Posted: August 27, 2009
By Larry LeBlanc
Publishing may be the only sector of the music industry not being significantly affected by the current global economic meltdown.
However, with the accelerating slide in recorded music sales, publishers are focusing on other sources of royalty revenue to compensate for the resulting loss in mechanical royalties from CDs.
This largely includes publishers placing greater emphasis on their film and TV music administration business. Meanwhile, they are finally receiving retroactive royalties from U.S. music subscription services; and are beginning to see revenue come in from such newly-developed territories as Southeast Asia, India, the United Arab Emirates and Dubai.
As chairman/CEO, David Renzer oversees the global activities of the Universal Music Publishing Group, which owns or administers over 2 million copyrights and has over 50 offices worldwide.
UMPG represents many of the world's top songwriters and catalogs including: U2, Elton John, Bernie Taupin, 50 Cent, Mariah Carey, R. Kelly, Coldplay, Nelly, Juan Gabriel, Ciara, Dave Grohl, Prince, Justin Timberlake, Maroon 5, Britney Spears, Beastie Boys, the Clash, the Sex Pistols, Gloria and Emilio Estefan, Paul Simon, Henry Mancini, Christina Aguilera and Linkin Park.
UMPG is also the global leader in the Christian and classical music sectors and in production music. It recently acquired the publishing assets of French production music company, Kapagama.
In a move that dramatically strengthens its presence in movie and TV production, UMPG recently signed a deal to be the worldwide administrator for Warner Bros. Entertainment.
The deal includes music in WB Pictures; WB Television (which includes Warner-Olive Music, Warner-Barham Music and Warner Hollywood Music); Lorimor Productions (including Marilor Music, Roliram Music, Goldline Music, Silverline Music and Oakline Music); Castle Rock Entertainment (including Hazen Music, Beverly Drive Music and 335 Maple Drive Music); and New Line Productions (including New Line Tunes, New Line Music and New Line Melodies).
Warner’s publishing catalog contains music from such celebrated film productions as "Batman," "Harry Potter" and "The Lord of the Rings" franchises, as well as such TV programs as "ER," "Two and a Half Men," "Gossip Girl" and "Nip/Tuck.”
The Warner deal is widely viewed as a "game changer" for the film and TV administration sector because UMPG now administers catalogs for two major Hollywood studios.
UMPG has long had strength in the film and TV work via Universal Pictures, and Universal Studio Entertainment.
In recent years, UMPG has greatly expanded its film and TV library. Today, it either administers or has a publishing interest in the music from NBC Universal, Beacon Films, Bravo, Canal Plus, CNBC, Celador, DIC, Focus Features, Fremantle Media, GreeneStreet Films, MSNBC, Pressman Film, Sci-Fi Network, Scholastic Entertainment, Telemundo, Trio, Viz Media, Volta, Working Title, and Mike Young Productions.
This past year UMPG has signed worldwide administration agreements with Eminem, Danny Elfman, Keith Urban, and writer/producer Christopher “Tricky” Stewart that generally cover all commercial opportunities, including synch licensing for motion pictures, TV, advertising and other media.
UMPG recently became the exclusive administrator of the Jimi Hendrix catalog throughout the world outside the United States.
Over the years, UMPG has made similar admin agreements with Miles Davis Properties which holds certain assets of the late Miles Davis; with Paul Simon, except in North America; and with Gloria and Emilio Estefan Jr.
In 2006, when European Union regulators gave Universal Music Group clearance to buy BMG Music Publishing for about $2.09 billion, the deal—completed in 2007—created the world's largest music publishing company.
Renzer was sitting in the audience at the MTV Video Music Awards in New York when he received an E-mail from Europe that said, "Done deal."
The EU warned, however, that it had "serious doubts" about the deal's potential effect on online music. UMG, however, overcame anti-trust objections by shaking off several short-term administration contracts and selling European rights to several catalogs.
Renzer began his publishing career at Zomba Music Publishing in 1985 as a professional manager, moving on to be director, then VP, and finally senior VP/GM running the American arm of Zomba Music Publishing, a division of the Zomba Group, owned by Clive Calder.
