Sunday, March 3, 2013

The Major Labels Go From 3 to 4

Bertelsmann Sign image from Bobby Owsinski's Music 3.0 blog
One of the former major players in the music business is back in the game. In a deal announced late last week, German multinational media group Bertelsmann has purchased the remaining 51% of BMG (Bertelsmann Music Group) from investment group KKR, bringing the company full circle and back into the recorded music business.

This is a big deal in that the Big 3 major record labels are now actually expanding to 4. Who could've even conceived that such a thing could ever happen, especially in these days of corporate consolidation?

BMG had been a major player in the record business for 30 years when it decided to sell of it's recorded music business to Sony Music and Universal Music Group starting in the mid-2000s. The company then transitioned into a "rights management" company by buying numerous publishing catalogs with partner KKR. Over the last couple of years, the company has made overtures to return to the business by making offers to purchase a number of record label assets, including those of Warner Music and EMI, but lost out on both accounts. In fact, it was only a couple of weeks ago that BMG purchased Sanctuary Records, home of Black Sabbath, Iron Maiden and Megadeath, from Universal.

That said, BMG has a new-found commitment to be in the recorded music business, and that's a good thing. More competition in this world is just what's needed when it comes to developing new talent and new industry blood.

The other thing that's attractive is that Bertelsmann is privately owned, with 80.9% owned by a private foundation and think tank founded by the Mohn family, with the family directly owning the remaining 19.1%. There's a wonderful freedom when you're not beholden to stockholders, Wall Street and quarterly reports.

The company said it's going to be aggressive moving forward, and this can only be positive for the music industry as a whole. Let's hope they bring in some fresh new forward thinking execs that know the ways of the Music 3.0 world instead of living in the past.


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1 comment:

Anonymous said...

It's more of a music publishing than record label play at this point. BMG bought up most of the large indie publishers over the past 4 years, with only a few record label deals in their portfolio.


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