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BMI has released its annual report for its fiscal year and, for the first time ever, it hardly contains any financial information.
Such information as how much it collected or distributed in the recently completed year is not revealed in the annual report, even though BMI has historically revealed detailed financial information every year. The report also doesn’t show how much collection and distribution amounts changed from the prior year’s $1.573 billion and $1.471 billion, respectively.
The only information indicating BMI’s financial performance in the year is an observation by BMI president and CEO Mike O’Neill that “every distribution we issued in our last fiscal year was higher than the corresponding one from the previous year.” No further specifics were provided.
The only numbers in the entire annual report that give any indication of how much activity BMI tracked in the year was a note that the performance rights organization processed 2.61 trillion performances, while its membership grew 7% to 1.4 million affiliates, and that it licenses and collects on behalf of 22.4 million works. Dollar amounts only appear once in the 24-page report, when O’Neill states in the opening note that BMI’s November distribution is forecast to be $400 million — which he labeled another record “that would make BMI the first ever PRO to ever distribute this high an amount in a single quarter.” The November quarter is in its current fiscal year, and not a part of the completed year covered in the annual report.
Last October, BMI announced it was switching from a not-for-profit model to a for-profit one. Now, in an opening note to this latest report, O’Neill disclosed the organization’s goal is to distribute 85% of the licensing revenue it collects to songwriters and publishers. The other 15% of collections, he wrote, will cover overhead and allow BMI to achieve a modest profit margin, noting that expenses typically comprise about 10% of revenue. In recent years, BMI’s distribution has been about $90% of revenue.
If BMI creates new M&A opportunities, however, or enters new businesses or offers expanded services, O’Neill said that BMI “will look to take a higher margin on any revenue generated, though always with the goal of sharing that new growth with our affiliates.” In other words, for those business, BMI may not limit itself to a 5% profit margin.
O’Neill also noted that “if BMI decides to seek outside capital or borrow money to invest in new services and opportunities, any repayments will come out of our retained profits and not distributions.”
In the current fiscal year, O’Neill reported that under the new business model BMI’s February distribution was its largest ever, up 6% over the previous year. That was then surpassed by the May distribution, which was up 15% over the corresponding year-earlier period. O’Neill predicted that the next two distributions for the remaining calendar year will follow that trend. For the full calendar year, distributions are projected to be 11% above calendar 2023, the report noted.
Going forward, O’Neill said BMI will announce percentage increases, but apparently will continue to withhold all other financial information.
Seemingly responding to immense pressure from the songwriter community and music publishers who have publicly expressed their unhappiness about BMI’s switch to profitability and its evasion of the many questions they asked, after disclosing the 85% distribution goal, O’Neill’s opening note repeats many of the thoughts he has already shared through open letters on the issue. “We changed our business model last year to invest in our company and position BMI for continued success in our rapidly evolving industry,” he wrote. “Our mission remains the same, to serve our songwriters, composers and publishers and continue to grow our overall distributions as BMI has done each year that I have been CEO. In order to continue this trajectory, we need to think more commercially, explore new sources of revenue and invest in our platforms to improve the quality of service we provide to you. I’m pleased to say that we have already made great progress on delivering these goals.”
He also reiterated that BMI changed its business model to better position the company for success in a rapidly evolving industry. “Our mission remains the same, to serve our songwriters, composers and publishers and continue to grow our overall distributions as BMI has done each year that I have been CEO,” O’Neill wrote. “In order to continue this trajectory, we need to think more commercially, explore new sources of revenue and invest in our platforms to improve the quality of service we provide to you.”
While BMI can accomplish its plans and goals on its own, O’Neill wrote, “We also recognize the opportunity to substantially accelerate our growth by partnering with a like-minded, growth-oriented investor with a successful history of building businesses. Of course, that partner would need to share our vision that driving value for our affiliates goes hand-in-hand with growing our business and building a stronger BMI.”
As Billboard previously reported, BMI is in an exclusive period with New Mountain Capital in a deal to sell the PRO — which is currently owned by radio and television broadcasters — at a $1.7 billion valuation. The valuation, however, sources say, is under downward pressure as negotiations continue.
While stating nothing has yet been signed, O’Neill wrote that the for-profit business model and the strategy outlined “will hold true for BMI whether or not we move forward with a sale.” In other words, BMI will continue to be a for-profit business, regardless of whether it sells or not.
BMI’s October 2022 switch to operating as a for-profit company didn’t cause a big reaction in the music business until a July 2023 Reuters article about the company being put up for sale revealed that it had generated $147 million in earnings before interest, taxes, depreciation and amortization. Then the response was significant – and mostly negative. The fear was that profit would essentially come at the expense of royalty payouts.
Even so, BMI executives and other music business sources familiar with the way private equity funds think about business suggest that songwriters and executives should wait to see how the performance rights organization’s vision, backed by the right strategic partner — such as New Mountain Capital, with which BMI is negotiating — could help them.
BMI has said it is switching models and seeking a buyer in order to respond to a changing market. “We need to continue to invest in our business and explore new avenues for revenue generation,” CEO Mike O’Neill said in an Aug. 18 letter to creators groups that was shared with Billboard, “so we can continue to expand our distribution sources.”
