Concord Music Pursues Acquisition of Stem
Concord Music is currently engaged in discussions with the digital music platform Stem regarding a potential acquisition. According to The Hollywood Reporter, the specifics of the financial arrangement remain undisclosed. Although Music Business Worldwide reported a valuation of around $50 million, sources suggest this figure is “wildly inaccurate,” indicating that negotiations may center around a partial acquisition rather than a full buyout.
Overview of Concord Music
Headquartered in Nashville and with additional offices in Los Angeles, New York, and London, Concord Music operates an extensive label group. Its imprints include renowned names such as Concord Records, Concord Jazz, Fantasy Records, Rounder Records, and Fearless Records. In addition to its label activities, Concord boasts a rich music publishing segment, featuring notable catalogs that include iconic songs from artists like REO Speedwagon, Kiss, and Cheap Trick. The company also has a theatrical division, which emphasizes script publishing, licensing, and cast recordings.
About Stem
Stem, which was established in 2015 by CEO Milana Rabkin Lewis, offers essential distribution, payment, and financing solutions tailored for musicians, songwriters, and producers. This platform empowers artists to maintain their independence by providing a clear and direct channel to their revenue across various streaming services and other media consumption pathways. Additionally, Stem automates the process of royalty calculation and distribution, ensuring that all contributors receive fair compensation for their work.
Strategic Implications of the Potential Acquisition
A partnership between Concord and Stem would enable Concord to bolster its distribution capabilities and gain valuable insights through advanced data analytics and modern tools.
Competitive Landscape in Music Distribution
The bidding process for Stem has reportedly attracted considerable interest, with 2023 witnessing a competitive landscape that includes potential buyers such as Sony Music and Warner Music Group. Notably, Stem recently secured a substantial $250 million credit agreement with Victory Park Capital. Currently, Concord’s distribution is managed by Universal Music Group.
Shifts in the Music Industry
The recent focus on distribution companies reflects a broader trend of record labels striving to expand their market shares, particularly as it becomes increasingly common for artists to retain ownership of their music rather than signing traditional record deals. This evolution follows Universal Music Group’s acquisition of Downtown Music Holdings, the parent company of distributors like CD Baby and FUGA, signaling significant shifts within the industry.
“No one’s doing the sort of deals anymore where the rights owner owns your master,” explains an industry insider. “Distribution is king in the race to be the fourth major.”
Additionally, a technology executive noted, “The labels need access to indie artists. It’s all about the users. They need their users. No one wants to be in the major label system. The majors are going to evolve more toward service-oriented companies.”
For further updates on this developing story, visit The Hollywood Reporter.