The Weekly RoundUp - 29.03.24

As BMG’s 2023 numbers show continued growth, could a merger with Warner Music or Believe be on the cards? (Complete Music Update)

As BMG announced its full numbers for 2023 and gave more detail on the continuing strategic repositioning of the business, the CEO of parent company Bertelsmann has told the Financial Times that BMG is “potentially” open to “joining forces with a competitor”.

The figures released yesterday show that BMG’s revenues for last year were €905 million, up from €866m in 2022. While that’s only a 4.6% increase year-on-year, it represents a full 50% increase in revenue since 2020 when BMG turned over €602 million.

Over the same period, BMG has continued to make significant investments in rights acquisitions, spending an estimated €900 million to €1000 million over the same period, according to CMU analysis of data from previous Bertelsmann annual reports. The 2023 numbers, says the most recent Bertelsmann report, “were positively impacted by, among other things, high investments in catalogue acquisitions”.

BMG’s figures are released each year as part of parent Bertelsmann’s annual report. As a privately owned company, Bertelsmann is not required to publish the detailed numbers made available by publicly listed companies, but still releases a relatively detailed annual report each year.

This is because, despite being privately owned, the company says that it is “capital markets orientated”, meaning that a lot of the deals it does involve private equity partners. This was the case for BMG, which - in its current form - was established in 2009 after Bertelsmann sold its stake in Sony BMG to Sony Music, before teaming up with private equity investors KKR to form a joint venture, with KKR taking a 51% stake in the company. It exited in 2013 when Bertelsmann took full ownership of BMG.

In an email to staff seen by CMU, the CEO of BMG, Thomas Coesfeld, said that “against the backdrop of an exceptional 2022, we have delivered a solid performance”. 2022 saw the company deliver a significant leap in revenues which increased 36.8% from 2021’s €633 million.

Coesfeld’s email also highlighted BMG’s current transitional phase, which he says is “the most fundamental shift in strategy and structure in the company’s history”.

As previously reported, BMG pulled its catalogue from its distribution deal with Warner Music’s ADA, and has established its own direct deals with Spotify and Apple, and recently signed a new physical distribution deal with Universal Music. This “upgraded distribution”, says Coesfeld, is a “strengthening” of the company’s strategy to “offer the scope and tools of a major and the heart and dedication of an indie”.

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Samro distributes over R33m of digital royalties (BizCommunity)

The Southern African Music Rights Organisation (Samro) has successfully distributed over R33m in royalties to its members for digital platforms in FY2024.

This accomplishment underscores Samro’s continued commitment to ensuring that its members are properly compensated for the use of their musical works by digital platforms, such as Digital Service Providers (DSPs), Video on Demand (VoD) & User Generated Content (UGC) such as Apple, Spotify, Netflix, and TikTok.

Additionally, Samro has another distribution scheduled for June 2024, further enhancing its members' earnings potential.

In 2021, Samro inducted the collection of royalties from digital platforms like TikTok, Facebook, and Netflix in response to the evolving technological landscape. This strategic advancement, made possible by licensing agreements, marked a fundamental step towards adapting SAMRO's licensing and royalty payment practices to the changing dynamics of the global digital landscape.

Samro's diligent research and documentation of compositions have significantly improved identification rates, which now averages 98%. This improvement has resulted in a successful royalty payment to members, including authors, composers, and publishers whose music was featured on these digital platforms.

"For Samro, every distribution of royalties is aimed at maximising earnings for our members, ensuring fair compensation for their musical works and ultimately enhancing their livelihoods. We acknowledged the challenges posed by unregistered music creators and unnotified musical works, which have hindered the accurate distribution of royalties in the past.

In response to these challenges, we implemented operational tactics that leverage data from DSPs, VoD’s and tools such as auto-copyright tools and CISNET. These methods have significantly improved the accuracy and speed of royalty distribution, reducing the need for manual involvement and speeding up the paperwork process. The positive results of this implementation are evident in the MIT category's remarkable distribution, " said Samro.

The organisation remains steadfast in its commitment to advocating for the rights of music creators. It affirms that it will continue to find new ways to adapt to the constantly changing digital environment. This landmark distribution is not just an achievement; it's a promise for the future. It sets a new benchmark for upcoming efforts in royalty distribution, ensuring a future where musicians receive fair compensation for their creative work.