BMG Rights Management GmbH (also known simply as BMG) is an international music company based in Berlin, Germany. It combines the activities of a music publisher and a record label.
BMG was founded in October 2008 after Bertelsmann sold its stake in Sony BMG. From 2009 to 2013, the investment firm KKR held 51% of the company, which became one of the world's largest music publishers during that time. BMG is 100% owned by Bertelsmann and one of the group's eight business divisions.
History
Music at Bertelsmann
In the 1950s, Bertelsmann entered the music business when it added music to its book club. Ariola, a record label, was launched and Sonopress, a pressing plant, was established. In 1975, Ariola opened an office in the United States. Bertelsmann acquired Arista Records in 1979 and RCA Records in 1985, thereby becoming one of the world's largest music companies. Its various subsidiaries were brought together in 1987 to form Bertelsmann Music Group (BMG), which did business in a number of genres, including folk, pop and, in particular, classical music.
In response to declining sales in the overall music market, Bertelsmann agreed to merge its record label interests with Sony in 2003; the company was called Sony BMG. Furthermore, in 2006, Bertelsmann sold its subsidiary BMG Music Publishing to Vivendi. Having reached the conclusion that established music publishing companies and record labels were not appropriate for an increasingly digital music business, Bertelsmann sold its stake in the Sony BMG joint venture in 2008. The company was subsequently renamed Sony Music Entertainment.
Launch of the new BMG
In October 2008, Bertelsmann launched the new BMG with a small portfolio of recorded music rights of around 200 artists it retained from Sony BMG. It declared it would pursue a business model focused on fairness, service and transparency.
The launch of the new BMG came amidst the 2008 financial crisis, and within two weeks of the collapse of Lehman Brothers. Since Bertelsmann could not supply the required funds on its own, a 51% stake was sold to financial investor KKR in 2009. Bertelsmann retained 49% and the right to appoint the company's management. The transaction allowed BMG to increase its equity ratio.
International expansion
Initially, Bertelsmann had announced that the new BMG would focus on the European broadcast market. After KKR became the majority shareholder, the company set its sights on expanding internationally. A key step towards achieving this goal was acquiring Cherry Lane Music Publishing in 2009, which provided BMG with its first foothold in the United States. BMG made several other purchases in 2010, including Evergreen Copyright Acquisitions.
In 2011, Bug Music was bought by BMG, followed by music publisher R2M Music in 2012. Bertelsmann was also reported to be interested in buying EMI, but EMI was ultimately acquired by Universal Music Group and Warner Music Group (record labels) and Sony/ATV Music Publishing (songwriters). The regulatory authorities approved the deal subject to some conditions, including the sale of several labels. BMG was thus able to acquire Mute Records (2012) and Sanctuary Records (2013), as well as the publishing catalogues of EMI Virgin Music and Famous Music UK from Sony/ATV.
Becoming a group division
In 2013, KKR sold its stake in BMG to Bertelsmann, making it the sole shareholder of the company. Under the leadership of Chief Executive Officer Thomas Rabe, who had been a key driver of BMG's expansion during his time as Chief Financial Officer, Bertelsmann again cited music as one of its strategic growth areas.
In 2013, the company began to represent rights to songs by Robbie Williams and the Rolling Stones. Record labels were also added to the portfolio including Union Square Music (distributor of Universal Music's ZTT Records and Stiff Records), Vagrant Music and Infectious Music (2014), as well as S-Curve Records and Rise Records (2015). Other acquisitions followed in 2016, including the label ARC Music and the catalog of The End Records. By acquiring Basement, BMG entered the market in Brazil, one of Bertelsmann's growth regions. The company also signed an agreement with Warner Music's Alternative Distribution Alliance for the physical and digital distribution of music, allowing BMG to consolidate its longstanding sales structures. BMG further expanded by entering the Chinese market in cooperation with Alibaba, allowing the online company to distribute the work of musicians and composers via its web channels while securing copyrights.