IMPALA Calls Out UMG Downtown Deal’s ‘Cultural Diversity’ Threat

Photo Credit: IMPALA

Does Universal Music’s proposed Downtown purchase threaten cultural diversity? IMPALA believes so, and amid a high-stakes European Commission investigation, it’s once again come out swinging against the $775 million acquisition.

Brussels-based IMPALA explored this comparatively little-discussed angle in a paper entitled “Universal/Downtown – Why does it matter from a cultural diversity perspective?” While the question is new, the indie sector’s pushback against the UMG-Downtown buyout is not.

To be sure, the likes of IMPALA and members such as AIM have criticized the deal (which they maintain should be blocked outright) from the get-go. Earlier in October, they spearheaded a “100 Voices” campaign that, in keeping with its name, shined the spotlight on specific indie companies’ and execs’ concerns.

Thus far, however, the opposition has largely focused on the UMG-Downtown play’s anticipated competition-related fallout. Now, taking things even further, IMPALA is zeroing in on the mentioned cultural-diversity side.

As things stand, we don’t know the entity’s exact arguments; IMPALA presumably left no stone unturned in its “confidential submission…to the European Commission” about the cultural considerations.

Nevertheless, the overview shared with DMN paints a fairly complete picture. Indie labels, the summary spells out, “have always led the way in the acquiring and developing of new music” – in part, during recent years, because their catalogs are smaller than those of the majors and existing works are dominating on streaming.

As such, the “essential risk-takers” account “for over 80% of new releases in Europe,” according to the document. Following this idea to its logical conclusion – with support from findings attributable to competition-policy professor Amelia Fletcher – further reducing competition would negatively affect indie revenue, thereby impacting the wider cultural fabric, IMPALA explained.

Also already working against indies: The majors’ streaming dominance (as well as the adjacent presence of contractually guaranteed playlist spots), the 1,000-play-minimum “streaming demonetisation policy led by UMG,” and more, per the paper.

“This is a problem because independent labels lead the way in the promotion of national artists outside the mainstream,” IMPALA indicated, “singing in local languages and the development of emerging niche genres. … If UMG buys Downtown, there will be a material detrimental impact on artistic cultural diversity within the EEA [European Economic Area] as a result of the independent labels generating less income and having less money to spend on new music.”

“It’s about balance,” added IMPALA executive chair Helen Smith. “Big companies are important and so is collaboration, with the joint AI licensing project with Spotify as an example.

“At the same time, concerns have been raised about the health of the digital market and the ecosystem if the leader is allowed to become too big. The conclusions point to the risk of the independent sector losing revenue as a result and that means fewer and less diverse releases,” Smith concluded.

With that, it’ll be worth continuing to closely monitor the Commission’s investigation, which, we previously noted, is expected to produce a decision sometime early next year.

Though we shouldn’t jump to conclusions here, the EU’s aggressive regulatory approach isn’t a secret – nor are the meetings between indie-organization higher-ups and the European Commission’s Valdis Dombrovskis.

Furthermore, IMPALA itself is “co-funded by the European Union,” and the Commission only opted to launch a more intensive phase-two probe after declaring that the possible purchase “threatens to significantly affect competition.”