How Private Equity PRO Ownership hurts US Songwriters
With Private equity pro ownership of two of the three major US performance rights organizations, songwriters are paying the price, writes Bobby Owsinski.
How Private Equity PRO Ownership hurts US Songwriters
Op-Ed by Bobby Owsinski via Music 3.0
When I was growing up in the business, the one thing that you could always trust was that the U.S. performance rights organizations (ASCAP, BMI, SESAC) were looking out for your songwriting interests. As a matter of fact, I think most songwriters felt that while the music business as a whole was picking your pocket, at least the PROs were on your side. Sorry to say, but today you can no longer trust your PRO the way you used to, and many believe that’s because private equity firms are now involved. The U.S. Copyright Office suspects that’s the case, and has launched an investigation to find out for sure.
The whole thing started when US House Reps. Jim Jordan, Darrell Issa, and Scott Fitzgerald sent a letter to the Copyright Office stating that some of the bars and restaurants in their districts “have reported receiving demands for royalties from new entities claiming to represent songwriters, and threatening litigation if the demands are not met.”
Any retail establishment playing music must purchase a blanket license from the PROs in order to do so. That said, the letter also stated that, “Considering that the possibility of substantial statutory copyright damages poses an existential risk for most bars, restaurants, and other small businesses, many feel compelled to pay these entities on top of what they already pay for blanket licenses from the traditional PROs.”
Now here’s where it gets tricky. While ASCAP is a non-profit owned by its songwriter-members, both BMI and SESAC recently converted to for-profit entities. And guess what, they were purchased by private equity firms – New Mountain Capitol purchased BMI and Blackstone purchased SESAC.
Frankly, I’ve always felt that the financial engineering that comes with private equity firms is a major problem in this country, as its rare that a business purchase by one ends up thriving. Profits are the main motivator for the private equity, and they tend to bleed the company dry in search of sucking up every last dime. It’s a shame that’s come to this part of the music business, although it shouldn’t be a surprise either.
The problem is that it’s the songwriters signed to these organizations that are going to suffer. The only good thing about this story is that Congress and the USCO are getting involved, although it’s debatable what kind of power they ultimately hold.
Private equity and music tech does not care about you or your music, and that’s obvious by the smaller and smaller payouts that artists and songwriters are receiving with each passing year, despite the increase in revenue that music tech takes in. It’s another case of the middlemen lining their pockets while the ones that are actually providing the content that keeps them alive are the ones left out in the cold.
Bobby Owsinski is a producer/engineer, author, blogger, podcaster, and coach. He has authored 24 books on music production, music, the music business, music AI, and social media.