To do that, while delivering the kind of growth a buyer will presumably want, BMI plans to explore new businesses to build a company that can operate at scale, and across national borders, more efficiently than it now does. The idea, according to sources inside and familiar with BMI, is to create a new interdependent royalty-collection ecosystem that will benefit BMI and its potential new owner, as well as its affiliates.
BMI is looking for “a partner who can help us take advantage of new opportunities and provide a new level of investment and technological expertise,” according to a Sept. 5 letter from O’Neill to creators groups published on BMI’s website. New Mountain Capital, which is in an exclusive period to negotiate a deal with the performance rights organization, could be such a partner, executives familiar with the private equity sector suggest, since the firm has a track record of investing in companies to help them achieve significant growth. Since its 1995 launch, New Mountain — which now oversees more than $35 billion in assets and funds — has acquired or founded more than 60 companies, without any going into bankruptcy and without missing an interest payment, according to the company.
In particular, sources familiar with New Mountain Capital point to its investment in Blue Yonder, a software company the private equity firm acquired for $565 million in 2010 and sold to Panasonic in 2021 for an enterprise value of $8.5 billion. The private equity firm, “through continued investment and improvement” helped grow it from a “somewhat sleepy niche company to being the 14th largest software company in the nation,” New Mountain Capital’s CEO Steve Klinsky wrote in the May-June 2022 issue of Harvard Business Review. “We offer the capabilities and access to capital that a large corporate parent would, without forcing companies to become part of a conglomerate culture. At the same time, we bring a fresh, entrepreneurial vision to strategy, talent, R&D, technology, and corporate alliances.”
Still, BMI has not specifically addressed many of the concerns raised by its switch to a for-profit model, which is why songwriters and publishers remain nervous. In fact, on Sept. 18 a letter signed by dozens of lawyers called on BMI to engage in open and honest conversations with affiliates, saying that the PRO owes them the responsibility to respond with “specificity and transparency.”
“I get it that some writers may have legitimate worries because in a vacuum there is not a clear picture of what such a deal could be and how it could be a positive for BMI,” says a veteran music business executive. “But a lot of people with their own interest have been spreading very negative spins with shrill voices that what BMI is doing will be bad for publishers and songwriters.”
In the case of New Mountain Capital, the executive says, they “are nice, smart people” that help businesses add new processes to help them grow substantially and become even more profitable. New Mountain Capital has been studying the music industry for a few years and looked at some substantial deals, sources say, but so far has passed on them until now.
“There is so much negativity out there that doesn’t give this deal the benefit of the doubt,” says another executive. “New Mountain Capital are not corporate raiders; they are intelligent and love the business and want to grow the revenue base so that publishers and writers will be making more money and still make a profit for BMI.”
That’s exactly the kind of approach BMI is looking for, according to executives familiar with its strategy. In its first year as a for-profit business, for example, BMI announced a partnership with the United Arab Emirates company Music Nation to try to establish a public performance licensing and royalty infrastructure there. BMI has also undertaken an “extensive customer service initiative” to enhance the service it provides to affiliates, with plans for an improved online service portal to follow.
The company has said that its move to a for-profit model made these investments possible. But one music publishing executive, who requested anonymity, wonders “why is it easier to invest in systems upgrades as a for-profit entity rather than as a not-for-profit organization?” One answer: The level of investment would impact distributions to affiliates under the previous not-for-profit system.
Publishing executives also believe that growing outside the U.S. will become a priority for BMI. Most of the growth for royalty collections is now coming from the growth of streaming services, and most of that will be international. Over the past decade, some of the European collective management organizations teamed much with publishers to license repertoire for online purposes across Europe, as European law allows. Such a model could also work in other territories, such as Latin America, Asia, or even the Middle East.
Given the opportunity for BMI outside the U.S., another executive wonders if it could be the first organization to try to rollout a global model, with a global membership. And if so, whether that would re-ignite competition to sign writers around the world.
Meanwhile, some executives speculate about whether New Mountain might be frightened off by the antitrust consent decree under which BMI operates, but “they understand deeply what that means,” says a source familiar with the fund, “and that it is baked into the business.”
Private equity is known for growing profits, not restraining them, but sources familiar with BMI’s thinking say that potential suitors need to understand that the company will prioritize payouts. In fact, a potential deal would not involve an expectation of “insane margins,” says one music industry executive who has worked with private equity. If a sale takes place, said O’Neill in an Aug 19 letter, BMI “would ensure that any partner embraces our mission of prioritizing the interests of songwriters, including their financial success.”
For-profit, for whom?
It’s “easy to assume that if we kept doing business the way we always had, distributions would continue to grow,” O’Neill wrote in his Sept. 5 letter posted on the company’s website. “That is a dangerous assumption to make, because in an evolving industry like ours, you run the risk of settling for a larger slice of a shrinking pie. Our goal is to grow that pie to your benefit.”
So far, in the three quarterly distributions since BMI announced its shift to a for-profit model, combined payouts were 9% greater than the same periods of the previous year. That’s almost as good as the 10.2% increase to $1.471 billion that BMI distributed in the fiscal year ended June 30, 2022, when overall revenue grew 15.6% to $1.573 billion, when it was still operating as a non-profit. (BMI is not releasing how much distributions increased for the full year ended June 30, 2023, and it will no longer release any company-wide revenue results, sources say. Instead, it will provide more information to songwriters and publishers to help them measure BMI’s payments in comparison to the past, and in some cases, if songwriters so request, to other PROs.)
