WIf you are interested in bold theses on the future of the music industry, then Hartwig Masuch is the right address. One of his current forecasts is this: “The integrated models of the majors will come under pressure, as has happened in other industries,” says the head of Bertelsmann’s music division BMG. “Probably the variant is that the established repertoire is split off from the other activities – above all the expensive frontline business with the risky development of new artists, cross-financed by the bubbling catalog revenues.”
Investors would only have to look at the current catalog boom. Even a fund like Hipgnosis, which with shares in around 65,000 songs only owns a fraction of the rights of Universal Music and Co., is valued at around 2.5 billion dollars. When will there be a split? “Cautiously forecast within the next five years.”
Good connection to KKR
More power for musicians through the largely digital market, discussions about shares from streaming revenues – especially with regard to artists with contracts from the wedding of the CD – and of course the question of how to deal with the rights to the music: The music industry is not only been on the upswing again for years. There are also various, sometimes more, sometimes less new major topics. The US artist India Arie recently complained in “Rolling Stone” about the Universal Music label Motown, which holds the rights to most of her recordings and does not want to delete them from Spotify.
Acquisitions are well known: BMG and KKR recently acquired ZZ Top’s “entire music interests”.
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Image: dpa
BMG, on the other hand, her new label partner, immediately implemented her request in the course of the debate about podcaster Joe Rogan. Such controversies are just right for Masuch, who aggressively positions BMG as an alternative to the supposedly slowly changing traditional giants of the music world.
Founded in 2008 and launched the same week as Spotify (which people like to emphasize), BMG is supposed to stand for a new kind of music company: transparent, with lean structures and primarily positioned as a service partner for musicians who want to get involved on the business side themselves, instead of relying on the classic all-round package of a label. More control, more personal contribution, but also a higher percentage of the income for the artist. BMG initially only takes on core tasks such as collecting royalties or product management. This is how the standard deal can be explained in a nutshell.
Far away from the sales of the majors
Masuch rebuilt the company through a large number of catalog purchases – initially in the publishing sector, later BMG also took over labels. Until March 2013, the investment company KKR helped and held 51 percent of the shares. Back then, the collaboration was set up in just a few weeks, “which is unusual for projects like this,” recalls Masuch. This is also due to the fact that he has known KKR’s Philipp Freise – today co-head of the private equity business in Europe – for more than 20 years. In a looser partnership, they have been working together again for almost a year. KKR and BMG have already jointly acquired two rights packages – from John Legend and ZZ Top. More are to follow, every other day he talks to people from the financial investor, says Masuch.