by : Business, October 2011

BMG Publishing Makes Inroads (In America)

BMG Publishing Makes Inroads (In America)

The publishing business is vital in protecting, valuing, and developing new music. Publishers are responsible for the business side. They seek to maximize copyright protection and collections for their clients and search for music from composers and songwriters. They act as a foundation to nurture artists, composers and songwriters in their creative process. Two of the leading publishers in the music world, albeit very different, are BMG and Bug Music.

Bug Music, which was founded in 1975, has a varied music catalog that allows music supervisors and ad agencies to procure usage rights around the world quickly and easily. This independent music publisher, one of the largest, owns and/or manages copyrights of such mega-hits as “Fever”, “I Walk The Line”, and “The Real Slim Shady”. Some of their clients include: Johnny Cash, Willie Dixon, Del Shannon, Muddy Waters, Stevie Ray Vaughn, Woody Guthrie and contemporary stars such as Jamie Foxx, Iggy Pop, The Guess Who, Ryan Adams, Pete Townshend, and Kings of Leon. Their catalog holds more than 250,000 titles from the Top 40 of Indie, Hard Rock, Electronica, Pop, Hip-Hop, Jazz, and Country. They primarily represent independent record labels and artist-owned masters in the US and are able to license, account and pay all mechanical royalties and collect synchronization, print, and performing licenses. They can make any recordings available to all digital stores safely and legally such as iTunes, subscriptions services like Rhapsody, ringtone providers, and mobile music stores. Above all, they are known for being especially good at marketing the music of their selective talent roster.

BMG Publishing, a mega-publisher long established in the business, was re-founded in 2008, after BMG Records exited the record business and bailed out from its partnership with Sony Music. It counts two hundred employees worldwide (compared to Bug Music’s seventy-five) and represents the rights of song recordings by Crosstown Songs, Cherry Lane Music Publishing, Stage Three Music, Evergreen Copyrights, and Chrysalis group.  BMG is a joint venture between German media giant Bertelsmann and U.S. private equity group Kohlberg Kravis Roberts.  During the week of Bug’s purchase, BMG was the number one publisher on the U.S., U.K., and German charts.

The deal between BMG and Bug Music was worth an estimated $300 million, with BMG looking to bolster its catalog and taking advantage of a drop in Bug Music’s selling price. They beat rival bidders including pop idol Simon Fuller, creator of American Idol, and Sony/ATV, which is a joint venture between Sony and Michael Jackson’s estate, and Ole Music. Financial terms of the transaction are expected to close by October. After the purchase, BMG now controls rights of more than 300,000 song recordings. The industry estimates that revenue for the company in 2011 will be around $272 million.  “With the acquisition of Bug Music and its vast collection of evergreen and contemporary compositions, BMG further establishes itself as a leading music rights-management company,” said Hartwig Masuch, CEO of BMG Rights Management.

This is a story of bigger and better, and BMG’s interest in the US market, where Bug Music’s presence is strongest.  The Bertlesmann family’s stake in recorded music may no longer be what it was in the 1990s and the early millennium. But much of the business knows that publishing monies are still going strong (in spite of the drop in collections from mechanical rights), and this is where the new BMG group wants to head.

Tom McGrath, Senior Managing Director of Crosstown Songs, another American music publisher bought by BMG in 2009, points to the “next generation of music publishers who can marshal global resources to develop new writers, showcase the works of established writers, and nurture the legacy of…long term clients and historic catalogs.” Indeed.

By Megan Graney

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