BMI’s For-Profit Plan Questioned by Songwriter Groups in

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 sent an open letter to BMI CEO Mike O’Neill addressing the issue on Friday (Aug. 18).

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, operates on a not-for-profit basis.)

“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.

BMI President and CEO Mike O’Neill responded to the coalition’s letter with his own letter to the different coalition and association members that was provided to Billboard Friday afternoon. While he did not respond to specific questions, he said that the move to become for-profit was “so we could invest in our company to ensure our continued success and growth for the future, while also increasing our distributions.” He went on to add that the first two distributions under the new model “all exceeded previous years with two being the largest in the company’s history.”

O’Neill cited the reason to switch to for-profit was also to ensure BMI “continues to evolve” along with the overall music business, allowing the organization to invest in new avenues of growth and improvement. Since its business model switch, BMI says it has announced a partnership with Music Nation to establish licensing in UAE, a fast growing market, enhanced customer service, and an upgraded online portal.

“In your letter, you raise a series of questions should a sale of BMI occur,” wrote O’Niell. “In such a situation, we 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.”

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 songwriter group’s 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

Proceeds from a BMI Sale

BMI Operations after a Sale

Sincerely,

Black Music Action Coalition
Music Artists Coalition
Songwriters of North America
SAG-AFTRA
Artist Rights Alliance

Read O’Neill’s letter in full here:

Dear Coalition and Association members:

Thank you for your letter this afternoon. You raise some important questions about BMI and our successful move last October to a for-profit business model. As you stated, there is no BMI without songwriters, and no one knows this better than us. Our mission has been, and always will be, to support our songwriters, composers and publishers and grow the value of their music. It is what we have done since launching our company with an open-door policy in 1939.

As we shared with many of you in October, our move to for-profit was so we could invest in our company to ensure our continued success and growth for the future, while also increasing our distributions. And the first three distributions under our new model all exceeded previous years, with two being the largest in our company’s history. Our responsibility is to continue that trajectory on behalf of our affiliates.

As you know, the music industry has undergone dramatic change and continues to evolve rapidly. We need to continue to invest in our business and explore new avenues for revenue generation so we can continue to expand our distribution sources. We share a common goal with you in that we believe music creators should be appropriately compensated for the critical contributions they make to this industry. We’ve proven this time and time again.

In just under a year, our move to for-profit has already enabled us to invest more in BMI. We have:

In your letter, you raise a series of questions should a sale of BMI occur. In such a situation, we 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.

Mike O’Neill President & CEO BMI

Additional reporting by Ed Christman and Kristin Robinson.

UPDATE: This article was updated Aug. 18 at 7 p.m. EST to include O’Neill’s response.