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DIGITAL China crisis? Indie sector voices concern about ‘power play’ by and UMG Independents raise competition fears in growing Chinese market as major forms strategic deal with DSP

Q BY ANDRE PAINE IMPALA is to formally oppose the proposed investment by Tencent Holdings in UMG, Music Week can reveal. The decision was taken at the European independent labels trade body’s board meeting this month, amid growing concerns about the impact on competition in the streaming market. IMPALA executive chair Helen Smith said: “Even at a low level of shareholding, we believe “This type the risk of harm for consumers and competitors of creeping from such a transaction would be a concern because of the impact in both the digital market influence and the music sector, with independents being won’t escape squeezed further and artists also losing out.” Any competition probe could potentially scrutiny” draw in . The Swedish streaming giant Helen Smith has a stake in Entertainment IMPALA (TME), while Tencent Holdings and its TME subsidiary have invested in Spotify. UMG has Giving their ten cents: (L-R) Martin Goldschmidt, Helen Smith, Paul Pacifico also retained its shareholding in Spotify. Smith said there were fears about the is growing rapidly. China moved from No.10 to idea that such a major player [UMG] would Chinese streaming giant’s option for a further No.7 in last year’s IFPI global rankings. create a walled garden for their benefit,” said 10% stake in , following Last year Merlin struck indie licensing deals AIM CEO Paul Pacifico. “We need to look the initial 10% agreed with parent . with Chinese platforms, including TME’s carefully at the implications of such a deal.” “Our view is that this type of creeping streaming services QQ Music, Kugou and Kuwo. TME has reported 661 million monthly influence won’t escape regulatory scrutiny The UMG-Tencent deal values the major active users for mobile music in China. It has and we would expect regulators to also be at €30 billion (£25.6bn). Martin Goldschmidt, announced expansion into South East Asia. concerned about the Spotify-Tencent link,” chairman at Cooking Vinyl Group, described Chinese rival ByteDance is reportedly Smith told Music Week. “We believe it would be the potential advantage to Tencent from unique readying a global music streaming service. difficult for Tencent and other companies with access to UMG repertoire as “dangerous”. Sony Music and WMG are both investors power in a vertical market to acquire influence “In China they have very much used their in TME, which is the subject of a Chinese over the world’s biggest set of repertoire.” market power to tie up the majors and to competition probe over licensing with majors. UMG has previously allayed competition become dominant in a way that has raised a lot “[The deals] would appear to give Tencent concerns, such as its EMI acquisition in 2011. of issues,” he told Music Week. “It hasn’t been a pretty strong stranglehold on the digital UMG/Vivendi declined to comment. Tencent that great for independents and the consumer, music market in China,” said Pacifico. did not respond to requests for comment. either. Tencent are definitely a company with “I doubt that their ambitions are to remain The strategic partnership between Tencent an agenda – and this [deal] is a power play.” in China,” added Goldschmidt. “They could and UMG comes as the Chinese music market “There may be cause for concern around the easily expand worldwide into other markets.”

Light up: TAKE A BOW Jeff Lynne TEAM Jeff Lynne’s ELO Management: Online Press: Craig Fruin (CSM Management) Ashley Matthews (MBC PR) Marketing: Regional Press: Martin Harris (RCA) Stasi Roe (MBC PR) Digital Marketing: Radio: Nick Goree (RCA) From Out Of Nowhere Lauren Fitzgerald (RCA) TV: Sarah Haddow (RCA) Peak Chart Position: No.1 National Press: Publishing: Label: RCA Moira Bellas (MBC PR) Sony/ATV Music Publishing

08 | Music Week 25.11.19 musicweek.com