BMG goes shopping for music rights with €250 million

BMG, the recently relaunched music publishing arm of Germany's Bertelsmann, has €250 to spend on buying up catalogues of music rights. What can  this tell us about the state of the music industry?

According to reports in the Financial Times, BMG*, the recently relaunched music publishing arm of German media empire Bertelsmann, has €250 million  in venture capital funding. It is seeking to spend this money on catalogues of rights to composers and songwriters in the US and the UK. In doing so, it hopes to challenge the might of the 'big four' music publishers who currently control the music market. 

The story here appears to be  quite a different story from the one that the music industry tells to politicians and policy-makers.   

It is interesting that in times when

venture capital is difficult to get, Bertelsmann has managed to obtain such a large sum for buying music rights.

According to the FT, music publishers are considered to have 'strong and predictable cash flows' which 'make them attractive investments'.  The FT also points out that the financial market crash of 2008 resulted in a reduced valuation of music catalogues, which means that there are some good deals available now for those who have cash.

Bertelsmann has snapped up a company called Cherry Lane Publishing, which includes in its catalogue the lucrative  rights to Elvis Presley and the Black Eyed Peas. 

How should we regard such deals in the context of the copyright enforcement debate? It begs for analysis of the real impact of the digital environment on the music industry. And it raises a key  question as to  why such companies  deserve State-sponsored protection.

Sources: 

Financial Times  Sweet sound of music still benefits BMG  

By Gerrit Wiesmann in Berlin Published: May 2 2010 18:19

Financial Times BMG eyes snapping up its UK rivals

By Gerrit Wiesmann in Berlin Published: May 2 2010 17:46

*This new BMG should be differentiated from the old joint venture with Sony, known as Sony BMG - Bertelsmann sold its share in that venture to Sony, and the new BMG  is in fact a rival to Sony BMG. 

This article is licensed under a Creative Commons Attribution Non-commercial-Share Alike 2.5 UK:England and Wales License. http://creativecommons.org/licenses/by-nc-sa/2.0/uk/ It may be used for non-commercial purposes only, and the author's name should be attributed. The correct attribution for this article is: Monica Horten (2010) BMG goes shopping for music rights with €250 million  http://www.iptegrity.com 5 May 2010