SESAC Scores Big, GMR Faces a Deadline, and Concord Keeps Buying

SESAC claims victory in its radio royalties dispute, while rival GMR has a deadline to reach a deal of its own. Meanwhile, Concord talks publishing valuations and acquisitions.
August 4, 2017

Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney.

SESAC Scores Big Win in Radio Royalty Rate Dispute (The Tennessean)
Benom’s Take:
SESAC’s favorable ruling in their radio royalty dispute is very positive news for SESAC affiliated songwriters, music publishers and royalty payees. SESAC says that it will now receive a royalty rate 50% higher than ASCAP’s recent rate court decision. This is historic, as the article states: “No one had ever litigated the rates with radio before. This was the first time.” I believe this is further proof that the restrictions placed on ASCAP/BMI through the Department of Justice’s “Consent Decree,” does not result in fair market value for music radio royalties.

I say this because SESAC is not in the same category as ASCAP/BMI, due to its private, for-profit company structure. ASCAP/BMI are considered “non profit” and are bound by anti-trust laws. It’s possible, that if BMI is unsuccessful in their upcoming radio royalty rate court hearing, we could see more songwriters leaving ASCAP and BMI for SESAC. All in all, this historic radio royalty event may blaze a trail or set things in motion for major changes in the world of music publishing radio royalties.

Radio Survives First Interim License Hurdle in Global Music Rights Battle (Inside Radio)
Benom’s Take:
Speaking of radio royalty disputes. The smallest and fourth U.S. performing rights organization, GMR, is currently in a dispute with the Radio Music License Committee (RMLC) over radio royalty licenses for their catalog of music publishing rights. GMR is a recent creation of music industry titan, and former Eagles manager, Irving Azoff. GMR is what I jokingly like to call, “the illuminati of PROs” because of the sheer star power on its roster. GMR is really a “superstar only” PRO... you can’t join unless you’re in the big time. Mr. Azoff’s creation has caused some big stars to leave their old PROs (ASCAP, BMI, SESAC) for promises of higher royalty rates through GMR.

The issue is that GMR has an even smaller share of the market than SESAC, and it is having a hard time organizing its data and negotiating performance licenses. It’s no small job to just “create” your own performing rights organization. The logistics and legal hurdles are innumerable. Under this radio royalty dispute, a deadline of September 30th has been set for a royalty licensing deal. As the article states: “If the court doesn’t force GMR to offer [radio] stations an extended interim deal - and no settlement is reached - it could mean starting Oct. 1 songs written or performed by the likes of Adele, Aerosmith, the Beatles, Bruce Springsteen, Bruno Mars, Drake, Jay-Z, John Lennon and Madonna would be forced off the air; otherwise stations could face copyright lawsuits.”  

Concord Keeps Faith With Imagem As It Eyes Further Acquisitions (Music Business Worldwide)
Benom’s Take:
I would have to agree with this author that Concord Bicycle has become a “mini-major” next to BMG Rights Management. Concord and BMG are independent companies (not affiliated with Sony, Warner, Universal) but have the songs, stars and acquisition power to be big competitors with those majors. With the Imagem acquisition, Concord Bicycle now controls over 380,000 musical works including songs by big stars Phil Collins, Mark Ronson, Pink Floyd and Daft Punk.

One of the biggest takeaways of this article is this quote from Concord CEO, Scott Pascucci: “Music publishing [valuations] have definitely been elevated over the past few years, but the multiples are also going up in recorded music. We’ve made a number of strategic recorded music acquisitions at an opportune time and we’re very happy with them.”

This just further confirms the consistent and positive growth we’re seeing year over year in the music royalty market. So the big question is: Who will Concord Bicycle acquire next? Stay tuned...

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