Virgin Music Group is having its say.<\/p>\n
To date, JT Myers<\/strong>\u00a0and Nat Pastor<\/strong>, the co-CEOs of the global services company, have publicly refrained from discussing opposition to Virgin’s proposed<\/a> $775 million<\/strong> takeover of Downtown Music Holdings<\/strong>.<\/p>\n That just changed.<\/p>\n In a new letter to VMG staff, obtained by MBW, Myers<\/strong> and Pastor<\/strong> address several accusations made about Virgin \u2013 and its parent company, Universal Music Group \u2013 from parties who want regulators to block the Downtown<\/strong> acquisition.<\/p>\n Myers<\/strong>\u00a0and Pastor<\/strong>, who co-founded mtheory<\/strong> before joining Virgin, don’t name particular individuals or companies in their letter.<\/p>\n However, they respond to a number of specific public statements, including:<\/p>\n Myers<\/strong> and Pastor’s<\/strong> letter was sent to Virgin employees earlier today (July 3).<\/p>\n You can read it in full below.<\/p>\n To the Virgin Music Group team:<\/em><\/p>\n As you all know by now, we are tremendously excited about the pending combination of Downtown and Virgin.<\/em><\/p>\n Given the bold visions of the future and the mutual respect our companies share, we are confident our combined business will be able to deliver enormous added value to our clients.<\/em><\/p>\n We are writing this note to you now for two reasons: first, to briefly update you on the regulatory status of the proposed acquisition, and second, to clear up some of the falsehoods that opponents of the deal are perpetuating, which I\u2019m sure might even be confusing or concerning to you.<\/em><\/p>\n First, an update on the status of the merger: Last month, the European Commission initiated \u2018Phase I\u2019 of its review of Virgin\u2019s acquisition of Downtown. In the coming weeks, the Commission is expected to announce whether it has no objection to the deal, in which case we will then proceed to close the transaction, or whether the Commission has decided to afford itself more time to review the case \u2013 for example by moving into \u201cPhase II\u201d.<\/em><\/p>\n Now to those falsehoods:<\/em><\/p>\n While the merger has rightly been under regulatory review around the world for the last six months, our priority has naturally been to present to the regulators our position on the transaction. We nevertheless want to bring truth to bear against some of the fictions and falsehoods being spread by the familiar cast of characters, including professional lobbyists, who oppose our companies\u2019 coming together.<\/em><\/p>\n Here are a few examples:<\/em><\/p>\n FACT:<\/strong><\/span> Virgin will not exploit Downtown\u2019s customer base for any reason.<\/em><\/p>\n Virgin will not only uphold Downtown\u2019s data privacy policies, we will also expand and strengthen them. Virgin already handles \u2013 with the care and confidentiality they deserve \u2013 the sensitive client data of hundreds of partners.<\/em><\/p>\n Betraying the trust our clients have bestowed on us would be self-destructive: they would quickly, and quite rightly, end the relationship. Which is why we\u2019re proud to say that since the day we entered this business, we have never had a single complaint of misuse of client information of any kind.<\/em><\/p>\n FACT:<\/strong><\/span> Virgin is doing this deal for exactly the opposite reason. We see the extraordinary value of investing in and expanding access to these and other platforms.<\/em><\/p>\n Over the last three years, we\u2019ve been building Virgin within UMG as a standalone, global services business with its own leadership, tech stack, and autonomy. The deal with Downtown will strengthen the foundation we\u2019ve built thus far.<\/em><\/p>\n Our motivation for the merger and our excitement about it are rooted in this singular opportunity: by combining Downtown\u2019s and Virgin\u2019s unique capabilities, the unified company will offer an even more robust and flexible suite of services to independent labels everywhere.<\/em><\/p>\n FACT:<\/strong> <\/span>There is ZERO credible data to support this \u2026 and for a very good reason: It\u2019s not true. The reality is that during this period the independent sector\u2019s marketshare has grown materially, while UMG\u2019s marketshare has not.<\/em><\/p>\n Why? Well, the growth of the independent community has been the product of several factors: private and venture capital has poured into both indie labels and services providers; artists have more tools than ever; streaming has democratized music; and a new generation of companies has flourished.