms and strategic relationships.

UMG's control over data increases its anti-competitive potential in the other areas, as it can use its rival’s data to inform its investment decisions, develop other lines of business, structure deals to its advantage, and manipulate the market to outbid competitors, putting the balance of the music market at risk.

In addition to the impact of this acquisition on music industry workers, entrepreneurs and businesses around the globe, what is at stake for European consumers is access to quality products, variety and innovation. To eliminate competitors is to reduce choice, to allow large multinational companies to control the music we consume is to limit cultural diversity, and a market with less choice and diversity amounts to a form of consumer injury.

Historically, most new music genres started on independent labels and then were absorbed by multinationals as they became popular: hip hop, jazz, salsa... Independent labels champion values such as fairness, equality, diversity, and freedom. We don't just run businesses: we innovate and promote art and culture. And for that we need open markets with equal access and opportunities, without distortions or abuses of power.

We thank the European Commission for taking up this case. We look to you to set the standard globally by conducting a detailed assessment and blocking this acquisition to avoid harm. Just last week this was echoed by our Spanish member Unión Fonográfica Independiente (UFi). We also endorse the calls of our European sister organization IMPALA.

The defence of competition and the cultural business fabric is the defence of European heritage and values. Independent music companies and the artists they work with around the world rely on Europe's ambition to lead the way and inspire us, so that they can have a future based on the merits of their music and consumer choice, not market power.

Sincerely,

Noemí Planas, CEO noemi@winformusic.org
Worldwide Independent Network (WIN)