IMPALA, the pan-European organisation for the independent music sector, has responded to the news that Warner Music has reacquired Zebralution, the music distributor the major previously owned between 2007 and 2017, and which it sold in 2017 as part of a divestment commitment made with the indie label community in 2012.
Addressing Warner directly, IMPALA says - if any indie labels currently working with Zebralution “wish to remain independent” by switching to another distributor - the trade group “looks to you to allow them to move promptly”.
And for clients that decide to stick with a Warner-owned Zebralution, IMPALA expects those labels and their artists “to have level playing field access with all Warner artists in terms of remuneration and promotional tools”.
The Zebralution deal is part of an ongoing trend of the major record companies acquiring independent music distribution businesses, bringing those companies’ infrastructure and clients into the major-controlled digital music ecosystem.
IMPALA has repeatedly expressed strong concerns about that trend, which gives the majors increased market dominance - making it easier for them to demand self-serving changes to digital music business models - as well as access to ever more crucial marketing and consumption data.
To that end, IMPALA has previously urged competition regulators to intervene, including with Sony Music’s takeover of AWAL in 2021 and Universal Music’s acquisition of Downtown and its FUGA subsidiary earlier this year.
Warner is significantly smaller than the other two majors, with the most recent stats from Music & Copyright giving Warner a 14.8% market share, compared to Sony at 22.7% and Universal at 32.5%.
That’s in no small part because, in the CD era of the 1990s, there were six major record companies, three of which - MCA, Polygram and EMI - merged to become the Universal Music Group, while two - Sony (formerly CBS Records) and the original iteration of BMG - became the modern Sony Music, leaving Warner as the mini-major.
With that in mind, Zebralution becoming part of Warner is not as problematic as when Universal and Sony acquire indie businesses. In fact, IMPALA views the deal as having a positive aspect to it, helping push back against the dominance of Sony and Universal. It says, “we have always said that big markets need big companies and we hope this acquisition boosts competition among the majors”.
But at the same time, continues IMPALA, “the independent music sector has lost another part of its infrastructure, and Europe, a part of its diversity”. And “labels and artists who consciously chose an independent distributor now find themselves within a major’s network”.
Even if Warner makes it easier for those Zebralution clients that wish to stay independent to move to another distributor, it’s still a considerable logistical task for those labels to undertake.
And with yet another indie distributor now owned by a major, IMPALA adds that this latest deal “reinforces the need for a strategic European approach for culture that recognises the importance of independent infrastructure and ensures that cultural diversity is central to the development of EU policy”.
Zebralution launched as a fully independent distributor in Germany in 2003 just as the legitimate digital music market was getting going, amid the record industry’s pushback against online music piracy and MP3 file-sharing.
Warner acquired a significant stake in the company in 2007 saying at the time that the deal would allow the major to utilise Zebralution’s “impressive digital distribution infrastructure to further Warner Music’s role as a leading distributor of digital music”.
Although Warner later sold the distributor in 2017, the events that led to that sale began in 2011 and 2012 amid a period of significant consolidation in the music rights business. The former British major music company EMI was split up, with EMI Music Publishing going to Sony and the EMI record labels to Universal. Both those deals were controversial and heavily criticised by the independent music community.
In order to get approval for its EMI deal from the European Union competition regulator, Universal was forced to sell off a chunk of the EMI business in Europe. To meet that requirement, it put various EMI labels into what it called the Parlophone Labels Group, which it then sold to Warner.
With new concerns then expressed about the Parlophone deal, Warner reached an agreement with the indie community - negotiated by IMPALA and digital rights agency Merlin - which involved a commitment on Warner’s part to voluntarily divest a number of labels, catalogues or businesses, allowing the independent sector to “buy, license or distribute” those assets.
The subsequent sale in 2017 of Zebralution to a consortium of indie label entrepreneurs, including the distributor’s founders, was part of that commitment.
Warner said at the time “this deal is part of the divestment package which Warner Music Group promised to make available to the independent sector pursuant to its agreement with European indie music association IMPALA and the independent´s digital network Merlin in December 2012”.
Two years later, in 2019, Zebralution was bought by German songwriter collecting society GEMA. It then sold the distributor to digital publishing company Bookwire earlier this year.
Over the years Zebralution had expanded beyond music distribution and was also involved in distributing e-books and audiobooks, which is what motivated Bookwire to do that deal. Not wanting the music side of the business, it then started its negotiations with Warner leading to the deal announced yesterday.
Warner mainly provides distribution and other services to independent artists and labels via its ADA division. At one point it also dabbled with moving into the DIY distribution space by developing a new artist-centric platform called Level. That went live in 2018, but was never really properly launched, and was quietly shut down last year.
But it’s no secret Warner - as the mini-major - is keen to grow through acquisition, including in the distribution space. As part of that plan there was the high profile but short lived attempt to acquire the Believe distribution and artist services business in 2024. Even though that takeover bid failed, it’s clear Warner is still very much in the acquisition game, making its Zebralution purchase unsurprising.
But for IMPALA and the indie label community, although not quite on the level of Sony buying AWAL and Universal Downtown, it’s annoying that once again there is one less option in the market for artists and labels that want truly independent distribution.
In its statement, IMPALA also addresses EU policymakers and regulators, noting that “it is difficult to reconcile the fact that a business divested to boost competition by strengthening the independent sector should be reacquired down the line”.
It then urges policymakers to consider how they can help create “the right conditions” to help independent music companies in Europe “to grow and compete”, adding, “targeted finance options are also essential to help build the next Zebralution”.
“We must keep cultural diversity and smaller players at the heart of Europe’s approach and facilitate our growth and competitiveness”, it adds, before concluding that the Industry Plan IMPALA published back in May “sets out concrete proposals for a coherent, structured and ambitious EU policy for culture”.