Organisations representing songwriters in the US have again written to the boss of BMI regarding the American collecting society’s recent shift to becoming a for-profit entity and the new reports that it is talks with private equity outfit New Mountain Capital about a possible sale.
In the new letter, the Black Music Action Coalition, the Music Artists Coalition, Songwriters Of North America, the Artist Rights Alliance and American performers union SAG-AFTRA note that BMI CEO Mike O’Neill has so far not answered any of the questions they posed in another letter sent earlier this month.
Most of the music industry’s collecting societies are not-for-profit organisations owned by their members, so usually a combination of artists, songwriters, record labels and/or music publishers. BMI, however, is actually owned by a group of broadcasters, but it nevertheless operated on a not-for-profit basis until last year.
The shift to becoming a for-profit entity followed a review in which BMI considered whether anyone would be interested in buying the society. Initially, it decided not to proceed with any sale but still became a for-profit business. It then emerged last month that talks were back on with possible buyers, with New Mountain Capital being reported as a preferred bidder last week.
In their letter earlier this month, the songwriter groups asked O’Neill for clarification on BMI’s current profitability and the extent to which the introduction of a profit margin is impacting on the fees and commissions the society charges on the royalties it collects for its member writers and publishers.
They also wanted to know who will 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.
O’Neill responded quickly to the letter, but without actually answering any of the questions in it. Instead, he repeated the rationale previously given for becoming a for-profit entity – mainly that it would allow BMI to seek investment to enhance and grow the business – and insisted that songwriters will benefit from that move and any future sale.
He also noted that since shifting to a for-profit model, BMI’s royalty distributions to members had increased.
Somewhat unsurprisingly, the songwriter groups were not impressed by O’Neill’s generic response and failure to actually answer the questions they had posed. Questions which, from a songwriter perspective, are all the more pressing given the reports that an acquisition deal is now close to being agreed with New Mountain Capital.
In the new letter, published by Billboard, the groups state: “We were extremely disappointed and upset to read the announcement of BMI’s sale to New Mountain Capitol. Songwriters have real questions and deserve real answers before any further action is taken”.
“While we appreciated you responding to our letter, all of our questions went unanswered”, they go on. “Your response was that distributions went up last year. Of course distributions went up – all [collecting societies’] revenue went up”.
“This does not answer any of our questions”, they add. “And, it does not explain where the $145 million [in earnings] – as reported by Billboard – came from and why that money was not distributed to songwriters”.
Noting rumours that the New Mountain Capital deal has not yet closed, they then write: “Prior to taking any other action, we are giving you another opportunity to provide songwriters with real, substantive answers to the questions we posed”.
Responding to the new letter, a BMI spokesperson told Billboard: “Relying on the past has never sustained a business for the future. Our goal is to stay ahead of the changing industry and invest in our business to grow the value of our affiliates’ music”.
“Any path forward would prioritise the best interests of our songwriters, composers and publishers, including their financial success”, they went on. “Our focus is on delivering for our affiliates”.
Given that statement has basically been pulled out of the same bucket of waffle as O’Neill’s previous response, it seems unlikely that the songwriter groups will be placated.
Indeed, the songwriters might argue that “prioritising” their interests also involves ensuring that they are properly informed about how the society to which they have entrusted their copyrights is being managed.
We wait to see if any more useful information is made available by BMI in the days ahead.
Kristin Robinson