Zomba Music Publishing had a staff of 43 in New York, Los Angeles, and Nashville. Under Renzer, its musical scope included R&B, hip-hop, country, alternative rock, reggae/dancehall, Latin, and pop.
On its formidable roster were Mutt Lange, Dinosaur Jr., Juliana Hatfield, Sonic Youth, L7, Babes In Toyland, Anthrax, Def Leppard, the Breeders, and reggae/dancehall acts Super Cat, Patra, and Cobra.
In 1996, Renzer joined MCA Music Publishing. Its copyright holdings went back several decades, partly as a result of a purchase in the early 1960s of catalogs owned by the late publishing legend Lou Levy.
At MCA, Renzer launched a Latin music division. He signed such Latino heavyweights as Rudy Perez. KC Porter, Jorge Luis Piloto, Gustavo Santaolalla, Pablo Manavello, Aterciopelados, King Chango, Los Amigos Invisibles, José Manuel Figueroa, Molotov and Rosana.
MCA also published the works of Alanis Morissette, Glen Ballard, Aqua, No Doubt, All Saints, the Smashing Pumpkins, Sublime, New Edition, and the Chemical Brothers. Additionally, Renzer acquired the All Nations publishing catalog; and extended an administration deal that the estate of the late composer Henry Mancini had with All Nations.
There were also deals for the Interscope Music Publishing, Charlie Daniels, Epitaph, Momentum Music, Forerunner and John Phillips catalogs.
Seagram's $10.6 billion acquisition of PolyGram in 1998 led to the merging of the music publishing operations of PolyGram and MCA under the renamed Universal Music Group.
PolyGram’s holdings of 440,000 copyrights included songs by Bjork, Bon Jovi, Massive Attack, Van Morrison, and U2. As well, it included the ABBA catalog; Dick James Music (with songs by Elton John and Bernie Taupin); and Island Music (with songs by Free, Traffic, and Spencer Davis). It also had a publishing arrangement with Andrew Lloyd Webber's Really Useful Group.
When the smoke cleared from the merger, Renzer was president of Universal Music Publishing Worldwide.
In 2000, UMPG acquired Rondor Music's catalog of 60,000 copyrights that included repertoire by the Beach Boys, Al Green, Otis Redding, Peter Frampton, Isaac Hayes, Supertramp, Leon Russell, Stephen Stills, Rod Temperton, Mark Knopfler, the Doors, and Steven Van Zandt.
You seem very involved with both the creative and the business side of UMPG.
I am a fortunate guy. I figured out early on in my career that publishing is the right place to be in. Publishing is the place where you can be incredibly creative and entrepreneurial. I’m a creative dilettante. I love all kinds of music. As a publisher, you can (work with) all of that.
There isn’t a day that goes by that I don’t pinch myself and say, “You mean we publish these legends?” Or “We publish these amazing songs?” When we put a compilation CD together, it is incredible the songs that we have. And we have an amazing roster.
With Universal Music Group’s purchase of BMG Music Publishing in 2007 for about $2.09 billion, you became the biggest music publisher in the world.
If you look at our company now, we are a truly transformed company with an incredible mix of businesses. We now not only have this amazing pop publishing business but we have the production music library, and classical publishing. We are the #1 company in the production music library business. We just bought a production music company in France, Kapagama. Our classical publishing is very significant as is our Christian music publishing with Brentwood-Benson Music Publishing in Nashville.
(Diversification) has given us a balance. It has made our company less adverse to this downturn from all of these businesses that are reliant on mechanicals.
With our (catalog) comes a responsibility. We have a marketing council that is focused on mining the catalog in new and innovative ways. We do a lot of on-line promotion. We are going to be re-doing our websites, and we are investing in compilation CDs. We are always trying to continue the awareness (of our catalog). We want the music supervisors, the ad agencies, the music users and licensors out there to have our copyrights at the forefront of their minds.
Selling lyrics is a market opening up for publishers
We’ve got our lyrics on premium designer T-shirts. We’ve got deals with many digital providers for lyrics on line. We are starting to get paid for lyrics on line. We are seeing significant money from companies like Hallmark and American Greetings, who are licensing our lyrics for musical greeting cards etc.