Some songwriters and executives argue that, if BMI is sold, affiliates deserve some of the revenue from that sale. But as one industry executive familiar with private equity points out, it’s actually surprising that BMI’s owners – radio and television stations – didn’t sell it a long time ago.
“For over 80 years, you have had owners — all for-profit companies with their own businesses — and yet they didn’t make any profit on BMI,” that executive says. “And I guess it would be unseemly for them to pull dividends out at the same time they are paying licensing fees.” At the same time, he adds, those owners had to watch SESAC and GMR come along and build very profitable businesses.
SESAC, which is considerably smaller than BMI, was sold to the private equity firm Blackstone for about $1 billion in 2017. Ironically, at the end of 2018, one of Blackstone’s investment funds acquired a passive minority equity stake in New Mountain Capital, a fact that U.S. regulators could look at, if New Mountain Capital moves forward with its BMI acquisition.
“The fact is that the broadcasters own BMI; and they are entitled to sell it,” the executive says. “I understand that the music industry likes the status quo, but if you start with the premise that the owners will sell, then you would want them to sell it to someone who is decent and understands the industry. It’s not smart to push [New Mountain Capital] away with a big outcry, because you don’t know who will come along next.”
There is also the potential for BMI to grow into a more modern company in a way that benefits the entire industry, the source says. “Take a year or two and see how things roll forward and how things shake out. If [BMI] songwriters are happy, then they can stay; and if not, then they can look to make a move.”
In late August, Billboard reported that BMI is in serious discussions to sell itself to New Mountain Capital for $1.7 billion, less than a year after the organization announced it was switching for a for-profit model. No deal has been signed, but talks are serious enough that the two sides have entered into exclusive negotiations, and the change in the way BMI operates — especially after the industry became aware of how much profit it has generated in its most recent fiscal year — has triggered an avalanche of questions from songwriters and music publishers. The most important: Will BMI’s future profits come at the expense of royalty payouts to its more than a million affiliated songwriters and publishers.
BMI had $147 million in earnings before interest, taxes, depreciation and amortization in its most recent — but as yet unannounced — fiscal results, according to Reuters. The question is where this money came from.
“Where does profit come from for a performance rights organization?” asks one veteran music publishing executive. “It can come from only two buckets — the cost bucket or the royalty distribution bucket.” And that executive, like several others, believes that BMI “definitely didn’t cut $147 million in expenses.”
Although BMI made news in October 2022 when it announced it would begin to operate on a for-profit basis, all four U.S. performance rights organizations are actually set-up as for-profit corporations – BMI and ASCAP both file form 1120 with the I.R.S., as SESAC and GMR likely do as well. For decades, though, the first two have operated as not-for-profit companies, which likely means that since they pay out all the royalties they collect, minus expenses, they have no profit on which to pay tax. ASCAP’s Articles of Association states that “all royalties and license fees collected by the society shall be…distributed among its members,” except for expenses and contributions to a reserve fund.
BMI has always operated the same way, even though it has always been a private company owned by radio and television companies. In July 2022, though, rumors started spreading about BMI’s plans to change its operations, and the company hired Goldman Sachs to shop the company, preferably to a company which can fill the role of a strategic, but non-industry, partner. That effort didn’t result in a sale, either because the not-for-profit model BMI operated under at the time left it without any profit to show potential buyers, according to some sources; or, as other sources say, because BMI didn’t find a partner at that time that shared its vision of prioritizing the interests of songwriters.
Last October, when BMI announced it would switch to operating on a for-profit basis, the initial reaction in the industry was muted. This summer, however, when Reuters reported that BMI was once again up for sale — and that it had generated $147 million in earnings before interest, taxes, depreciation and amortization — creators expressed alarm, especially at the idea that those earnings might have been taken out of their royalties.
On Aug. 17, five creators groups sent an open letter to BMI CEO Mike O’Neill that asked 17 questions about BMI’s new business model, including whether songwriters and publishers would receive any of the proceeds from a potential sale, how the organization generated so much profit, and how it could continue to do so without reducing payouts to songwriters and publishers, the last of which is an especially significant worry, according to sources. The letter came from the Black Music Action Coalition, the Music Artists Coalition, the Songwriters of North America, SAG-AFTRA, and the Artists Rights Alliance.
So far, the only music publisher to comment on the changes at BMI is Universal Music Publishing Group chairman and CEO Jody Gerson, who said in a statement that, “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.” Other publishers would not comment on the record but expressed concerns.
On Aug. 18, O’Neill responded in a letter to the creators groups and acknowledged that they raised “some important questions” about BMI’s evolution. (His letter was shared with Billboard, and published in full along with a story on it.) He said that the change would allow BMI to invest in its business in order to grow, plus increase payouts. Most important, O’Neill wrote, in the event of a sale, BMI “would ensure that any partner embraces our mission of prioritizing the interests of songwriters, including their financial success. This is especially important as we navigate this rapidly changing industry together.”
(BMI executives declined to be interviewed for this article but they responded to questions with emailed statements, issues other statements for two other stories on the issue, and provided Billboard with the letters O’Neill wrote in response to the creators groups.)
“Relying on the past never sustained a business for the future,” BMI said in an Aug. 29 statement to Billboard. “Our goal is to stay ahead of the changing industry and invest in our business to grow the value of our affiliates’ music.”
