BMG, the world’s largest international music company outside the three ‘majors’, is taking direct control of its 80 billion stream digital business in the biggest change to its recorded music strategy in its history. The move was taken after BMG and its current distributor, Warner Music Group’s ADA, agreed to part ways, enabling both companies to focus on growing their businesses and margins.
It will see a phased in-sourcing of distribution to all major streaming platforms, beginning at the end of this year with Spotify and Apple Music. BMG will continue to outsource physical distribution in a new deal expected to be announced shortly.
BMG CEO Thomas Coesfeld said, “This is a new chapter for BMG and marks a significant milestone for the music industry more generally as BMG becomes the first new global-scale full-service music company to emerge in the past two decades which controls its key routes to market. Taking direct control of our relationships with streaming services is a major leap forward in our mission to offer artists the most effective and efficient service. The new set-up will enable us to better market, service and advise our great artists and will further improve BMG’s relationship with key digital and physical partners.”
BMG’s recordings catalogue includes the work of Black Sabbath, Iron Maiden, Mötley Crüe, Mötörhead, Sex Pistols, Corey Taylor, and many others.
BMG Chief Operating Officer Sebastian Hentzschel said, “There are many advantages to third-party distribution in the early years of a new music company, but with BMG’s annual streaming rate in excess of 80 billion streams this year, it is time to unleash the benefits in terms of market insight and leveraging data that going direct will bring. This will enable us to be a better partner to our artist and songwriter clients and to digital services.”
Thomas Coesfeld paid tribute to BMG’s former distribution partner, Warner Music Group’s independent label services and distribution company ADA. “We are very grateful to Warner Music Group and ADA for their trustful partnership,” he said. “With their help we have tripled our recorded business over the past seven years.”
Robert Kyncl, CEO of Warner Music Group, said, “We’ve always known that going direct on streaming was BMG’s ultimate objective and we’re proud to have helped them grow to the scale where they could achieve it. Taking this step will mean we create more space for ADA to focus on developing new partnerships, and for WMG to continue to grow our investment behind artists, songwriters and labels. We wish BMG all the best and know that we will have many other opportunities for successful collaboration.”