What we try to do with our marketing council is to brainstorm anyway we can to generate revenue for our songs and our songwriters.
You have built a formidable executive team with a regional structure that allows you to run a business with 750 employees.
Part of the key of doing this job is having strong staff. This isn’t all about me. I’ve got a strong worldwide CFO (Mike Sammis, Executive VP/Chief Financial Officer). I have a very strong team globally with people like Andrew Jenkins (executive VP of International) in the U.K; Paul Connolly (president of Europe/Managing Director UK) across Europe; Eddie Fernandez (senior VP, Latin America) for Latin.
We have a fantastic team here (in the U.S.) too including Tom Sturges (Executive VP/Head of Creative); and Evan Lamberg (Executive VP Creative, East Coast) in New York.
One way for an artist to break through in the music business today is to sign with a major publisher.
We always hear, “Well, you are just a bank. You don’t really do anything.” That couldn’t be further from the truth. We are investing in artist development deals. We do collaborations (putting writers together with other writers) all of the time within our roster. We have recording studios in our offices. We have a 24-track studio here in L.A. If a writer is lucky enough to come here (UMPG), I think the key thing (for them) is to have a creative champion. (They should) connect with an executive who they feel that they have chemistry with.
Recently, you unveiled royaltywindow.com, an online option for clients to track their royalties on a market-by-market basis.
It took us close to two years to develop, and it was a seven figure investment for us. We felt that by investing in this we would differentiate ourselves from the competition and attract more business which is what we’ve done.
Royaltywindow.com isn’t the only reason you are attracting clients.
Clients can get the best of all worlds here. Some (publishers) don’t have their own staff in every country. We don’t rely on third party companies. We have over 50 offices around the world. We’ve got staff in each territory dealing with the local collection societies. When a manager asks about greatest hits collection that came out in Australia or France we can email our people there. If there’s an issue about collections, we have people there dealing with the local collection societies.
They can now also log onto royaltywindow and also look at what is happening with their copyrights on a global base. If they want to see what their songs are earning by digital, it is there.
[Royaltywindow.com, a web-based portal system, tracks revenue on a market-by-market basis. It was developed in-house by UMPG’s U.K. IT team led by Michael Donnegan, and CFO/executive VP of operations, Mike Sammis.
For global deals, it electronically registers songs with performance societies around the world and provides cue sheets that list all the music in a production with reference to the scene it accompanies.
It allows a user—business manager, songwriter, or film and television production company--to look at royalty data, make sure their copyrights are registered on a global basis, and look into the details of individual synch licenses.]
UMPG’s administration deal with Warner Bros. Entertainment is significant because you now represent two major studios as well as other independent and television companies in different territories around the world.
Warner has been a nice edition because it has turned out not just to be a passive admin deal. Doug Frank (president, Music Operations, Warner Bros. Entertainment) and his team have really welcomed our creative staff. When we have an artist that comes to town—say Daughtry--they want Daughtry to come by their office and talk with Warner’s staff about new film and TV projects that they are working on.
Brian Lambert (senior VP film & television music) who is the point person on the creative side here, sits in the Warner creative meetings every two weeks and goes through every film and TV show. So (the deal) has opened up opportunities and given us an inside track for our roster.
We also continue to work closely with the Universal Film staff trying to maximize the creative opportunities there. We have a strong working relationship there. We renewed our deal to continue administering all of the Universal entities not too long ago.
Film and TV placement have evolved into an important part of the publishing business as recorded music sales continue to slide. You have expanded your film and TV division significantly.
That’s exactly right. Film and TV copyrights and, to a large degree our production music library business, is primarily performance income driven, and synchronization income driven. That is why we have really focused on (film & TV placements) and been aggressive. It is an important area for us. We have the largest department of film and TV executives (in music publishing).
We try to make sure that we have a good amount of people focused on pitching as well as licensing, and income tracking. Part of this company’s history has been administering Universal Films so we have developed an expertise over the years.
So many of our artists, writers and producers might be excited about getting a cover but, boy, if you can get them into a film or television show, they absolutely love that.
The biggest deal of your career was Universal Music Group buyout of BMG Music Publishing for about $2.09 billion. Weren’t you sitting at the MTV Video Awards in 2006 when you got confirmation that the deal had gone through?
