Music Week has an exclusive in the latest edition – an in-depth interview with PIAS CEO & co-founder Kenny Gates.
A stalwart of the independent sector for more than four decades, Gates and co-founder Michel Lambot left some in their community reeling by the decision to sell to Universal Music Group in October.
Gates, who will remain as CEO, is unapologetic about the tie-up with the market-leading major and suggested it was important to “preserve” the ecosystem.
Yet IMPALA (whose founding PIAS played a key role in) has expressed concern about the power of major labels because of the PIAS deal and subsequent Downtown acquisition announcement. The trade body was able to persuade Beggar Group founder Martin Mills to express his dismay about the direction of travel for the sector.
Even before the final UMG deal, labels came together to form Cargo Independent Distribution to ensure their routes to market remained independent.
While acknowledging any label’s right to find the best partner for them, Gates questioned some of the attitudes in the independent sector. He suggested that a greater concern should be the role of venture capital aggressively seizing on opportunities amid the streaming-led growth in music.
“There are some independent labels who, to me, are fundamentalists,” said Gates. “It’s like the Japanese soldier who was found in the ’70s in the jungle and still thought that the war was going on. Well, some independent labels are like this poor guy, they still think there’s a war between independents and majors. I don’t see it that way at all.
“There’s a musical ecosystem that needs to be protected, and the majors and the indies have more in common [than not] to try and preserve that ecosystem. To me, the bad guys are those who come in with lots of money and want to make even more money and create a race to the bottom. That is dangerous for our industry.”
In fact, the UMG partnership first began with an “unconventional” deal back in 2021. That was followed by Universal acquiring 49% in 2022 (because PIAS’ original minority shareholders were looking to sell) and then the remainder being sold last year.
“I wanted to do a deal which ticked all the boxes and was good for everyone,” Gates told Music Week of why they ended up with Universal. “To me, that means the autonomy and the culture of the company prevails, that we don’t get sucked into any system, let alone UMG’s, that we keep our raison d’être and way of doing things, and that we can again, in turn, make promises and commitments to our clients.
“Our clients are our labels and our artists, and we needed to make sure that the deal would not hurt them and would actually benefit everybody. That’s the labels, the artists, the staff; of course, it’s the shareholders as well. We also needed to be good for Universal, and that’s why I’m quite proud of this deal, because I’ve done it with people who understand what we are about, who understand the independent community.”
I’m quite proud of this deal, because I’ve done it with people who understand what we are about, who understand the independent community
Kenny Gates
For PIAS and partner labels (including Heavenly, Bella Union and Transgressive), 2024 highlights include releases by such avowedly independent artists as the iconic Nick Cave And The Bad Seeds, Belfast trio Kneecap, singer-songwriter John Grant, indie-folk artist Katy J Pearson and British-Japanese innovator Miso Extra.
The PIAS co-founder believes that the ethos of the company will endure under UMG’s new ownership.
“We've been working together for five years, and every promise that was made was kept,” he said.
Gates was familiar with the principals at UMG, which helped the deal come about, and he clearly respects UMG CEO & chairman Sir Lucian Grainge.
He worked with Universal Music’s Boyd Muir, CFO and EVP, when PIAS acquired services network Co-op a decade earlier as part of the divestment process following the major’s EMI acquisition.
“He’s a music guy,” Gates said of Sir Lucian. “He understands. In the past, I think majors had a bad reputation because they made use of undue power and were big and greedy. There have been lots of acquisitions that kill the culture of the company, Lucian understands that. The independent market share has not stopped growing over the last 15 years, so independents need access to market, support, freedom...”
“The whole concept of our deal is really to help us grow and allow us to be ourselves; to allow us to be able to make promises and keep them,” he added.
While Gates would not disclose "confidential things” in the contract, he underlines that the PIAS label side continues to have a majority on its board following the UMG deal.
The distribution side was losing money year-on-year, just because there are so many actors coming in and undercutting everybody
Kenny Gates
Integral, the distribution and services side of PIAS, will now become part of the Virgin Music Group operation globally. Gates will take a seat on the board in addition to his PIAS chief exec role.
“The distribution side was losing money year-on-year, just because there are so many actors coming in and undercutting everybody,” he explained. “So it was also a marriage of reason between Virgin and Integral. Integral needed scale, Virgin needed scale. And what is really smart from UMG’s side is they’ve agreed to create a second supply chain made to measure for the independents. They understand that what an independent needs is an Integral – it’s people dedicated to understanding their music, their way of thinking and having a personal rapport.”
In the UK, Virgin will actually move PIAS’ new office in London’s Bermondsey.
“I like for people to keep their promise and the promise is not to absorb Integral into UMG, but for Virgin and Integral to team up and combine their skills into having a fantastic offering,” said Gates. “We’ve got a whole strategy rolling out for physical, for digital. I think the two combined have got formidable potential to offer independent entrepreneurs and independent labels an ideal set-up.”
Partisan, previously an Integral distribution partner, is one of the key independents that has signed up to the new Virgin-Integral set-up. Gates suggested it’s a sign of the continuity and development to come.
“Yes of course, it’s a great announcement, and Partisan’s a fantastic label,” he said.
One thing that will change, though, is Lambot won’t be a direct part of this stage of the PIAS journey. He’s stepped down after four decades.
“I will not have Michel but he will be my adviser, I still speak to him every day,” said Gates.
Subscribers can read the full interview with Kenny Gates here.