BMG is exiting its current distribution agreement with Warner Music Group’s ADA and taking direct control of its 80 billion-stream digital business in a move the company called “the biggest change to its recorded music strategy” yet, according to a statement released Monday.
The fourth largest global music company will begin phasing in the new strategy later this year, starting with its relationships with Spotify and Apple Music, according to BMG. BMG’s recorded music catalog, which includes works from Jason Aldean, Jelly Roll, Mötley Crüe and Kylie Minogue, among others, will continue to outsource physical distribution and is expected to announce a new distribution partner soon.
It’s the first major strategic initiative to come from BMG’s new chief executive Thomas Coesfeld, and it signals that its roughly 15-year-old recorded music business is reaching a new evolutionary stage, he 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… music company to emerge in the past two decades which controls its key routes to market,” Coesfeld said on Monday.
“Taking direct control of our relationships with streaming services is a major leap forward in our mission … (and) 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.”
Third-party distribution held its advantages early on for BMG, chief operating officer Sebastian Hentzschel said, but going direct now will give the German-owned music company greater insight into its streaming data.
BMG and Warner described the winding down of their agreement as amicable.
“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,” Robert Kyncl, CEO of Warner Music Group, said in a statement. “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.”
