State Champ Radio CMOs
SESAC Music Group today (March 5) announced a deal with the Korean Society of Composers, Authors and Publishers (KOSCAP) that calls for KOSCAP to represent SESAC’s repertoire in Korea and for SESAC-owned Audiam to administer KOSCAP’s publishing rights in the U.S.
The deal makes SESAC one of the first big collective management organizations (CMOs) to move its rights out of the established Korea Music Copyright Association (KOMCA) to KOSCAP, a competitor that the government approved in 2014 to increase competition in the market. KOSCAP will represent SESAC’s online and offline performing rights in Korea, and the catalog of the Harry Fox Agency, the SESAC Music Group’s mechanical rights entity, will follow next year.
The Audiam deal calls for that company, which the SESAC Music Group bought in 2021, to collect performing, mechanical and other audiovisual rights in the U.S. on behalf of KOSCAP.
Trending on Billboard
Charles Park
Although this might seem like just another deal in the alphabet soup world of collective rights management, it highlights the growing competition among CMOs – and how that is leading to different kinds of international deals. In October, SESAC made a deal to have its offline performing rights in Italy managed by Soundreef, a private company just over a decade old, instead of the traditional society Italian collecting society, SIAE.
“Why did we switch?” Alex Wolf, president of international of the SESAC Music Group, told Billboard about the KOSCAP deal. “We’re convinced about the competence and the responsiveness of the management and we’re convinced that we will increase our revenues. This is a bet on the future.”
Just a decade ago, only a few markets had competition among CMOs, which didn’t compete with one another across borders. Since 2014, though, when the European Union passed the Directive on collective management of copyright and related rights and multi-territorial licensing, European societies have had to compete for online rights in the EU, and many other countries have opened up as well. This has led to competition among established organizations, as well as new companies like Soundreef – both to represent writers and publishers and to make deals with foreign CMOs.
“It’s a great honor to partner with SESAC, a global leader with a world-class catalog and one of the premier Performing Rights Management organizations in the world, along with Audiam’s innovative technology to administer our catalog in the US,” KOSCAP COO Charles Park said in the press release announcing the deal.
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.
“There is a myth that at the SACEM restaurant, there are people serving food with white gloves and an orchestra playing,” the organization’s CEO, Cécile Rap-Veber, says with a hint of amusement in her voice. “It is a good story, but it is not true.”
Rap-Veber, who joined SACEM in 2013 and got the top job in 2021, is referring to what she calls its “old-fashioned” reputation. SACEM, which stands for Société des Auteurs, Compositeurs et Éditeurs de Musique, was founded in 1851 after composers Ernest Bourget, Victor Parizot and Paul Henrion refused to pay their bill at the Paris cafe Les Ambassadeurs until they got paid for the use of their compositions there. It became the first music collecting society, as well as the model for those that followed, and over the years, it grew into something of a French cultural institution: important, successful and perhaps overly aware of it.
Rap-Veber is not running your père’s SACEM, however. As a result of European Union (EU) legislation, collective management organizations (CMOs) in Europe now compete to represent and license online rights throughout the continent (and in some other countries) on behalf of songwriters and publishers. “We are now a global society,” she says.
SACEM still licenses public performance rights in France, but it now competes with other societies, most significantly ICE — a licensing hub owned and operated by the U.K. CMO PRS, the German GEMA and the Swedish STIM — to license works to online services in many international markets. (The United States is not one of them, but SACEM represents online rights in many markets for ASCAP and Universal Music Publishing Group, among others.)
Rap-Veber has pursued a “SACEM 3.0” strategy that she describes as “maximizing rates and minimizing costs,” plus offering new services like URights, which can track the use of music internationally, and MusicStart, which lets creators register their works on a blockchain-based system.
A statuette celebrating the diamond certification of the soundtrack to the 2006 movie musical Le Soldat Rose.
Matthew Avignone
These strategies appear to be working. In June, SACEM announced that 2022 was its best year ever. CMOs across Europe are benefiting from the return of live music and growth in streaming. But SACEM grew more than its peers — its collections increased 31% in 2022 to 1.4 billion euros ($1.5 billion). Even as growth boosts the entire sector, “I have to prove that we deliver the best services at the best cost,” she says. “And honestly, I think we can prove that.”
Congratulations on setting a record for SACEM.
It might be a worldwide record as well. And there is nearly 300 million euros [$328.8 million] more on top of it. In France, we collect neighboring rights [royalties for sound recordings] and private-copy levies [on blank media, which are distributed among rights holders in various businesses] for all the culture industries. So if I talk about the performance of our team, it’s not 1.4 billion euros — it’s 1.7 billion euros [$1.9 billion]. And when I look at the first quarter of 2023, that’s also very good.
Why so good?
In the first quarter of 2022, France still had some COVID-19 restrictions, and then the summer and the rest of the year were great. We also have new agreements — with Hipgnosis, with [Hungarian CMO] Artisjus to collect online, and with ASCAP — plus renewed agreements with better rates, especially for online. And now we collect [for online uses] in more than 150 countries directly.
You talk about running SACEM like a business. Is that a reflection of the competition among the various societies?
There was a time when there was a kind of monopoly in each country. There was no consciousness of the cost because there was no competition. Then the European Commission said any rights holder can withdraw his rights for online uses, and suddenly we were in competition. And we have the highest tariffs in the world.