That is a true story. I was in New York and I was sitting at the MTV Awards and that’s when I got the news that the deal had closed. It was a year of planning, meeting and negotiating with teams of people involved. You can imagine in a $2 billion deal. Full credit to Zach Horowitz (president and COO, Universal Music Group) and Doug Morris (chairman and CEO of Universal Music Group) and Vivendi for being incredibly supportive. It was a complicated deal.
It was during an environment when such major deals were being opposed in Europe.
Yes. (To close the deal) we had to work closely with the European Commission. We had to agree to certain concessions.
You had to sell off European rights to different things.
We did and it was a little painful. But we had to keep our eye on the big picture which was to close the deal.
UMPG recently became the exclusive administrator of the Jimi Hendrix catalog throughout the world outside the United States.
You have also recently made worldwide administration deals with Eminem, Danny Elfman, Keith Urban, and writer/producer Christopher “Tricky” Stewart.
What is the benefit for artists and estates making such deals like this with you?
Our approach is to be selective. We seek to get involved with talent that is meaningful and that we feel can make a meaningful impact on our bottom line; and that we can really add something to what the talent brings to the table. But having said that, we are signing new and developing acts too. We have a full spectrum of deals from the bigger dollar to developmental deals.
People come to us because we are a global company. They come because they know our administration reputation--our systems, our staff globally, and the strength of our local synchronization staff. We have a great reputation and we seem to continue to attract incredible names, including Paul Simon and Prince.
You now handle the publishing estates of Henry Mancini, Jimi Hendrix, John Phillips (of the Mamas and Papas), and Miles Davis. How closely to you work with their families?
We try to keep the families involved as much as possible. We try to have regular meetings with them. We have developed close relationships and friendships with the children of the composers we handle. It is something I personally enjoy. It is an honor to represent legends. To be involved with Mile Davis is incredible.
It is also a responsibility we take seriously. I’m proud to meet with a family and show them how we landed a commercial on their catalog in France or Germany or England or Australia. That’s part of the service and part of the fun about being a publisher.
There are numerous types of administration deals for an estate to consider.
They are mostly looking for the earnings to be maintained or to grow. That is what we have been able to do over and over again. When we take over a catalog we make sure, first of all, that the global registrations are done properly. We are surprised that some times that even that basic thing hasn’t necessarily been put in place. Some (publishing) companies, we’ve seen, have only bothered to register the top earning copyrights. They may not register the entire catalog.
UMPG has been very aggressive in pursuing opportunities in many of the emerging music markets.
We were recently the first company to announce a sub-publishing deal for the United Arab Emirates and Dubai. We were the first company to get our writers paid mechanicals in India through a Pan Asian deal for digital rights.
India has a statutory mechanical rate but publishers weren’t getting paid.
That is exactly right. They have a statutory rate in law but it wasn’t being enforced. We have closed deals with two majors, Sony and Universal. We are far along in negotiations with EMI.
Digital licensing has been cumbersome in many regions, and certain monies haven't been flowing for mobile, etc. to publishers.
There are still challenges in a variety of territories with China and Russia being two potentially big markets where we are getting some money but piracy remains a huge issue. As much as 90% of the market in China is pirate.
Has the recent introduction of iTunes in China yielded revenue results yet?
The major record companies and the major publishers are still struggling to get legitimate digital revenue out of China. But we do collect revenue (in the Asian market). In Korea, which is a big digital market, we are getting paid but we are struggling to get all of the money out of there that we feel we should be getting.
This year, UMPG partnered with French society SACEM in a joint venture Direct European Administration & Licensing (DEAL) that offers repertoire on a Pan-European basis
The truth is that even in the more established markets like Europe, the digital market is still not what it should be for publishers. That is one of the reasons why we set up a Pan-European licensing option.
There was also pressure from the European Commission to open up licensing in different territories there.
Yes, there’s definably been pressure from the European Commission. So we’ve done a bunch of these Pan-European deals with big digital companies. We are the first company that these digital companies talk to. They know that they can go to a major like Universal and they will get a certain amount of market share. We have Amazon, Nokia, Spotify, Omniphone and many others. But we are still frustrated because the (digital) revenue isn’t what it should be. This continues to be a frustration for us globally.
