Picture Credit score: Downtown Music Holdings
Virgin Music Group, a division of Common Music Group, has introduced a definitive settlement to accumulate Downtown Music Holdings for $775 million. The deal, anticipated to shut within the second half of 2025, will deliver collectively two main companies and know-how suppliers for impartial labels, publishers, and music IP house owners, whereas dramatically increasing UMG’s involvement within the indie house.
The acquisition, formally disclosed this (Monday) morning, will allow Virgin Music Group to develop its international footprint and improve its choices for impartial artists and labels. The mixed firm will provide a far broader suite of companies, together with distribution, advertising, rights administration, and royalty assortment.
The deal follows months of rumblings of a attainable sale, with Downtown reportedly consulting with personal fairness corporations in July.
All of the sudden, Common Music Group is a a lot greater participant within the burgeoning indie house. As soon as finalized, UMG will take pleasure in an expanded footprint throughout quite a few tiers of impartial distribution (for each artists and labels), to not point out an array of indie-focused monetization and rights administration competencies.
Downtown, based in 2007, has grown right into a diversified music companies firm with divisions spanning artist and label companies, distribution, royalty and monetary companies, and music publishing. Due to a string of aggressive acquisitions and expansions over time, Downtown’s portfolio now contains CD Child, Soundrop, Curve, FUGA, Songtrust, Discovered.ee, Sheer Publishing Africa, and homegrown neighboring rights, studio, and artist and label companies divisions.
Downtown at present manages greater than 50 million music belongings from nearly each nation worldwide. It serves over 5,000 enterprise purchasers and 4 million creators throughout 145 nations, in accordance with stats shared by the corporate with Digital Music Information.
“Justin Kalifowitz, Andrew Bergman, and Pieter Van Rijn have constructed Downtown Music into one of the diversified and revered operations on this planet,” mentioned JT Myers, Co-CEO of Virgin Music Group. “This mix allows us to develop on the Downtown legacy and provide the impartial music group a dynamic and revolutionary international infrastructure each when it comes to service providing and territorial footprint, and we look ahead to working with the Downtown workforce to serve impartial entrepreneurs, artists, and creators with an excellent broader portfolio of companies.”
Justin Kalifowitz, Founding father of Downtown Music Holdings, additionally expressed enthusiasm concerning the deal, stating, “It is a super recognition of the significance and vitality of impartial music, and the worth that our firm brings to its purchasers daily.”
Certainly, the deal is occurring alongside a progress spurt throughout the impartial music sector that’s cramping the market share of main label artist releases. That has prompted quite a few strategic modifications from the main labels, with acquisitions one other weapon to exert extra affect within the house.
That mentioned, Downtown Music isn’t centered on music IP possession — not less than not anymore.
Again in 2021, Downtown offloaded a catalog of roughly 145,000 songs to Harmony in a deal valued north of $300 million. The choice adopted Downtown’s This fall 2020 “strategic evaluation of its enterprise pursuits,” which concerned shifting away from IP possession in favor of companies and different core competencies.
After the deal, Downtown used the proceeds to develop Downtown Music Providers, a part of a broader effort to focus “solely on the fast-growing music companies sector to assist the extraordinary progress of the impartial music financial system.”
It could be untimely to contemplate the post-acquisition modifications that can occur in 2025. Nevertheless it’s believable that Virgin will depart many Downtown sub-divisions intact, specifically CD Child and FUGA. Each are well-known and established inside their distribution niches, with robust model identities amongst artists and labels.
Nat Pastor, Co-CEO of Virgin Music Group, emphasised the corporate’s dedication to supporting impartial artists and labels, stating, “That is an funding into the worldwide impartial music ecosystem and a dedication to nurture present and future creators and entrepreneurs with world-class assist.”
The 2 firms will proceed to function independently till the deal closes, pending regulatory approvals. Goldman Sachs and Skadden, Arps, Slate, Meagher & Flom suggested Downtown Music on the transaction, whereas Kirkland & Ellis and Freshfields suggested Virgin Music Group.