O’Neill’s initial letter didn’t satisfy the groups behind the letter, which followed up with another letter to BMI on Aug. 25, which was also obtained by Billboard. “While we appreciated you responding to our letter,” it read, “all of our questions went unanswered.” So far, sources involved with the music creators groups argue. BMI has still not responded to most of the questions in the original letter.
SLICING A FOR-PROFIT PIE
The other big question hanging over a potential sale of BMI is what it would mean for its competition against and its relationships with the other collective management organizations that it competes with but also collects money for and in turn receives royalties from under reciprocal agreements. Because of BMI’s change in governance, it has gone from being a member of CISAC, the international organization of CMOs, to a client, so it is no longer bound by the organization’s transparency rules but will still have access to its data systems.
ASCAP, BMI’s main competitor in the U.S. for more than eight decades, had a pointed take, which it shared in a social media campaign clearly aimed at BMI, though it did not mention the company by name. Its tweets included “We pay songwriters, not shareholders;” “growth without greed;” “Not for profit since 1914 and still growing;” and “There is no I in ASCAP.” Asked to respond, BMI issued a statement: “Our focus is not on how our competitors position themselves, our focus is on delivering for our affiliates.”
So far, BMI has made record payments to affiliates under its for-profit model, the company claims. In a Sept. 5 letter, posted on BMI’s website, O’Neill points out that the company has made three distributions under the new model, each higher than the corresponding one from the previous year. BMI said in an emailed statement that the three combined payments are 9% higher than they were in the previous year. Two of those payouts, according to O’Neill’s Sept. 5 letter, “are the “largest in [the] company’s history.” BMI also set a record in 2022, when it collected $1.573 billion, a 15.58% increase over the previous year, and distributed what it called an “unprecedented” $1.471 billion, a 10.2% increase.
If BMI’s core business keeps growing, it would be relatively easy for the company to continue to increase annual payouts, while keeping healthy profits for itself, industry financial executives point out. From now on, though, songwriters and publishers will have to take BMI’s word for its financial success because, according to sources, its 2022 results are the last ones it will make public. The kind of financial information BMI has traditionally shared would allow publishing executives to see where BMI’s EBITDA is coming from – which could potentially fuel further debate about how much of that money ought to have gone to rightsholders, but didn’t.
Going forward, BMI will instead emphasize and expand the financial information it provides to individual songwriters and their publishers to allow them to compare its payouts with previous years – and potentially, if BMH songwriters so choose, with those going to their co-songwriters who are affiliated with other PROs. That information would show affiliates that it takes its obligations to pay creators competitively, say sources familiar with BMI’s thinking.
BMI’s reluctance to share information is not unique. Both SESAC and Global Music Rights (GMR) operate under a for-profit model, and neither shares information about its overall financial results. Sources speculate that GMR, a boutique U.S. performance rights organization that represents top-tier writers for performance rights licensing, collects more than $150 million. Less is known about SESAC’s financials, which it guards closely, but in 2013 when investment firm Rizvi Traverse acquired a 75% interest in the company, Billboard obtained the financial information used to shop the company which showed that in 2011 SESAC took in $128 million in collections, and paid out $60 million in distributions, leaving itself with $68 million in net publisher’s share. After $27 million in expenses, the company realized $41 million in EBITDA, an EBITDA margin of 32%, according to Billboard calculations. (Rizvi Traverse subsequently sold SESAC to Blackstone for about $1 billion in 2017.) For the year ended June 30, 2023, Billboard estimates that BMI has an EBITDA margin of 8.1%, although BMI is unlikely to make public these financial results. In other words, SESAC’s 2011 EBIDTA margin was four times larger than BMI’s, Billboard estimates.
SESAC and GMR declined to comment or could not be reached to comment on their profitability. But an executive familiar with SESAC’s strategy noted, “everyone who’s affiliated with SESAC has known SESAC is a for-profit” company. The implication is that it didn’t switch models, as BMI did.
The same goes for GMR, and some industry sources find it ironic that Irving Azoff, who founded the for-profit GMR, is on the board of two of the creators groups leading the charge in criticizing BMI. Like SESAC, GMR has always made clear to songwriters that it operates as a for-profit business, and it shows its affiliates a rate card with the amounts of money it collects from different licensees, sources say, so they can compare that to other PROs. It sticks to those rates, unlike BMI and ASCAP, which have bonus plans, explained on their respective web sites, which pay out more money per play to songwriters who accumulate a certain number of plays.
At BMI and ASCAP, for example, a pop song might generate a payout of about a dollar a play on a popular big-city radio station, but a composition that qualifies for a bonus could generate three times that much, to use a simplified example. These bifurcated rate structures apply to most big genres, and to subscription streaming and satellite radio play, as well as terrestrial radio. While some songwriters and executives argue that it’s not fair to pay top songwriters and their publishers at a higher rate, since their songs accumulate more plays anyway, these plans allow BMI and ASCAP to compete for top writers with SESAC and GMR, which are not bound by antitrust consent decrees the way BMI and ASCAP are. For BMI and ASCAP, having those top writers helps them get better rates from licensees. “A rising tide lifts all boats,” as one PRO executive says.
Even so, these plans show how the two big PROs structure their businesses in order to pay different rates to songwriters, which sources suggest BMI had to do even more in order to generate a profit.