Even in the U.S.?
Yes, we are getting paid from ITunes but the amount of income that we are getting, and the performing rights societies are getting on the digital side still remains low. It is growing but from a very low base. This is a big concern for our industry too.
Don’t forget that in the U.S. while we do get paid a mechanical from ITunes, we are not getting any performance income from Apple yet. Even though you go on iTunes and can do lots of things other than download a mechanical (track). You can stream radio, and you can preview (tracks), things that we should be getting paid performance income for. Also, if you download a film or TV show, there’s no performance (payment) and typically there’s no mechanical (payment) either.
You went to law school but never practiced law. How did you first get involved with the music business?
I was a musician. I am a keyboard player. My claim to fame is co-writing “Electric Lady” by Con Funk Shun on Mercury Records (that reached #4 on the Billboard R&B chart in 1985). My daughter recently found the track on the Internet and embarrassed me with it.
You were hired at Zomba Music Publishing in 1985 as a professional manager. How did that happen?
Well, the guy who produced that Con Funk Shun record was Larry Smith who produced the first few Run-DMC records (as well as Kurtis Blow and Whodini). Larry was signed to Zomba. That’s how I met Barry Weiss (currently RCA/Jive Label Group's chairman and CEO) and found my way to Zomba Publishing in New York.
It’s nice that the catalog company that I started out with in now part of Universal. We continue to administrate Mutt Lange’s publishing through all these years. In a nice coincidence, Maroon 5 has just gone over to Europe to go into the studio with Mutt. He’s producing their new album.
You became senior VP/GM of Zomba Music Publishing which only had about 10,000 copyrights. Still, it was an impressive catalog.
(Zomba Group owner) Clive Calder was an unusually brilliant executive. He was very entrepreneurial, and terrific at identifying opportunities in the business that not everybody was focused on. He was one of the first guys to be aggressive in the production music library business; and to go after the Christian music publishing business. A lot of what we acquired in the BMG acquisition, some of those significant production music libraries, came from Zomba. The Firestorm library was owned by Zomba. Brentwood-Benson Music, the Christian music publisher, was acquired by Zomba.
Clive was also a great music man. He understood identifying great talent. I could talk to him about why we should do a deal, and he’d understand (the deal) creatively.
What also was fun was his integration of the publishing and the record company. He made sure I sat in on the record company’s A&R meetings so when we were signing the Backstreet Boys I was part of the signing process. Jeff Fenster (then senior VP A&R Zomba/ Jive Records) and I flew together to see them perform at a high school in Cleveland.
That entrepreneurial spirit is something that I’ve tried to bring to Universal. What we do in our marketing council, we try to be entrepreneurial. Let’s be aggressive about licensing our songs into digital greeting cards, and lyric clothing lines.
When you joined MCA Music Publishing in 1996 you launched a Latin music division that certainly was ahead of the curve for any major American music publisher.
When I joined, MCA Music Publishing was a terrific publishing company with about 250,000 copyrights. But we had no Latin music division. So I hired an executive in New York who relocated to Miami, and we established an office there. .
Did you know anything about Latin music?
Actually, yes. At Zomba, with Clive wanting us to look for those niches, I was involved in acquiring a very prestigious Latin catalog--the catalog of Maria Grever (Golden Sands Enterprises). Maria Grever not only wrote many Mexican standards but one of her most famous copyrights was “What A Diff’rence A Day Makes” (A Spanish hit as “Cuando Vuelva a tu Lado” and then a #5 Billboard pop hit for the Dorsey Brothers Orchestra in1934; and #8 Billboard pop hit for Dinah Washington in 1959). So I was involved in that acquisition which started us off in the Latin and Tejano business. We were involved in the early Selena (Selena Quintanilla-Pérez) copyrights.
[Warner Brothers made a film based on the late Mexican-American singer starring Jennifer Lopez in 1997.]
Many years later, as our company grew to have offices throughout Latin America, we’ve added some pretty incredible names, including representing Rudy Perez, (Gloria and Emilio) Estefan’s entire catalog and, recently buying Kike Santander’s catalog. Now, he’s one of our writers.
