The bosses of indie sector trade groups IMPALA and AIM have issued new statements expressing further concern about the ever increasing dominance of Universal Music in the recorded music market. And how that dominant position is being used to skew the streaming business model in the major’s favour, resulting in some indie labels seeing 70% of their repertoire being demonetised overnight on some platforms.
The new statements follow yet another Universal acquisition, this time of Dutch indie label 8Ball Music, and have been issued as it becomes very clear that changes being made to Amazon Music’s royalty payment policies - changes that have been hailed by Universal as a key component of its “streaming 2.0” strategy - will have a negative impact on many independent artists and labels.
“Independents are being asked to sign terms with Amazon based on thresholds that have a disproportionate impact on their artists and revenue”, IMPALA reveals, “with some reporting that around 70% or more of their repertoire is being demonetised overnight and a large number of artists being impacted in some way”.
IMPALA and AIM have already urged competition regulators around the world to intervene over Universal’s big acquisition of Downtown Music. The 8Ball deal and Amazon Music revelations, says Gee Davy, CEO of the UK’s Association Of Independent Music, are “more ammunition in one single week for regulators to step in”.
“It’s time to pause ‘streaming 2.0’ and properly assess how this impacts artists and labels outside of the few large corporations”, Davy argues, adding “acquisitions like Downtown and 8Ball will only give an already hugely dominant market player more power to control streaming terms for the whole market”.
It’s no secret that Universal has been piling pressure onto the big streaming services to change the way they pay royalties in a way that benefits the majors and superstars. Streaming is a revenue share business which begins with each track on each platform being allocated a portion of that service’s revenue each month, based on what percentage of total consumption it accounted for.
Under new rules that Universal perversely refers to as the ‘artist centric’ model, Deezer, Spotify and Amazon are disadvantaging or demonetising artists or tracks that fail to reach certain thresholds, so that more money can be allocated to other artists and tracks. It’s not just Universal that benefits from that system, though the majors and superstars are almost certainly the biggest winners.
Universal announced it had agreed a new licensing deal with Amazon Music at the end of 2024, with CEO Lucian Grainge bigging up the deal and saying he looked forward to “progressing our shared artist-centric objectives” with Amazon. Those objectives are now starting to impact on everyone else.
Helen Smith, CEO at pan-European trade group IMPALA, explains: “Universal made it very clear in press releases that its new deal with Amazon announced at the end of last year is part of its bid to impose its view of how streaming revenues should be allocated”, before adding, “we are seeing the impact of this right now as labels assess what this means”.
Because of its market dominance, Universal is able to force payment policy changes onto the streaming platforms that then impact on the entire recorded music sector. And that dominance is only increasing with the major’s most recent acquisition spree, with the Downtown and 8ball deals following its buy out of [PIAS] last year.
8ball was an active member of IMPALA and the Dutch indie label trade group STOMP, both of which have thanked the label and its top team of Tony van de Berkt and Floris Janssen for their past work supporting the indie community, while also expressing concerns about the Universal deal.
Says Smith, “We remain concerned that hardly a week goes by without another major acquisition making headlines. This is another reason why regulators need to hit pause on these acquisitions, as we set out in our detailed submission to key competition authorities last week. There comes a point where big is simply too big, and the scale can impact outcomes for a whole market. It’s time to put a stop to Universal’s juggernaut strategy”.