Sources familiar with BMI’s thinking dismiss as inaccurate the idea that it will change the way it pays songwriters and publishers and BMI in an email to Billboard called this unfounded speculation. But other industry sources suggest that BMI’s switch to a for-profit model gives it an incentive to grow that would make such a switch worth considering. And there are plenty of ways it could do so. “There are a lot of rule changes they can make there and in other places to get dribs and drabs that would impact people equally but not so noticeably,” says an executive at a competing PRO. As another executive notes, paraphrasing a music publishing saying, “If you get a crumb here and a crumb there, eventually you have a loaf of bread.”
If BMI does decide to alter its payout structure, changes are likely to come at the expense of less popular songwriters on the so-called long tail, argue other sources, or smaller publishers who are less likely to push back. “The people with no representation are at the biggest risk in the for-profit model,” the music publishing executive says. “For sure, [BMI’s profit] will come out of the pocket of many, many people who are currently paid little amounts of dollars.”
Another executive familiar with BMI’s plans says that this kind of speculation is nonsense, and O’Neill said in the Sept. 5 letter that there is no truth to these rumors. “The industry’s most successful music creators didn’t start out that way,” he said in the Sept. 5 letter, “and we pride ourselves on our work helping to guide, develop, and support your talent to ensure your passion can also be a profession.”
Not everyone is convinced, though. “In the music industry,” says another veteran executive, “we usually oil the squeaky wheels with money.”
OTHER QUESTIONS
Even after these two big questions are addressed, others remain. One: Will BMI loosen its rules on songwriter departures, since its switch to a for-profit model represents such a dramatic change in how it operates?
More immediately, will BMI’s balancing act – operating for-profit while continuing to make sure its affiliates are paid fairly – appeal to a private equity player? The company already operates under a consent decree, and its first attempt at a sale, in the summer of 2022, didn’t succeed.
It’s also hard to predict what effects a potential BMI sale to a private equity fund would have on its regulatory environment, from the possibility of more antitrust scrutiny from the U.S. Dept. of Justice to the chance of a renewed look at a compulsory license for public performances.
And the big question driving all of the arguments still remain unanswered. If BMI does make a deal to sell itself, will songwriters and publishers share in what sources suggest is a $1.7 billion valuation price? Will some of that money be earmarked for infrastructure improvements? Or will all of it go to the radio and TV stations that own BMI? Since BMI has taken in an average of about $238 million a year in annual licensing fees from terrestrial radio and broadcast television over the last half-decade, that means that a price of about $1.7 billion would fund about a seven-year licensing rebate for BMI’s owners.
Since the end of August, there have been reports that BMI is in advanced talks to sell itself to the private equity firm New Mountain Capital. A deal has yet to be signed but the possibility has raised concerns among songwriters about what it will mean for the collective management sector if one of its largest organizations becomes a business owned by private equity.
Such a move would take BMI in a new direction, away from the traditional model – based on non-profit and transparent operations—of the CISAC community. For CISAC and our global network of 227 Collective Management Organisations (CMOs, or societies), however, it also highlights the strength and value to creators of the global collective rights management system. The collective management model has been successful for over a century, remaining faithful to its core principles, while transforming and adapting to keep pace with the rapidly changing business environment.
BMI will stay connected to this community. In anticipation of the new direction it has taken in the last year, it has moved from being a full CISAC member to a CISAC “client,” a new category that was established in 2020 to accommodate the new types of rights management entities — including SESAC, Soundreef and Nextone – which have emerged.
Clients make up a very small group of “for-profit” entities that differ from the overwhelming majority of CISAC members, which operate on a non-profit basis. Clients are not subject to all of the traditional transparency and business rules that full CISAC members abide by, but still have access to CISAC’s systems and data exchanges that help the global music market function
By accepting for-profit entities as clients, CISAC maintains its inclusiveness and diversity, while not compromising on the core conditions of membership.
It is those core membership conditions which provide the unique value of the global network. Full members, such as ASCAP in the US, PRS for Music in the UK or GEMA in Germany, are required to meet key fundamental rules:
to operate on a non-profit basis or be controlled by their affiliates
to respect CISAC’s global standards of governance and professional rules
to be fully transparent in their financial reporting and share information with the rest of the CISAC members
As a global confederation, CISAC respects individual creators’ decisions on whom they entrust their rights to. It equally respects members and clients’ decisions on how they manage creators’ rights. The global song rights market is changing rapidly, with growing competition between different types of royalty collection bodies at a time when the cost pressures of managing digital collections and distributions has never been greater.
These changes are inevitable and they are good, if they have the end of result of better serving the creators who are at the center of our business.
In this transforming landscape, the vast majority of CISAC’s member societies remain non-profit entities which abide by all CISAC rules. Full CISAC members work only for creators and rightsholders, not shareholders. Their transparency obligations ensure high levels of integrity and best practice across the network. Creators and rightsholders, not financiers and investors, are assured a controlling role in their decision-making. Creators sit on our societies’ Boards of Directors. You’d be hard pressed to find other entities in the music industry which have music creators as their Board members.
The global collective management system gives creators a strong, united voice to lobby for creator-friendly legislation, develop modern systems for data exchange, adopt best practices and maximize collections and distributions. From turning around failing markets such as Greece, Turkey and India, this community continues to play an indispensable role for creators and publishers worldwide.
