BMG has boldly predicted that it will double revenue it receives from master recordings over the course of 2012.
The BMG masters model typically offers artists a revenue split of around 70% of net receipts compared with an effective record label royalty rate of less than 20% (after deductions).
BMG does not pay traditional advances. Instead it agrees a project budget with the artist and releases money for manufacturing, marketing and promotion which is then recouped according to the agreed revenue split.
BMG CEO Hartwig Masuch (pictured) said, “Developing a strong catalogue of master recordings has formed part of our plan since BMG was founded in 2008. We see a lot of opportunity in the market and are now accelerating our investment.”
He added: “This is a modern alternative to a record deal. With the number of majors set to fall from four to three, it is clear that there will be fewer traditional record deals about. BMG is becoming a new source of investment for the artist community.”
Masuch said the masters model is an important development for the music publishing industry. “Publishers can no longer afford to sit on their hands and wait for labels to sign artists. With all labels cutting back, if publishers restrict their horizons to signed artists, they are looking at a much-reduced future.”
BMG began operations in October 2008 with a catalogue of master recordings it retained when it sold its part of the former joint venture Sony BMG to Sony. This catalogue of about 16,000 recordings includes tracks by the likes of Nena, Kylie Minogue, Scorpions, Alison Moyet, The Sweet and Paolo Conte.
Since then, BMG has built its music publishing catalogue with a strong of acquisitions including Crosstown Songs (2009), Cherry Lane Music Publishing, Stage Three Music and Evergreen Copyrights (all 2010) and Chrysalis plc and Bug Music (both 2011).
But the company has also sealed 40 separate masters deals in Germany, Spain and the UK.
BMG’s biggest selling masters project so far is German artist Nena’s Made in Germany which has sold 180,000 copies. It is also enjoying worldwide success with Danish electronic act The Asteroids Galaxy Tour, whose album Fruit, was launched with worldwide syncs with Apple and Heineken and has since sold over 400,000 tracks and 50,000 albums, achieving three gold awards for Golden Age and a silver lion in Cannes for best music in a commercial. Their upcoming album will be released in 20 territories.
BMG has also backed Fools and Worthless Liars, the second album by UK act Deaf Havana, which has already sold 10,000 units since its release in November, double the total of their debut.
Said Masuch, “The beauty of our masters programme is that because it is based on a mutually agreed budget with the artist, it can operate at virtually any level of sales.”Music Business Worldwide