Music Business

BMI to raise cut it takes from songwriters, publishers from 10% to 15%

[UPDATED] BMI plans to raise the margin it retains from royalties collected from 10% to 15% or more, according to the PRO’s Fiscal Year 2023 Annual Report.

In August, BMI said that it was shifting from a non-profit to a for-profit corporation and for sale, with several private equity firms expressing interest. Sources tell MBW that the frontrunner is New Mountain, with an approximately USD $1.7 billion offer.

“As we look at the next three years of our business, our goal is to distribute 85% of licensing revenue to our songwriters, composers, and publishers and retain approximately 15% to cover our expenses/overhead (which have historically run around 10%) and a modest profit margin,” wrote Michael O’Neill, CEO of BMI. “For context, this is well below the margins taken by comparable for-profit businesses in our industry. Additionally, for any incremental growth we create for the company (for example through better technology, M&A opportunities, new businesses or expanded services), we will look to take a higher margin on any revenue generated, though always with the goal of sharing that new growth with our affiliates.”

Non-profit PRO ASCAP operates at approximately a 10% margin. SESAC is a for-profit company

Will songwriters and music publishers tolerate the increase?

As he has since the shift to for-profit became public, O’Neil argues that a for-profit BMI will mean more money for its members. “I am pleased to share that our distributions for the full calendar year of 2023, all under our new model, are projected to be up 11% compared to the corresponding distributions under our old model in calendar year 2022,” he wrote. “Not only did each quarter increase year-over-year, but our upcoming November distribution is forecasted to be over $400 million, another record that would make BMI the first PRO to ever distribute this high an amount in a single quarter.”

We will publish artist and industry reactions as they become available.

Read the full BMI report here.

Bruce Houghton is the Founder and Editor of Hypebot, a Senior Advisor at Bandsintown, President of the Skyline Artists Agency, and a Berklee College Of Music professor.


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