Concord Finalizes Acquisition of Music Distributor Stem

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It was officially confirmed on Monday that Concord had completed the purchase of the music distribution platform Stem.

Previously, The Hollywood Reporter announced the deal in March. However, neither Stem nor Concord revealed the specific financial terms of the agreement. It was clarified that the deal pertains solely to Stem’s distribution division and does not involve Stem Disintermedia, its parent company, or Tone, its financial services company.

In an open conversation, Milana Lewis, Stem’s founder and CEO, along with Tom Becci, CEO of Concord Label Group, disclosed that they had been exchanging ideas informally for quite some time. However, it was only last July that they started seriously considering the possibility of acquisition.

Concord is among the biggest standalone music businesses in the sector, boasting a diverse collection of record labels like Rounder, Loma Vista, and Pulse Records, along with a publishing division that houses the songbooks of Rodgers & Hammerstein, Kiss, Daddy Yankee, and Phil Collins.

Lewis explains that she struck an agreement with Concord to tackle a situation she refers to as the “graduation issue.” Essentially, artists would start on Stem but as their popularity flourished, they required additional funding and resources beyond what Stem could independently provide.

During the negotiation phase with Concord, Stem disclosed a roster of artists they’ve collaborated with in the past, such as Bad Bunny, Morgan Wallen, and Conan Grey. Now that the deal is finalized, Lewis aims to continue working with similar-sized artists. However, Lewis mentioned that previous financial agreements like the $250 million credit deal with Victory Park Capital were more like applying bandages to bullet wounds rather than addressing the root issues.

Essentially, Lewis states that our main competitors had larger financial resources to issue larger, riskier investments with longer timeframes. Our primary objective over the past year was to locate a genuine partner who could not only preserve the business we established but also help us continue to succeed and draw in the type of businesses eagerly seeking our services.

Acquiring Stem allows Concord to dive into independent artist distribution, focusing on creators who might not actively seek a recording contract. If these artists ever require additional assistance from a label later on, Concord would ideally be the initial option they consider.

Becci explains that the aim is for Stem to persist and retain its fundamental values, without losing artists. However, if an artist chooses to leave, Stem is ready and willing to facilitate their transition to a new level.

As a dedicated fan, I’m excited to share that Stem will persist as an independent platform, while Becci has reassured us that Concord will carry on partnering with Universal Music Group for the distribution of their flagship labels and archives.

As a gamer, I’m not ready to spill the beans on who else I’ve been chatting up, but there were whispers (THR hinted at Sony Music and Warner Music Group) that others had shown interest. I sensed there were more potential players eyeing Stem, hoping to snap it up. However, Concord seemed to want us to keep rockin’ with what we do best – they were cool with us continuing our winning streak.

She emphasizes that their top priority was identifying the ideal business partner who possessed an optimal financial standing (first criterion). The second essential factor was choosing a partner that would enable them to uphold their core values – independence, equity, and adaptability.

This purchase occurs during a lively period of demand for distribution services. Notably, in December, the music group owned by Universal Music, Virgin Music Group, agreed on a $775 million deal to acquire Downtown Music Holdings, which is the parent company to music distributors such as CD Baby and FUGA.

Independent artists are gradually taking a larger portion of the market previously dominated by major labels, giving artists more power to negotiate favorable recording contracts. Consequently, record companies are shifting their focus towards distribution services and label services as a means of expansion. Becci states that acquiring Stem will enable the company to adapt to the rapidly evolving music industry and attract more musicians.

Becci explains, ‘In the past, artists often signed contracts for five or six albums with a royalty rate of 15 to 18 percent. Today, deals are generally profit-sharing and the artists retain ownership. With STEM, we’ve leveled the playing field, giving artists more freedom in the marketplace. Not all artists want to shoulder all the risk and workload. Labels still have a role, but they’ll serve different purposes. We’re here to cater to a broader market.’

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2025-03-24 16:26