Our sector remains the only part of the music industry that puts the creator front and centre of everything it does. While more commercial ventures may be tested in our fast-evolving market, the fact remains that the collective management system is the most robust, reliable and fit-for-purpose model in serving creators.
Gadi Oron is the director general of the International Confederation of Societies of Authors and Composers (CISAC), a Paris-based rights organization.
Gary Kemp of Spandau Ballet will be named a BMI Icon at the 2023 BMI London Awards, to be held Oct. 2 at The Savoy Hotel. The private event will be hosted by BMI president & CEO Mike O’Neill.
Kemp is best-known for writing Spandau Ballet’s swoon-inducing 1983 smash “True.” The song topped the Official U.K. Singles Chart for four weeks and reached No. 4 on the Billboard Hot 100. Eight years later, it was sampled in PM Dawn’s “Set Adrift on Memory Bliss,” a No. 1 hit on the Hot 100.
In addition, producer Richard Isong, better known as P2J, will receive the BMI Impact Award, which recognizes ground-breaking artistry, creative vision and impact on the future of music. This marks the first time a producer has received this honor.
“We’re in for an exciting night celebrating our BMI family of U.K. and European songwriters, composers and music publishers,” O’Neill said in a statement. “We’re thrilled to pay tribute to the legendary Gary Kemp in recognition of his incredible creative accomplishments. His timeless songs have reached multiple generations, leaving a lasting impression on the world of entertainment and inspired many to follow in his footsteps. We’re also honoured to present P2J with the BMI Impact Award. His work is a testament to the unifying power of music in bridging cultures and captivating audiences worldwide.”
The ceremony will also honor the U.K. and European songwriters and publishers of the previous year’s most-performed songs on U.S. streaming, radio and television from BMI’s repertoire. The Million-Air Awards, song of the year, and awards for pop, film, television and cable television music will also be presented throughout the evening.
Kemp is one of the most successful songwriters to come out of the New Romantic era in British pop music. As a founding member and guitarist for Spandau Ballet, Kemp wrote the lyrics and music for all of the band’s hits. “True” has received more than 5 million airplays in North America alone. “Gold,” “Communication” and “Only When You Leave” also made the Hot 100.
Kemp’s songs have been sampled by many artists, including Backstreet Boys, PM Dawn, Nelly, Paul Anka, Rui da Silva and Lloyd. As a solo artist, Kemp has released two albums for Columbia Records, Little Bruises (1995) and Insolo (2021). He’s also written two musicals with Guy Pratt, with whom he currently co-hosts a podcast called the Rockonteurs. For the last five years, Kemp has toured with Nick Mason’s band Saucerful of Secrets as co-lead singer and guitarist.
Kemp is also an accomplished actor and author. He has appeared in several films, including the 1992 blockbuster The Bodyguard and the British crime thriller The Krays. In 2009, he authored his autobiography, I Know This Much: From Soho to Spandau.
Kemp has received a Q Award, a BRIT Award, an IVOR Novello for outstanding song collection and five BMI Awards. As a BMI Icon, he joins an elite group of recipients including Bee Gees, Crosby, Stills & Nash, Ray Davies, Peter Gabriel, Queen, Sting and Van Morrison.
P2J will be recognized with the BMI Impact Award for the influence he’s had on the future of music. Previous winners are Tems, RAYE and Arlo Parks.
For the past decade, P2J has established himself as an in-demand producer through his work with chart-topping artists such as Beyoncé, Burna Boy, Doja Cat, Gorillaz, Ed Sheeran and WizKid. His work spans multiple genres, including pop, grime, rap and Afrobeats. P2J received his first Grammy nomination late last year – album of the year – for his work on Beyoncé’s Renaissance. His music has amassed more than a billion streams.
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Vivek Ramaswamy, a Republican Party presidential candidate, will no longer be able to play the music from one of Hip-Hop’s most celebrated stars while on the campaign trail. Eminem, via the BMI organization, filed a cease-and-desist letter towards Ramaswamy over the track “Lose Yourself,” who says he will comply but not without taking a swipe at the veteran rapper.
Daily Mail exclusively reports that BMI informed Ramaswamy’s campaign office of Eminem’s desire to no longer license the song for use during his run for the White House.
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The outlet adds that the letter from BMI was dated August 23 which said they “received communications from Marshall B. Mathers, III, professionally known as Eminem, objecting to the Vivek Ramaswamy campaign’s use of Eminem’s musical compositions (the “Eminem Works”) and requesting that BMI remove all Eminem Works from the Agreement.”
Ramaswamy was seen rapping a version of “Lose Yourself” at the Iowa State Fair and, as per BMI’s request on behalf of the rapper born Marshall Mathers III, he will no longer have the rights to do so.
Ramaswamy, 38, has emerged of late as an outspoken candidate full of quips and soundbites and is the youngest candidate among the presidential hopefuls that include the likes of Former New Jersey Gov. Chris Christie, Former South Carolina Gov. Nikki Haley, Sen. Tim Scott, former Vice President Mike Pence, and current Florida Gov. Ron DeSantis.
The businessman made an appearance on MSNBC and fired back at Eminem over the “Lose Yourself” cease-and-desist, challenging the rapper’s politics. Most might know that Eminem has been critical of the so-called MAGA movement and former President Donald Trump so it appears clear where his political affiliations are placed.
