Broadcast Music, Inc. (BMI), the world's largest performing rights organization representing artists including Taylor Swift, Lady Gaga and Ed Sheeran, is being acquired by investment firm New Mountain Capital. The transaction is expected to close by the end of the first quarter of 2024. Terms of the deal were not disclosed.
BMI's next step to adopting a for-profit business model was announced on November 21. Founded in 1939, the performing rights organization had previously operated as a rule on a not-for-profit basis, like its chief U.S. competitor ASCAP. However, as for-profit PROs, notably SESAC (founded in 1930) and the relatively new Global Music Rights, launched in the U.S., the constraints of that model began to limit BMI’s opportunities, according to the organization's chief.
CEO Mike O’Neill said in a statement: "We will be changing our business model, moving from operating on a not-for-profit making basis to for-profit. This will open up new and important opportunities for us to invest in our business and ensure we can continue to deliver on our mission to support our affiliates [songwriters, composers and music publishers] and grow the value of their music. And most importantly, our goal is to continue to grow our distributions at an even greater rate than we have before."
BMI protects the rights of and advocates for more than 1.4 million affiliates, although their primary purpose is to track and collect performance royalties whenever their members' songs are played publicly on TV, digital streaming platforms, radio, live venues, restaurants and shops. The organization then distributes those royalties to songwriters. According to the organization, its repertoire currently consists of 22.4 million musical works.
Elle King at the BMI Country Awards, Nashville, TN, November 8, 2022
On August 17, songwriters were already asking pointed questions about what BMI’s sale could potentially mean for their royalties. At that time, the sale was speculation, bordering on a final handshake. In a letter to BMI, the Artist Rights Alliance, the Black Music Action Coalition, the Music Artists Coalition, Songwriters of North America and SAG-AFTRA stated:
"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."
The impact of a change to BMI's business model could be profound for the U.S. music business. "While the music industry has undergone a technology-driven transformation over the past two decades, music infrastructure, including the performing rights ecosystem has been slower to transform," said Mike Oshinsky, Director at New Mountain. "There is tremendous opportunity to modernize this critical part of music infrastructure and ensure that long-term royalty collections for songwriters, composers and publishers continue to grow. With our support, BMI is ideally positioned to drive this transformation as the only PRO in the world to combine an open-door policy to all music creators with the innovation and commercial drive of a for-profit business.”
