There’s a significant change afoot at US-based performance rights company BMI (Broadcast Music Inc.).<\/p>\n
BMI revealed on Wednesday (October 12) that its not-for-profit business model, under which it has operated since the PRO was founded in 1939, is changing to a for-profit<\/em> model.<\/p>\n The news was announced by the company in a post published to its website, which includes a note sent by BMI President & CEO Mike O\u2019Neill to the organization’s affiliates.<\/p>\n Within his note, O\u2019Neill writes that the decision to change BMI’s business model comes “after a comprehensive and careful assessment on how best to position our company for the future”.<\/p>\n He argues that the move “will open up new and important opportunities for us to invest in our business”.<\/p>\n Added O\u2019Neill: “Simply put, growth for BMI means growth for our affiliates. And most importantly, our goal is to continue to increase our royalty distributions at an even greater rate than we have before.”<\/p>\n Last month, BMI revealed<\/a> that it had distributed a record $1.471 billion to its songwriters, composers and publishers in the year ended June 30, 2022, which was up 10%.<\/p>\n For comparison, its close rival\u00a0ASCAP,<\/a> which operates a not-for-profit licensing and collection society, reported annual collections<\/a>\u00a0of $1.335 billion for the calendar year 2021.<\/p>\n The move to a for-profit model follows the news from August that BMI had scrapped<\/a> plans for a multi-billion dollar company sale following underwhelming offers.<\/p>\n Citing sources, Bloomberg<\/em> reported<\/a> at the time that the music rights collection firm set a price tag of up to $2 billion or $3 billion for certain potential buyers and that BMI executives had hoped to sell for at least $1.5 billion.<\/p>\n BMI enlisted Goldman Sachs<\/a>\u00a0as an advisor in March to help review strategic opportunities.<\/p>\n Commenting on that strategic review process, O\u2019Neill stated in his note to BMI affiliates this week that, “BMI began a strategic review earlier this year to evaluate opportunities to grow our company and make the most of our evolving industry for our affiliates”.<\/p>\n He added: “The one thing we continually heard throughout that process reinforced what we have been thinking for some time: the need for us to invest in BMI and operate in a more commercial and forward-thinking way. Growth requires investment.<\/p>\n “And in this new model, we can now structure, fund and operate new strategic opportunities, adopt new technologies and enhance and expand our services and products in a way that under our old model would have come at the expense of distributions.”<\/p>\n Elsewhere in the note to BMI affiliates, O\u2019Neil argues that while the business model shift “is a big change”, the former model “held [BMI] back and limited [its] ability to invest in the future in a meaningful way”.<\/p>\n He added: “Our move to for-profit gives us more financial flexibility and makes us nimbler to do what we need to do”.<\/p>\n O\u2019Neill cites a need to upgrade BMI’s distribution technologies and the org’s ambitions to “buy a company that has emerging services for songwriters”, or to “create a tool that presents affiliates with a digital record that tracks royalties across the full spectrum of their earnings”.<\/p>\n “To make these types of investments in our old model, we would have had to choose just one option and focus on that at the expense of anything else,” said O\u2019Neill.<\/p>\n Billboard<\/em> reports<\/a> that BMI’s business model change won’t affect its consent decree with the US Department of Justice.<\/p>\n
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