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Photo: STEFANI REYNOLDS / Getty
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American Society of Composers, Authors and Publishers (ASCAP) has launched a new social media campaign that appears to be in response to a recent Billboard exclusive that revealed that ASCAP’s main competitor, Broadcast Music Inc (BMI), may sell itself to a private equity firm. Sources say the potential deal has an estimated price tag of $1.7 billion.
Just two days after the Billboard story was published on last Wednesday (Aug 23), ASCAP — which, along with BMI, is one of the largest U.S.-based performing rights organizations — posted a graphic on Instagram and X (formerly known as Twitter) that read: “ASCAP. Creators first. Not for profit. Not for sale.” In the caption of the post, ASCAP continued to point out that it is the “only U.S. PRO that operates as a not-for-profit” and that it is the “only one founded and governed by songwriters, composers and music publishers.”
In the last three days, the organization has posted seven other similar posts on its socials, seemingly highlighting their distinctions from BMI. The posts include quotes like: “Private equity never wrote an iconic love song,” “ASCAP. Growth without greed,” and “ASCAP writers. Who owns us? Who gets paid? You. And you.”
ASCAP CEO, Elizabeth Matthews, provided a statement about the social campaign to Billboard, saying “it’s important for everyone to understand what makes ASCAP different. We are a membership association, founded and run by songwriters, composers and music publishers. We are the only US PRO that operates as a not-for-profit, and our distribution policy is set by a board of writers and publishers, who are elected by our members. ASCAP’s governing articles require us to put creators first, which puts us in a category of one. And we’ve been overwhelmed by the positive response from our members.”
“Our focus is not on how our competitors position themselves,” replied a representative of BMI when asked to comment on ASCAP’s latest social posts. “Relying on the past never sustained a business for the future. Our goal is to stay ahead of the changing industry and invest in our business to grow the value of our affiliates’ music. Any path forward would prioritize the best interests of our songwriters, composers and publishers, including their financial success. Our focus is on delivering for our affiliates.”
BMI first began experimenting with its business model in March 2022 when it hired Goldman Sachs as an outside advisor to explore new strategic opportunities for growth. This was believed to include a possible sale to an outside firm, but by August 2022, Bloomberg announced that BMI had ditched its exploration of such a sale. A few days later, Billboard found that the PRO laid off about 30 staffers from its workforce, citing “uncertain” economic conditions.
By October 2022, BMI announced that it would be switching from its 80-plus year status as a non-profit organization to a for-profit company. In an interview with Billboard at the time, the company’s CEO and president, Mike O’Neill, explained that the company made this switch because “growth requires investment, not just maintenance… This new [commercial] model will grow at a faster rate.”
This summer, reports surfaced that BMI was once again considering a sale. O’Neill explained to his staff in a memo that the company’s new for-profit model and recent investments into improving its operations “has only intensified outside interest” in purchasing the PRO.
Amid growing concern about the future of BMI, songwriter groups — including Songwriters of North America, Black Music Artists Coalition, Music Artists Coalition, Artists Rights Alliance, and SAG-AFTRA — provided Billboard with an open letter to BMI on Aug. 18. Outlining three areas of concern, the songwriter groups question how they will be impacted by BMI’s increased profits; the proceeds from any potential BMI sale; and what may happen operationally at BMI in the event that the organization is sold. “Songwriters have a right to understand these decisions and how it impacts us,” the letter read.
Days after, Billboard reported that multiple sources say BMI is considering an offer to sell to New Mountain Capital, a private equity firm that has been quietly shopping for music assets over the last few years, according to sources. The deal has yet to be signed, as New Mountain Capital has entered an exclusive window to scrutinize the deal. Sources suggest that the deal, if it takes place, will be worth around $1.7 billion.
In response to that exclusive, the same songwriter groups provided Billboard with another open letter to BMI on Aug. 28, expressing that they were “extremely disappointed and upset” to hear the news of a possible sale. The coalition asked for BMI’s chief executive to respond to songwriters with more information “prior to taking any other action” towards the possible sale to New Mountain.
A coalition of songwriter and artist groups have expressed that they are “extremely disappointed and upset” with BMI in a letter to the firm’s CEO and president Mike O’Neill. Obtained by Billboard, the letter is written in response to last week’s news that the performing rights organization may sell to private equity firm New Mountain Capital for around $1.7 billion, according to multiple sources.
Consisting of Songwriters of North America (SONA), Black Music Action Coalition (BMAC), Music Artists Coalition, Artist Rights Alliance, and SAG AFTRA, the coalition’s new letter asks O’Neill for “real, substantive answers” to questions they posed to the company leader in a previous letter from Aug. 18, citing that O’Neill’s original response did “not answer any of [their] questions.”
The Aug. 18 letter addressed three major concerns: BMI’s profits; the proceeds from any potential BMI sale; and what may happen operationally at BMI in the event that the organization is sold.
Five days later, on Aug. 23, Billboard reported that BMI was, in fact, in the process of selling. Spurred by that report, the coalition wrote their second letter to O’Neill, asking for the executive to respond to songwriters “prior to taking any other action” towards its possible sale. “If you do not want to provide us with written answers, we are happy to meet with you as a group,” it says.
They also call out BMI for responding to their last request by saying that there was an uplift in BMI’s distributions last year. “Of course distributions went up — all PROs’ revenue went up,” the new letter reads. “This does not answer any of our questions. And it does not explain where the $145m EBITDA (as reported by Billboard today) came from and why that money was not distributed to songwriters.”
