IMPALA’s Helen Smith has warned that independent music companies could be “locked out” as a result of Tencent’s deals with major label organisations.
Smith is executive chair at IMPALA and won the Indie Champion award at this year’s Association Of Independent Music (AIM) Awards. She has now spoken to Music Week about the possible impact of Tencent’s relationship with Universal Music Group and other similar deals.
“Its move to acquire a significant part of Universal is really significant because it’s a shift in structure of the music market and in the way strategic alliances are built,” Smith said. “How will that affect the ability of the independent sector to compete effectively internationally, in Europe and in China in markets where Tencent is so, so powerful?”
Smith believes that regulators may begin to look more closely at the details of such deals in the future.
“We need to be able to say to regulators that this is not a normal situation,” she said. “We’re dealing with the cultural sector and we need to be able to investigate those types of deals, because they will bring advantages and preferential arrangements that the independent sector may be locked out from.”
What will it mean for the independents as these alliances develop?
Helen Smith, IMPALA
“Deals that might have previously been seen as fairly anodyne because the shareholdings are small will see a change in how regulators view them because those types of alliances will clearly have an impact on commercial relationships,” Smith added.
Smith said that IMPALA is yet to uncover any concrete fallout yet, and said that the organisation will keep a close watch on possible developments.
“It’s certainly something we’re monitoring, there are still negotiations going on so the story is not quite complete yet,” Smith said. “We don’t know, for example, who is going to buy the other shares in Universal and what will happen with Sony. These are questions the whole sector is looking at. What will it mean for the independents as these alliances develop? It’s a completely new way of working compared to before. Our members are concerned about that.”
Smith said that the European Union is investigating “how to apply competition rules in the new online world” and explained that IMPALA has seen “concerns about how non-EU companies will move to acquire European businesses”.
“There’s more scrutiny on those deals than ever before so that will probably mean scrutiny into Tencent at some point,” she said. “It will be interesting.”
Ultimately, Smith said, IMPALA will focus on how to meet the challenge: “It’s all about preferential deals with digital and non-digital services. It’s a commercial question, one of being able to work with your artists to get similar levels of exposure.”
Helen Smith took part in Music Week’s recent Indie Takeover special issue. Subscribers can read our report on how the independent sector is taking on 2020 here.
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