Impala, the European trade collective that represents both independent labels and publishers, announced today that it is “gearing up” to oppose Tencent’s buyout of a 10% stake of Universal Music Group, with an option to add a further 10%. The organization is also concerned about “who might buy the additional UMG stakes that are up for grabs.”
Impala Executive Chair Helen Smith commented: “Even at a low level of shareholding, we believe the risk of harm for consumers and competitors from such a transaction would be a concern because of the impact in both the digital market and the music sector, with independents being squeezed further and artists also losing out.”
The statement claims that “the impact of such a sale would change the whole music ecosystem, and smaller companies will be the first to lose out. UMG is the world’s biggest music company and Tencent currently owns four out of five of the leading music apps and has an estimated 90% market share in the growing Chinese market for the retail of digital music, with strong presence in other key markets.” It notes that “the Chinese competition watchdog is already looking into Tencent Music’s licensing deals with the majors.”
Reps for Tencent and UMG parent company Vivendi either declined Variety’s requests for comment or did not immediately respond to requests for comment.
Smith also mentioned last year’s Tencent Music-Spotify stock swap, in which the two companies acquired 10% of each other’s shares. “We would expect regulators to also be concerned about the Spotify-Tencent link,” she said. “We believe it would be difficult for Tencent and other companies with power in a vertical market to acquire influence over the world’s biggest set of repertoire.”