We started small but now we’ve grown into a real powerhouse in the Latin music publishing area. Eddie Fernandez (Senior VP, Latin America) who runs our office in Miami for the region does a terrific job.
You must be pleased with the current chart breakthrough of Cary Hilson as an artist. She was signed by Ethiopia Habtemariam (senior VP, Creative Affairs/Head of Urban Music) 5 years ago.
Cary is a terrific artist development/publishing development story. A lot of credit goes to Ethiopia for identifying her early on, along with (him) signing Polow Da Don who, with Timbaland, started collaborating with Cary. She started co-writing on a lot of records that they were producing. Eventually, they brought her to Interscope and now she’s got a top 10 single (with "Knock You Down" featuring Kanye West and Ne-Yo). The album ("In a Perfect World") is gold. It’s a great story.
[Hilson's "In a Perfect World" debuted #4 on the Billboard Top 200. Five years ago, Hilson signed a publishing deal with UMPG. Her slim résumé, however, only included being the lead singer of the Elektra group By D'Sign and songwriting credits on projects by Kelly Rowland and Ciara. Atlanta-based songwriter/producer Polow Da Don arranged an introduction between Hilson and Timbaland who signed her to his Interscope-distributed Mosley Music label. Hilson has also had songs recorded by the Pussycat Dolls, Ludacris, and Toni Braxton.]
We are always excited about new talent. Jeremih is a new signing. He just had a #1 with “Birthday Sex.” We signed him and his producer. BC Jean is another songwriter we are excited about. She’s working on her debut album for Clive Davis and Barry Weiss at BMG. We signed her very early on. She co-wrote that incredible song “If I Were A Boy” for Beyonce. She’s got the potential to be the next Pink.
UMPG just completed an exclusive worldwide publishing agreement with Texas-based singer/songwriter, Jason Castro, the third runner-up on the 2008 season of “American Idol.”
Jason is somebody Monti Olson (senior VP of A&R), who signed Daughtry and Tricky Stewart, has really championed. They are now in the studio working on Jason’s debut album for Atlantic Records.
Despite some drawbacks, publishers seem satisfied with the Copyright Royalty Board’s royalty decision even though it gave the status quo on U.S. mechanicals, and there will be no increase for 5 years. But publishers in the U.S. now have one of the highest rates for subscription services globally.
Publishers were generally pretty pleased with the CRB’s decision and the rates. There are a lot of discussions going on now in terms how we resolve certain issues related to the late (payment) fee. That is an area of concern for the records companies. We’re trying to sort that out.
While labels, it could be argued, took the good times for granted, it seems that publishers have had a long history of fighting for nickels and dimes in the marketplace.
Overall, the publishing business has proven its resiliency.
There are new revenue streams for us coming online, even this year. Digital video, for instance. Now that there is a rate after the CRB (decision) for legal subscription services. We never had a rate before. We were never paid for those services. We are going to start seeing those royalties. Our songwriters are going to start seeing those royalties. That’s helping us battle some pretty challenging market conditions.
There will always new digital services launching.
As long as there’s music, there will be songs and songwriters there. So publishers will be there to help protect the songwriter and make sure that they are getting paid what they should. Unfortunately, some people might not like that. But I think that most major music groups, given what is happening in the industry, truly appreciate their publishing companies now.
Not enough for them to offer a waiver on controlled composition clauses (paying mechanical royalties at 75% of the statutory rate). Is it time to rethink the scope of the controlled composition clauses?
I don’t think that we will see controlled composition clauses disappear in the near future. I can’t get too much into because there are negotiations, and discussions going on as we speak related to the CRB decision. But I don’t think controlled composition clauses are going to disappear.
But whether it is a record label, a digital service or whatever, if they are going to use songs, songwriters deserve to be paid. They deserve to be paid in a timely fashion and at a fair rate. That’s all we are really looking for. But, perhaps, the leverage, the bargaining position of publishers and songwriters has shifted in this (current) environment.
Larry LeBlanc was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record. He has been quoted on music industry issues in hundreds of publications including Time, Forbes, the London Times and the New York Times.