<\/em><\/p>\n “Today, approximately one hundred services companies are competing to partner with independent labels and artists”<\/p><\/blockquote>\n Competition among the services businesses is thriving precisely because of the continued investment in them and the flood of new entrepreneurs \u2013 label executives and artists themselves \u2013 into the marketplace. The more investment that flows into the services businesses, the more independent labels benefit, because more investment means better resources and greater competition among services providers.<\/em><\/p>\n Today, approximately one hundred services companies are competing to partner with independent labels and artists. The stronger the provider of services, the greater the chance that the independent label and artist has to succeed in today\u2019s market.<\/em><\/p>\n Finally, we want to address a series of personal attacks that have been levelled against Virgin and us during this lobbying effort in the press. We have been called \u201cwolves behind the cape\u201d \u2013 that is, that we\u2019re secretly preying on the very community we claim to serve.<\/em><\/p>\n Nat and I are used to a bit of name-calling. But the insinuation that Virgin is anything but a positive force in the independent marketplace is an insult to all of you who comprise the Virgin Music Group family, who work tirelessly every day to help independent labels and artists achieve their goals. Any assertions to the contrary are juvenile, offensive, and are just falsehoods being spread by those who are willing say anything to hurt the chances of this deal happening.<\/em><\/p>\n “[These assertions are] juvenile, offensive, and are just falsehoods being spread by those who are willing say anything to hurt the chances of this deal happening.”<\/p><\/blockquote>\n The independent sector isn\u2019t monolithic, as you know. It\u2019s comprised of thousands of labels and artists all over the world. Some subscribe to the reductive \u201cmajor = bad, indie = good\u201d worldview, others don\u2019t. We personally think that in an independent space this dynamic \u2013 comprised of the legendary \u201cold guard\u201d of iconic independent labels as well as a generation building the iconic companies of the future; of bootstrapped companies alongside ones backed by some of the largest private equity, venture capital and technology companies in the world; of artists just beginning their careers next to some of the largest global superstars \u2013 that things just aren\u2019t that simple anymore.<\/em><\/p>\n But that\u2019s just our opinion. We don\u2019t get to decide for the whole independent space, but neither does anybody else. Every member of the independent community gets to make their own choice, based on their own value system. And that goes for their choice of service provider \u2013 companies can choose Virgin, Downtown or any of the scores of other partners, independent or major, based on their commercial needs and preferences.<\/em><\/p>\n “The independent sector isn\u2019t monolithic, as you know. It\u2019s comprised of thousands of labels and artists all over the world. Some subscribe to the reductive ‘major = bad, indie = good’ worldview, others don\u2019t.”<\/p><\/blockquote>\n That\u2019s why, in 2022 the two of us joined Virgin to try and develop another choice \u2013 one that we felt would be a good one for entrepreneurs like us, one that we didn\u2019t think was being provided by the many existing players in the market. With the acquisition of Downtown, we see a significant opportunity to provide independents with something even more effective to advance their commercial and creative goals. We also know that we will be competing every day with dozens of other global service providers, so in order to win we will have to be the best partners the indie community can work with. And that is exactly what we are going to be.<\/em><\/p>\n We are so excited about everything to come, and I know all of us at Virgin look forward to speaking directly with all of our Downtown colleagues very soon.<\/em><\/p>\n Wishing you all the best,<\/em><\/p>\n Nat & JT<\/em><\/p>\n
\n1. FICTION: Virgin will exploit Downtown\u2019s customer data to gain a competitive edge for UMG.<\/em><\/h6>\n
\n2. FICTION: Virgin will restrict or shut down services such as FUGA, Curve, CD Baby, Downtown Music Publishing, or Songtrust.<\/em><\/h6>\n
\n3. FICTION: UMG\u2019s market share in Europe (ex-UK) has skyrocketed by 18 percentage points since the EMI acquisition in 2012.<\/em><\/h6>\n
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