Universal Music Group and BMG Announce Potentially Far-Reaching ‘Alliance’ — With an Initial Focus on Physical Distribution

BMG and Universal Music Group (UMG) have officially partnered to “explore a range of collaborative initiatives.” First up: shifting the Bertelsmann subsidiary’s physical distribution to UMG’s Commercial Services division.

UMG and BMG unveiled their high-profile “alliance” this morning, about 15 weeks following Thomas Coesfeld’s start as BMG CEO and about one month after the latter business split from Warner Music’s ADA distribution operation.

Designed to bolster “opportunities for BMG-signed artists around the world,” the decidedly significant BMG-UMG tie-up is ultimately expected to extend to everything from “shared positions on industry matters to joining forces in adjacent business lines,” per the involved entities.

But as initially highlighted, the union is kicking off with the pivot of BMG’s physical distribution (“including vinyl and CD for thousands of BMG-signed artists”) to the Commercial Services unit of Universal Music.

This noteworthy transition is currently scheduled to begin during the second quarter of 2024 and wrap sometime before next year’s conclusion, the music companies signaled. Meanwhile, discussions on “further collaborations” are already underway, the parties drove home.

Addressing the potentially far-reaching pact in a statement, BMG’s aforementioned CEO, Thomas Coesfeld, made clear his eagerness to work with “the world leader in music-based entertainment.”

“Our alliance with UMG is a significant step to further enhance our service to BMG-signed artists,” 33-year-old Coesfeld communicated. “We are delighted to partner with UMG, the world leader in music-based entertainment on our thriving physical recorded music business. Their scale, technology and commitment promises to further expand opportunities for BMG-signed artists around the world.”

And in remarks of his own, Universal Music head Lucian Grainge relayed: “BMG has brought a fresh vision to the music business, and we look forward to partnering with BMG on a variety of initiatives to provide greater opportunities to artists and our respective companies.”

As part of the “fresh vision” mentioned by Grainge, BMG has scooped up all manner of catalogs – its recorded repertoire is said to encompass north of 500,000 tracks – and signed a number of well-known artists in recent months and years. Moreover, these buildout efforts seem to have brought with them a material revenue boost, to the tune of approximately $450 million (up 11.6 percent) in reported H1 2023 revenue.

Needless to say, it’ll be worth closely monitoring the other collaborations stemming from the BMG-UMG partnership moving forward. Bigger picture, the underlying agreement has arrived about 19 months after UK regulators formally approved Sony Music Entertainment’s $430 million AWAL buyout and about 22 months after Warner Music Group dropped a reportedly similar sum on 300 Entertainment.