Virgin Music Group, the indie distribution arm of Universal Music Group (UMG), is offloading a big chunk of its U.S. physical distribution of CDs and vinyl to Alliance Entertainment’s AMPED distribution company, sources tell Billboard.
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Virgin currently distributes labels including BMG, ATO, Dirty Hit Records, Sumerian, ATO, Fader, Strange Music, NF Real Music and Thrive, along with artists such as the Smashing Pumpkins, Black Veil Brides, Body Count, Rick Astley, Bebe Rexha and Jason Aldean. The deal, which a source says is not yet completed, has created a degree of uncertainty for the labels distributed by the two companies, creating worries for label executives about how the new arrangement will work out for their respective labels and artists.
But some of the Virgin labels say the UMG-owned company is a much better digital distributor than physical distributor, and are hopeful that the move to AMPED will therefore prove to be a good one for their businesses.
Still other sources suggest that this move will serve as an enhancement and will expand Virgin’s physical reach, given that Alliance is the largest music wholesaler in the world, servicing more than 1,500 indie retailers and selling to chains and mass merchants while offering fulfillment services to online physical music merchants. The deal will ensure more complete coverage of indie retail within the U.S. and Canada, as well as nontraditional retail locations, according to sources familiar with the deal. Those sources expect the deal to fuel the growth of physical sales in the U.S. and Canada at independent retail for the company’s distributed independent label clients.
Over the last two years, UMG has been expanding and fortifying its indie distribution presence. In September 2022, the company placed its indie distribution arms, Virgin and InGrooves, under the Virgin Music Group banner, led by mTheory founders JT Myers and Nat Pastor. In October 2023, UMG then merged the two distribution companies into one. The following October, it acquired full ownership of [PIAS], which owns some labels and one of the larger European indie distribution companies, and merged it into Virgin Music Group. And in December, UMG followed that up by announcing that through Virgin, it was buying Downtown Music Holdings, which has a suite of music companies that includes two indie distributors, FUGA and CD Baby. That $775 million deal has yet to close, as it faces antitrust scrutiny from governmental regulatory agencies and opposition from some of the big players in the indie label sector.
As for the anticipated new physical distribution channel for Virgin’s domestically distributed indie labels, Billboard estimates that last year in the U.S., Virgin had about $25 million to $30 million in physical sales, based on Luminate data. However, it’s not known if AMPED will be getting all of those sales; AMPED’s parent may already have a share of that physical because Virgin probably only sells to bigger indie retailers directly and relies on one-stop wholesalers like Alliance to sell to smaller indie stores, meaning that for those sales the switch amounts to an internal accounting change within the company. Also, some sources suggest that K-pop releases, which are known to have a huge physical presence, might remain within the Universal system. Some sources estimate that when all the details of the deal and its transition are worked out, Alliance’s AMPED could land anywhere from $20 million to $25 million in sales from the deal.
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Alliance Entertainment is the biggest physical music wholesaler in the world; in its annual report last year, it said that about $450 million of its $1.1 billion in revenue came from music. Based on the nine months reported so far this fiscal year, where its music revenue totaled $358 million as of March 31, 2025, Billboard estimates that Alliance will close out the fiscal year with at least $475 million in music revenue. Those results are expected to be disclosed in mid-September.
Within that, sources say AMPED has annual revenue of about $80 million, so it’s conceivable that the addition of physical from the Virgin labels could see the indie distributor generating $100 million in revenue on an annualized basis, while putting parent Alliance’s music revenue at the $500 million mark, regardless of how the company accounts for the sales.
