Photo Credit: Downtown Music Holdings
Virgin Music Group, a division of Universal Music Group, has announced a definitive agreement to acquire Downtown Music Holdings for $775 million. The deal, expected to close in the second half of 2025, will bring together two leading services and technology providers for independent labels, publishers, and music IP owners, while dramatically expanding UMG’s involvement in the indie space.
The acquisition, officially disclosed this (Monday) morning, will enable Virgin Music Group to expand its global footprint and enhance its offerings for independent artists and labels. The combined company will offer a far broader suite of services, including distribution, marketing, rights management, and royalty collection.
The deal follows months of rumblings of a possible sale, with Downtown reportedly consulting with private equity firms in July.
Suddenly, Universal Music Group is a much bigger player in the burgeoning indie space. Once finalized, UMG will enjoy an expanded footprint across numerous tiers of independent distribution (for both artists and labels), not to mention an array of indie-focused monetization and rights management competencies.
Downtown, founded in 2007, has grown into a diversified music services company with divisions spanning artist and label services, distribution, royalty and financial services, and music publishing. Thanks to a string of aggressive acquisitions and expansions over the years, Downtown’s portfolio now includes CD Baby, Soundrop, Curve, FUGA, Songtrust, Found.ee, Sheer Publishing Africa, and homegrown neighboring rights, studio, and artist and label services divisions.
Downtown currently manages more than 50 million music assets from virtually every country worldwide. It serves over 5,000 business clients and 4 million creators across 145 countries, according to stats shared by the company with Digital Music News.
“Justin Kalifowitz, Andrew Bergman, and Pieter Van Rijn have built Downtown Music into one of the most diversified and respected operations in the world,” said JT Myers, Co-CEO of Virgin Music Group. “This combination enables us to expand on the Downtown legacy and offer the independent music community a dynamic and innovative global infrastructure both in terms of service offering and territorial footprint, and we look forward to working with the Downtown team to serve independent entrepreneurs, artists, and creators with an even broader portfolio of services.”
Justin Kalifowitz, Founder of Downtown Music Holdings, also expressed enthusiasm about the deal, stating, “This is a tremendous recognition of the importance and vitality of independent music, and the value that our company brings to its clients every day.”
Indeed, the deal is happening alongside a growth spurt within the independent music sector that is cramping the market share of major label artist releases. That has prompted a number of strategic changes from the major labels, with acquisitions another weapon to exert more influence in the space.
That said, Downtown Music isn’t focused on music IP ownership — at least not anymore.
Back in 2021, Downtown offloaded a catalog of roughly 145,000 songs to Concord in a deal valued north of $300 million. The decision followed Downtown’s Q4 2020 “strategic review of its business interests,” which involved shifting away from IP ownership in favor of services and other core competencies.
After the deal, Downtown used the proceeds to expand Downtown Music Services, part of a broader effort to focus “exclusively on the fast-growing music services sector to support the extraordinary growth of the independent music economy.”
It may be premature to consider the post-acquisition changes that will happen in 2025. But it’s plausible that Virgin will leave many Downtown sub-divisions intact, in particular CD Baby and FUGA. Both are well-known and established within their distribution niches, with strong brand identities among artists and labels.
Nat Pastor, Co-CEO of Virgin Music Group, emphasized the company’s commitment to supporting independent artists and labels, stating, “This is an investment into the global independent music ecosystem and a commitment to nurture current and future creators and entrepreneurs with world-class support.”
The two companies will continue to operate independently until the deal closes, pending regulatory approvals. Goldman Sachs and Skadden, Arps, Slate, Meagher & Flom advised Downtown Music on the transaction, while Kirkland & Ellis and Freshfields advised Virgin Music Group.