A representative for BMI replied to the letter in a statement to Billboard a few hours after its receipt, saying, “Relying on the past has never sustained a business for the future. Our goal is to stay ahead of the changing industry and invest in our business to grow the value of our affiliates’ music. Any path forward would prioritize the best interests of our songwriters, composers and publishers, including their financial success. Our focus is on delivering for our affiliates.”
BMI’s changing business model has been the source of concern and confusion within the music industry since March 2022. At that time, it was reported that the performing rights organization had hired Goldman Sachs as an outside advisor to explore new strategic opportunities for growth. As a non-profit organization since its inception over 80 years prior, the Goldman Sachs news signaled a major shift for BMI and was rumored to include a possible sale to an outside firm. In August 2022, however, Bloomberg announced that BMI had ditched its exploration of such a sale. A few days later, Billboard reported that the PRO laid off “just under 10%” of its workforce, about 30 people, in order to approve “efficiency” during “uncertain economic times,” said O’Neill in a company-wide email.
Last October, BMI announced that it would be switching from its non-profit status to become a for-profit company. O’Neill explained to Billboard that the company made this switch because “growth requires investment, not just maintenance… This new [commercial] model will grow at a faster rate.” Given the fast-shifting performance royalty landscape, moving from in-person to mainly digital collections, BMI appeared to want to invest more in modernizing its operations with its new model.
This summer, BMI resurfaced the potential of selling to an outside firm. In a memo to staff in late July, O’Neill said that the company has been increasingly interested in a sale over the last year. He added that by leveraging the company’s new for-profit model and recent investments made into BMI to improve its operations, BMI “has only intensified outside interest.”
Read the songwriter groups’ full letter here:
Mr. Mike O’NeillBroadcast Music, Inc.
Re: BMI
Dear Mike:
We were extremely disappointed and upset to read the announcement of BMI’s sale to New Mountain Capitol.
Songwriters have real questions and deserve real answers before any further action is taken. While we appreciated you responding to our letter, all of our questions went unanswered.
Your response was that distributions went up last year. Of course distributions went up – all PROs’ revenue went up. This does not answer any of our questions. And, it does not explain where the $145m EBITDA (as reported by Billboard today) came from and why that money was not distributed to songwriters.
We understand that a deal has been agreed, but has not closed. Prior to taking any other action, we are giving you another opportunity to provide songwriters with real, substantive answers to the questions we posed.
If you do not want to provide us with written answers, we are happy to meet with you as a group.
Sincerely,
Black Music Action CoalitionMusic Artists CoalitionSongwriters of North AmericaSAG-AFTRAArtist Rights Alliance
BMI has accepted an offer to sell to New Mountain Capital, a private equity firm that has been quietly looking at music assets over the last few years, according to sources. It’s unclear if the deal has been signed yet.
Sources suggest that New Mountain Capital will pay about $1.7 billion for BMI which claims $145 million in earnings before interest, taxes, depreciation and amortization in its first year acting as a for-profit entity, which was announced last October. That suggests that BMI — aka Broadcast Music Inc. — is trading on a nearly 12 times EBITDA multiple. Since BMI has no debt, it’s likely that New Mountain Capital will use a healthy level of debt to finance the deal.
According to New Mountain Capital’s website, the firm has $40 billion in assets under management and chases a “growth-oriented, value-add investment approach, rather than reliance on excessive risk, as the best path to high and consistent long-term returns.” The firm has made investments in such industries as software, business services, information and data, logistics and financial services among a few other sectors.
Besides New Mountain, sources say, bidders included Apollo Global Management, Brookfield Asset Management and its music investment Primary Wave, and RedBird Capital Partners. New Mountain and Brookfield/Primary Wave became the finalist, until BMI accepted New Mountain’s offer. Moreover, sources add that Moelis & Co. has been acting as an advisor to New Mountain while BMI has acknowledged that it hired Goldman Sachs to explore a strategic partnership.
BMI first put itself up for sale last year and at the time said it was switching from a not-for-profit operation to a for-profit company. In its fiscal 2022, before it switched to a for-profit entity, BMI reported that it collected $1.573 billion, while distributions totaled $1.471 billion. While the company has stated that the move is being made to benefit its affiliates and will allow the company to spend more money on developing technology and infrastructure so it can better services and songwriters, the strategy shift has caused consternation among songwriters and publishers.
Last week, a group of songwriters and creative advocates wrote a letter to BMI asking how such a move would benefit songwriters and questioning whether the profit would come at the expense of songwriter payments. The groups that signed the letter were Black Music Artists Coalition; Music Artists Coalition; Songwriters of North America; SAG-Aftra and Artists Rights Alliance.
Since its formation in 1940, BMI has been operating as a not-for-profit organization, paying out all of the money it collects to songwriters and publishers, even though it was a private company. In response to the songwriter and creator organization letter, BMI president Mike O’Neill said that because of its first year acting as a for-profit entity, it has allowed the company to upgrade its services portal, including new dashboards, among several other initiatives. He also said in pursuing a BMI sale, the company “would ensure that any partner embraces our mission of prioritizing the interests of songwriters, including their financial success.
BMI declined to comment for this story, and other firms mentioned didn’t immediately respond to a request for comment or couldn’t be reached.
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.
