Business News Labels & Publishers Top Stories
By Chris Cooke | Published on Monday 21 August 2023
Various groups representing songwriters in the US have written to the boss of American collecting society BMI asking a number of questions about the organisation’s decision last year to become a for-profit enterprise, as well as recent reports that it is again considering selling itself, possibly to a private equity outfit.
In the letter, published by Billboard, the songwriter groups state: “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 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”.
BMI CEO Mike O’Neill was quick to respond, although with rationale and reassurances rather than answers to the questions posed by the songwriter organisations. The shift to being a for-profit society was benefiting songwriters, he insisted, and if any new owner comes on board down the line, “we would ensure that any partner embraces our mission of prioritising the interests of songwriters, including their financial success”.
Most of the music industry’s collecting societies around the world are not-for-profit organisations owned by their members, which are usually some combination of artists, songwriters, record labels and/or music publishers. BMI, somewhat unusually, is actually owned by a group of broadcasters, it having been established by the US radio sector in the 1930s as a rival to the existing US society ASCAP. However, like ASCAP, it was still a not-for-profit operation.
Until last year. The society’s top team had been reviewing BMI’s operations for some time, initially as part of an investigation into whether or not there were any investors out there which might be interested in buying the organisation from its current owners. Despite ultimately deciding not to seek a buyer, BMI nevertheless announced it was shifting to a for-profit approach, seemingly to allow it to seek new investment in order to expand and enhance its operations.
Then last month Reuters reported that BMI was again working with Goldman Sachs to sound out potential acquirers, the investment bank having also performed that role last year. It was speculated that BMI’s board possibly hoped that, now it was a for-profit enterprise, there might be more interest in the private equity domain. Although sources speaking to Reuters stressed no decision had yet been made about any sale.
Last week’s letter was signed by the Black Music Action Coalition, the Music Artists Coalition, Songwriters Of North America, the Artist Rights Alliance and American performers union SAG-AFTRA.
The letter sought clarification on BMI’s current profitability and the extent to which the introduction of a profit margin would impact on the fees and commissions the society charges on the royalties it collects for its member writers and publishers. It also wanted to know who would benefit from the profits of any sale of BMI and what impact a new owner might have on the running of the society moving forward.
In his reply, O’Neill reasserted what was said last year, that “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. 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”.
Setting out how he believes BMI’s writer members are already benefiting from the recent changes – both in terms of operational improvements and royalty distributions made to writers and publishers – O’Neill stated: “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”.
As for any future new owner, O’Neill added: “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 prioritising the interests of songwriters, including their financial success. This is especially important as we navigate this rapidly changing industry together”.
It remains to be seen to what extent O’Neill can allay the concerns of his members, and also how hard the various writer organisations will push for detailed answers to their specific questions.
There has been lots of talk in recent years – including by labels, publishers and collecting societies – about the need for more transparency within the music industry. Although most artists, writers and managers don’t feel there has been any real shift, meaning they are often still in the dark about how their rights are being managed and exploited by their business partners.
But music-makers are being more persistent than in the past in demanding information, which means that BMI – whatever its organisational status may be – will probably need to be a little more forthcoming in answering questions about its plans and strategy.