Yesterday’s announcement that distributor Believe is buying music publishing-tech firm Sentric understandably focused on the positives for those companies.
It’s a big move into publishing the former: “a first step for Believe in rolling out a global and comprehensive publishing business” in the words of the distributor’s announcement.
The two companies aren’t strangers, as Sentric already works with Believe’s TuneCore subsidiary. Believe said that it is buying “full ownership” of Sentric in a transaction that values the latter company at €47m. It feels like a good fit, especially if Believe is keen to push into publishing.
However, the story is as much about what the deal means for the company on the selling end of this deal: Utopia Music, which bought Sentric in February 2022. Sentric thus joins industry database Rostr (bought in December 2021, sold in February 2023) as a speedy divestment.
This, after Utopia Music announced layoffs in November 2022; held a reorganisation that included the departure of its CEO in January 2023; and was sued by SourceAudio, a company it didn’t acquire but allegedly had promised to, in February 2023.
That’s not all though. This week, Swedish news site Breakit published an investigation into Utopia whose details include tax debts; bankruptcy applications relating to pension premiums filed against the company by a trade union representing employees; and unpaid salaries. MBW has since expanded on the story for a global audience.
Here are the key questions now. First, is Utopia in trouble and if so, how deep? And second, what does this mean for the companies that are still part of the group, and the wider music industry?
On the first point, Utopia told Breakit that “we sincerely apologise to all affected employees and stress that we are taking this matter very seriously. All late payments have been identified and will be resolved in the coming days”.
A statement sent to MBW mirrored that – “All payments mentioned in the post have already been identified and are being resolved. We have set up processes and structures to ensure that this won’t happen again” – while claiming that Utopia “handled more than €300 million last year, and continue to grow very fast”.
As for the second question, Utopia’s remaining businesses include several focused on distribution and services: Proper Music Group (bought in January 2022); Absolute Label Services (February 2022); and Cinram Novum (September 2022).
Proper and Cinram Novum are both focused on physical distribution, and play vital roles in that side of things for the British music industry. MBW suggested (although Utopia denied) that the company is “considering a quick sale” of those companies.
These are good businesses, so someone would surely buy them. The question is who, and for how much. As much as streaming dominates industry revenues, physical is still vital for many companies, so Proper and Cinram’s survival is important.
Finally, all of this raises a more existential question about Utopia Music: if it sells off more businesses, what is left beyond its ‘Fair Pay for Every Play’ slogan? What does Utopia want to be? And how will the events of recent months, and this weeks reports, affect its ability to raise capital and retain and hire the necessary expertise to carry through its plans in the future?
Tools: platforms to help you reach new audiences
Tools :: We Are Giant
With “fan communities” being on every artist’s team’s mind, we’re fans of the fact that…