Sony/ATV's Martin Bandier on Acquiring EMI Publishing, Breaking From 'Record Company Vagaries' and Why He Said 'No' to Apple (Q&A)
This story first appeared in the Nov. 16 issue of The Hollywood Reporter magazine.
Talk about coming full circle. After taking EMI Music Publishing from fourth place in market share to first during a 17-year run as the company's chief executive, then exiting to run second-ranked competitor Sony/ATV in 2007, Martin Bandier, 71, is back to helm the house he helped build. It was a pricey reunion and required purchasing EMI Publishing for $2.2 billion, a bill footed by an investment consortium that includes Sony/ATV, the estate of Michael Jackson, the Blackstone Group's GSO Capital Partners and David Geffen. But with it, Bandier buys a safer bet -- namely, the ability to monetize music rights without being drained by a record company burdened with the costly task of breaking new acts (EMI was split in two, with its recorded music arm sold to Universal Music Group in September).
Publishing was always seen as a penny business, but with more than 2 million songs in the combined Sony/ATV and EMI catalog (hits from The Beatles to Justin Bieber), that adds up to projected annual revenue of $1.2 billion. Bandier, a married father of three who lives on Manhattan's Upper East Side, explains the ins, outs and future of music's robust sector.
The Hollywood Reporter: You're running EMI again. What's different this time?
Martin Bandier: I don't have to worry about being called regularly and asked: "Is there any profit left? Any more cash in the bank?" This is a pure music publishing play, well funded and not reliant on the vagaries of another record company.
THR: Back in June, the acquisition of EMI Publishing officially closed on a Friday. What did you do the following Monday?
Bandier: Looked in my checking account to see if the money was [accidentally] sent to me. (Laughs.) I celebrated all weekend because owning EMI Music Publishing was a dream of mine. This was a company that I spent the better part of my life building. But I realized over the years that I was a worker bee like everybody else and had no equity in EMI. [Bandier has a small equity stake in Sony/ATV.] I never complained about how I was being paid, but it was like giving birth to the baby and then giving it away. I wanted to have something more meaningful.
THR: What's driving the most revenue these days?
Bandier: We are a rights-oriented business -- owning intellectual property to the words and music to songs is as important as those recordings, and we have revenue streams that the recorded music business doesn't have. For example, any time one of our songs is played on radio, television, in a bar, a commercial or a TV show, we get paid, and the record side of the business doesn't. Film and TV in particular is a huge part of our business. There's hardly a brand around that doesn't have music. On the digital side, there are streaming services that haven't had the material impact on us that we're hoping they ultimately will.
THR: There are so many digital services competing for subscribers -- among them Spotify, Pandora, MOG and Rdio -- and new ones popping up all the time. How do you decide which to do business with?
Bandier: We want as many new digital services as possible. Whether they're streaming or downloads, we see an opportunity for growth and for our songwriters to get a more equitable share of the digital pie. Recently we were able to remove our digital performance rights from ASCAP and BMI, and as a result, we can make direct licenses with some of the new digital services like Pandora or Apple.
THR: There was an issue with Apple in September when it tried to incorporate streaming services into the new iPhone 5 and couldn't agree on a per-song fee with Sony/ATV. What's the story?
Bandier: Apple wanted to put a chip in the new iPhone and asked us to accept the existing rate. We said we couldn't do that. They hadn't secured repertoire from the record companies, and it was, like, 48 hours before the phone was coming out. At some point we will negotiate with Apple, and I'm sure we'll agree on a fair and equitable price.
THR: These days, a pop hit can have more than 12 writers credited. Is that an administrative nightmare?
Bandier: I'd be lying if I said the old days, when someone wrote 100 percent of a song, weren't a lot easier and a lot better. But today, it certainly creates more opportunity for more people. And if the end product turns out to be a hit, then it's easy. If it turns out not to be a hit, then you can blame it on the fact that there were too many cooks in the kitchen.