Townsend Music, a U.K.-based distributor and direct-to-consumer retailer, has been acquired by Artone, a Dutch business with a portfolio of companies that caters to the physical music marketplace. Terms of the deal were not disclosed.
Townsend Music founder Steve Bamber called the acquisition “a clear opportunity to push its European expansion strategy forward quickly, with Artone’s well established sales, distribution and manufacturing facilities already in place.”
Artone can quickly scale up and meets its goal of becoming a global D2C company, according to sales director Bruce McKenzie. “Artone’s suite of services from vinyl manufacturing, EU physical distribution, and label services gives us perfect synergy to offer both our D2C clients and super-fan customers a super charged service,” he said in a statement.
Artone was formed in 2022 from the merger of Bertus Distribution and Record Industry, a vinyl pressing plant based in Haarlem, Netherlands. The portfolio of companies also includes Sound Factory, which provides artists and labels with solutions to sell exclusive content directly to consumers; two labels that release music in physical formats, Music on Vinyl and Music on CD; and V2 Benelux, which provides label services in the Netherlands, Belgium, France and Germany.
“The acquisition is another welcome step for Artone’s continued expansion of its service portfolio and gives us presence in the UK market,” CEO Jan Willem Kaasschieter said in a statement. “This acquisition strengthens our position as a global leader in physical music distribution. We’re excited about the opportunities this will bring and look forward to driving the future of physical music together, developing further global reach and innovative solutions for the benefit of the music industry.”
Physical music sales continue to show strong growth as streaming takes a larger portion of the global market. In the United Kingdom, vinyl sales grew 13.5% and CD sales improved 3.2% in the first half of 2024, according to the Entertainment Retailers’ Association.
With vinyl sales continuing to rise and streaming growth slowing, the music industry is putting increased focused on reaching “superfans” willing to pay more for premium experiences and tangible products. The unmet opportunity to monetize superfans was a key talking point in Universal Music Group’s Capital Markets Day presentation on Tuesday (Sept. 17). “We’re creating and monetizing new ways to meet the superfans pent up demand for products, experiences and access that brings them closer to the music and to the artists that they love,” said CEO Lucian Grainge.
Warner Music Group CEO Robert Kyncl has also made superfans a priority during his tenure. “One of the most important things is to figure out a direct relationship with the most valuable fans,” Kyncl said at the Morgan Stanley Technology, Media and Telecom Conference on March 6. “Because it’s not only important to monetization and new revenue stream, but it’s also important to launching new music, which is the core of what we do.”
Effectively reaching superfans could be a lucrative endeavor for record labels. In its latest “Music in the Air” report, Goldman Sachs analysts put the global superfan addressable market at $4.5 billion—nearly 16% of the $28.6 billion recorded music market in 2023, according to the IFPI. Much of that revenue could come from music subscription services’ high-priced, high-value offerings that go beyond the current premium subscription tier.
Physical goods are a proven way to connect with superfans. Market research firm MusicWatch found that 20% of U.S. music fans are superfans for their favorite artists who go to concerts, buy merchandise and albums and would be wiling to spend more for VIP experiences from the artist. At the same time, more superfan sales are coming from the types of direct-to-consumer stores offered by Townsend. In the first half of 2023, U.S. direct-to-consumer sales tracked by Luminate increased 20% year-over-year.
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