One of France’s top music industry lawyers has dismissed concerns over Universal Music Group‘s access to independent label data through UMG’s proposed $775 million acquisition of Downtown Music Holdings.
Michaël Majster, founding partner at Paris-based Majster & Nehmé and a 30-year legal veteran, described the data-related fears as stemming “more from fantasy or paranoia than from a concrete, realistic, and rational analysis”.
During his career, Majster has represented both multi-platinum and emerging artists in France, plus prominent independent record labels and distributors, and a major music publisher. He has not represented UMG or Downtown.
He is rated in the top tier of music law practitioners in France by the industry-standard Décideurs Leaders League.
In July, some 200 employees of independent music companies and trade bodies signed a letter citing data concerns about UMG’s potential acquisition of Downtown subsidiaries FUGA and Curve Royalty Systems.
The letter contended that UMG’s ownership of these subsidiaries would grant it access to sensitive data from independent labels, such as “distribution information – including artists and song trends, and performance on digital platforms [plus] critical business information such as pricing, contractual terms and strategic relationships”.
Majster argued that much of this data is already “easily publicly available or accessible” through existing market intelligence services.
“I do not see how this Downtown data provides any insight that UMG doesn’t already have.”
Michaël Majster, Majster & Nehmé
“You can see the number of streams for each title on Spotify, for example,” he noted, adding that labels routinely use specialized tools like Luminate and Chartmetric plus ” for in-depth market analysis.
“When [I’m] negotiating on behalf of artists with a major like UMG it is clear to me that [Universal] already has highly sophisticated tools that allow it to understand the music market and all market trends,” Majster said.
“Acquiring Downtown will not change the situation significantly in this respect.”
Europe’s competition regulator confirmed in July that it had opened an in-depth (Phase 2) inquiry into UMG’s proposed $775 million acquisition of Downtown, following an initial Phase 1 investigation.
The EC has cited preliminary concerns that the transaction may allow UMG to “reduce competition in the wholesale market for the distribution of recorded music in the European Economic Area by acquiring commercially sensitive data of its rival record labels.”
The original November 26 deadline for the investigation’s completion was recently extended to December 10.
Addressing specific concerns about UMG accessing artist royalty data via Curve Royalty Systems, Majster questioned the practical value of doing so for the major.
“I do not understand how the data reflected in artists’ royalty statements could be of any interest whatsoever to a label [considering signing them],” he said.
“When you enter into negotiations with an artist — whether through their manager, their lawyer, or directly with the artist — you can simply request this information,” Majster said, noting that competing labels usually receive the same information simultaneously during bidding wars.
“Negotiations are based more on what an artist wants to achieve in the future, which is not necessarily correlated with what they have already in their contracts.”
“I do not understand how the data reflected in artists’ royalty statements could be of any interest whatsoever to a label… When you enter into negotiations with an artist, you can simply request this information.”
Michaël Majster, Majster & Nehmé
Addressing fears about UMG using Downtown or FUGA’s data to identify emerging artists and sign them ahead of independent labels, Majster was skeptical.
“The entire market has so much access to data,” he said. “They can all see the streams on a weekly basis of every song in the world in every country.
“I do not see how this Downtown data provides any insight that UMG doesn’t already have.”
He pointed to existing major-owned distribution services – Sony‘s the Orchard, Universal’s Virgin Music Group, and Warner‘s ADA – as evidence.
“If the [internal partner label] data from a distributor was so important, then we would have already seen the disruptive effects on the business of the majors using their data from, for example, The Orchard, Virgin [Music Group], and ADA to advantage themselves. Has anyone really felt that?”
Universal has proposed acquiring Downtown (plus FUGA and Curve) through its indie-servicing division, Virgin Music Group (VMG).
Earlier this year, VMG co-CEOs JT Myers and Nat Pastor addressed internal data protection concerns in a letter to staff, stating: “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’re 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.”
Majster emphasized that any data misuse by a Downtown-owning UMG would trigger severe consequences: “Any misuse of this data would cause significant reputational damage and could result in severe sanctions from the competent authorities in the various European countries.”
He noted that such data would typically fall under GDPR protections in Europe, and would likely be covered by confidentiality agreements between Curve and its clients.
Crucially, he noted the absence of documented cases of major labels misusing distribution or services data to date. “Never!” he stated when asked about such instances over the past decade, adding that concerns around potential UMG data misuse appear to lack specific examples of problematic practices.
“No specific cases are given [by critics of the Downtown deal] to illustrate these fears or any potentially problematic practices,” Majster observed.
UMG has maintained confidence that its Downtown acquisition will create “an improved offering in the growing and highly competitive label services category.”Music Business Worldwide