Rap-Veber’s husband made this painting from a photo he took at a private 2007 Amy Winehouse concert booked by former Universal managing director Valery Zeiton.
Matthew Avignone
How do they compare with U.S. royalties under the new Copyright Royalty Board settlement?
They have reached 15.1%, and it will rise. We already had 15% when Apple Music released its service in 2015. And it’s not just the rate — it’s the minimum per subscriber. Ours is higher since it’s independent of discounts. When you see our effective net rate, it’s above 15%. I’m sure it’s easier for us than for a small Eastern European society: It’s the strength of your repertoire, and it’s unbelievable the repertoire we represent.
What’s your reaction to claims that streaming payouts are less fair for songwriters and publishers than recorded-music rights holders?
The highest tariff we had on CDs was 9% of the gross price. Then iTunes forced the community to agree on 8% on each download. Now we’re above 15%. Digital has become our biggest source of revenue. I think the main issue is that [the revenue is] going to very few people. There are people, especially in urban music, who are very happy.
CMOs are coming under pressure from some of the big publishers and platforms, both of which would rather strike direct deals than go through organizations like SACEM.
To go direct with one publisher? What does that mean? We represent [the publisher-led mechanical rights organization] IMPEL, [Canadian rights organization] SOCAN, Artisjus, ASCAP and Universal Music Publishing [among others], so we mutualize our cost [of operations] and we decreased our commission on digital for our members to 9%. That’s what I’m most proud of in the last [few] years. I want to use technology to process more at a lower cost. I think it’s the wrong way to think to go direct: It’s one thing for the majors, but what about the others?
You got the top job at SACEM in an interesting way. The tradition at CMOs is that the chief executive retires with a gold watch, but you basically replaced Jean-Noël Tronc as CEO in 2021.
Jean-Noël had been here for 10 years, and I was about to quit because — honestly, I had a job opportunity, OK? So I left SACEM, and Jean-Noël and the board had a discussion, and they decided to stop their relationship. The board asked me to take the interim job, but I already had this new job. And the team here said, “Are you kidding? You’re not going anywhere!” So I went back to the board and said, “I’m interested if you agree with my plan [for] SACEM 3.0,” and they did.
For a long time, there were no women running CMOs. Now there are many: Beth Matthews at ASCAP, Andrea Martin at PRS, Jennifer Brown at SOCAN and Cristina Perpiñá-Robert at SGAE. What took so long?
There was a lot of ego. It was a small circle of people: “We are so smart, ho ho ho! Let’s have lunch and a cigar.” CEOs then were more focused on an institutional view, and now we’re more focused on day-to-day matters and how to reduce costs. Women know how to reduce costs.
What’s your favorite song?
There are so many, it depends on the mood. The songs of the moment…
That’s cheating.
Serge Gainsbourg’s “Initials B.B.,” for sure. Songs by David Bowie, “Goodbye Yellow Brick Road” by Elton John, The Beatles, “Live and Let Die” from Wings. When you want to feel better, listen to “Sunny” by [German disco act] Boney M. Or Queen of the Night [the aria in “The Magic Flute”] from Mozart.
Rap-Veber says she discovered this photo of Jane Birkin and Serge Gainsbourg, which was taken for their 1969 joint album, when she was looking for ways to monetize Universal Music Group’s archives. “It had never been exploited before I found it,” she says.
Matthew Avignone
SACEM operates in a very different legal environment from the United States. France has stronger copyright laws to protect creators but also regulations that require SACEM to set aside money to fund culture.
It’s part of our DNA because that’s what a “collective” is. With SACEM, you have the highest rates in the world: concerts, more than 8%; broadcasters, more than 3%. If we take tiny amounts [for cultural funding], you will still get paid more than from any other CMO.
Some Americans hate this idea on principle.
Many of these cultural funds come from private copy levies that don’t exist in the Anglo-American system. By law in France, and this is typically French, 25% of this revenue must be allocated to cultural action. So we pay out the 75% that no one else in the world pays, except GEMA. The publishers benefit from it, too, because it helps them develop new creators.
According to EU regulations, I am required to ask you about artificial intelligence.
Last year, it was the metaverse, but this will last much longer. We see opportunities and dangers. Opportunities: As a tool, it can help musicians create music. The main issue for us is how we know whether or not our works have been used in a new product [and] how we can get paid. It’s a worldwide discussion, but I think Europe — and I hope France — will be at the center of it. We already have 120,000 songs uploaded a day, and 60% of the 100 million tracks on Spotify have less than 100 streams a year. Why do the platforms take all of this nothing music?
A lot of songwriting talent in Africa is turning to SACEM or other European societies to license their online rights internationally. How are you handling that?
African creators are usually with their local societies for their home countries, but many are SACEM members for the rest of the world. One problem is that many of these societies in Africa are controlled by the government. The only thing I can do is partner with them to help them improve their systems. In Senegal and Côte d’Ivoire, we just entered worldwide digital agreements so we can represent their repertoire for the world. We’re working with Morocco, too, and PRS is doing partnerships in some English-speaking countries. The idea is to be a bridge between the continents. I don’t wantto be seen as a colonialist — I want to be a partner.
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