Black Music Artists Coalition

Performance Rights Organization BMI is engaging with outside parties over the possibility of a sale, as the organization seeks to continue its transition into a for-profit entity. But where those profits will come from is of concern to several groups that advocate on behalf of songwriters, who have sent an open letter to BMI CEO Mike O’Neill addressing the issue.

Chief among those concerns is whether any profits that BMI does accrue will come at the expense of royalties that would otherwise be paid out to songwriters for the exploitation of their works, which is the business in which BMI has operated for more than 80 years. In its most recent annual report, for the year ended June 30, 2022, BMI — which represents repertoire by songwriters like Kendrick Lamar, Taylor Swift and Rihanna, among some 1 million others — reported that its revenue reached $1.573 billion and that it distributed $1.471 billion to songwriters, its highest mark ever. (While BMI has always been a private company that could have operated to reap profits, it has up until last year chosen to operate as a not-for-profit entity. ASCAP, its main competitor, is a non-profit 501-C corporation.)

“Songwriters have a vested interest in changes at BMI and in any proposed transaction which is wholly dependent on songs they have written,” reads the letter, signed by the Black Music Action Coalition, the Music Artists Coalition, Songwriters of North America, the Artist Rights Alliance and SAG-AFTRA, and which was obtained by Billboard. “BMI does not own copyrights or other assets; it is a licensing entity for copyrights owned by songwriters and, by extension, publishers. Songwriters have a right to understand these decisions and how it impacts us.”

The letter outlines three areas of concern: BMI’s profits; the proceeds from any potential BMI sale; and what may happen operationally at BMI in the event that the organization is, in fact, sold.

Under the first heading, the groups ask to verify whether BMI generated $135 million in profit since the shift to the for-profit model; how those profits were generated; whether that increase in profits would benefit songwriters; and whether any future profits might come at the expense of distributions to songwriters.

The second heading questions whether songwriters, publishers or broadcasters would receive any proceeds from any potential BMI sale; and if it were the latter, if that would not be effectively a rebate on the licensing fees they pay to broadcast songs, essentially lowering the cost to their businesses.

And on the final point, the groups ask whether any writers or publishers would receive benefits that are not extended to others; ask for assurances that writers will not be driven away or discouraged from joining BMI; and whether, if BMI is sold to private equity investors, the new owners would seek profits at the expense of disbursements to songwriters.

A spokesperson for BMI did not provide a comment at time of publishing.

Last month, in a memo to staff, O’Neill sought to explain reports about BMI reopening talks for a sale, after initial conversations had stalled out last year. “Delivering for our affiliates is always our top priority, and we have a responsibility to engage in discussions with outside parties if they can help further that mission,” O’Neill wrote in the memo. “That is exactly what we are doing right now, and no final decisions have been made.”

Following that news, publishers quietly began grousing about BMI’s intention to switch to profitability, but only privately. The only major publisher who has responded to a request for comment on BMI’s move to convert to profitability was the Universal Music Publishing Group. “We don’t comment on rumor or speculation, but to be very clear, we will only support changes that increase value for songwriters and will not stand for any that result in our songwriters being paid less than what they deserve,” UMPG chairman and CEO Jody Gerson said in a statement to Billboard at the time. “We have a long history of successfully fighting for our songwriters and will continue to do so.”

Read the letter in full here:

August 17, 2023

Mr. Mike O’Neill Broadcast Music, Inc.

Re: BMI Proposed Transaction

Dear Mike:

As you know, there is no BMI without songwriters. Songwriters have a vested interest in changes at BMI and in any proposed transaction which is wholly dependent on songs they have written. BMI has been very active: BMI announced a shift to a “for-profit” model and engaged Goldman Sachs to explore a transaction where a private equity company would purchase BMI. BMI does not own copyrights or other assets; it is a licensing entity for copyrights owned by songwriters and, by extension, publishers. Songwriters have a right to understand these decisions and how it impacts us.

As advocacy organizations representing songwriters, we have questions about the impact of a proposed transaction on our songwriter members. In the spirit of transparency, we hope that you will answer the following questions:

BMI Profits

We heard that BMI has reported $135m in profits since it shifted to a “for profit” model. Is that accurate?

If so, how did BMI increase its profits so dramatically?

Will songwriters benefit from this increase in profits?

What does BMI project its future profits to be?

We all know that the way to become more profitable involves increasing revenue and/ordecreasing expenses. If revenue increases, shouldn’t that money go to songwriters? Will BMI need to reduce its distributions in order to drive future profits?

Proceeds from a BMI Sale

If BMI sells, will writers or composers receive part of the sale proceeds?

If BMI sells, will the broadcasters on BMI’s Board receive the sale proceeds?9420 Wilshire BlvdBeverly Hills, CA 90212

If so, why should broadcasters be the biggest beneficiary from a sale of a company whose only asset is songs that belong to songwriters?

If broadcasters benefit from the sale of BMI, aren’t they essentially receiving a rebate on the licensing fees they’ve paid? In other words, they got to play songs for free?

If BMI sells, will publishers receive part of the sale proceeds?

If BMI were to sell who else would receive a share of the sale proceeds?

Proceeds from a BMI Sale

If BMI sells, will writers or composers receive part of the sale proceeds?

If BMI sells, will the broadcasters on BMI’s Board receive the sale proceeds?

If so, why should broadcasters be the biggest beneficiary from a sale of a company whose only asset is songs that belong to songwriters?

If broadcasters benefit from the sale of BMI, aren’t they essentially receiving a rebate on the licensing fees they’ve paid? In other words, they got to play songs for free?

If BMI sells, will publishers receive part of the sale proceeds?

If BMI were to sell who else would receive a share of the sale proceeds?

BMI Operations after a Sale

If BMI is sold, will any writers receive a benefit that is not extended to all writers (e.g., equity or profit participation)?

If BMI is sold, will any publisher receive a benefit that is not extended to all publishers and writers?

Private equity companies have aggressive return on investment goals. Since BMI is for profit, private equity owners will demand increased profits to meet their expectations. How can writers and composers be assured that private equity owners of BMI won’t drive more profits for themselves at the expense of songwriters?

Can BMI assure writers and composers that BMI’s profit margin will not exceed what BMI currently charges writers and composers as overhead?

We have concerns that increased profits for a private equity owner could come from lowering distribution rates or decreasing distributions by driving writers away from BMI. Can you assure songwriters that neither of these things will happen?

BMI is required to provide a home to any writer who wants to join. Can BMI confirm that they will not seek to drive writers away from BMI or discourage writers from joining BMI?We appreciate your attention. We will make ourselves available so that we can better understand this process and explain it to our members. We look forward to hearing from you prior to the completion of any proposed transaction.

Sincerely,

Black Music Action CoalitionMusic Artists CoalitionSongwriters of North AmericaSAG-AFTRAArtist Rights Alliance

Additional reporting by Ed Christman.