Were it not for the long hair he wore in his youth, Marty Bandier might have missed out on a career in music publishing.
Now chief executive of Sony/ATV, the world’s largest music publishing group, he recalls how he landed a job at a legal firm after graduating from law school. It was around 1970 and a senior partner, anxious to find a lawyer who could represent a music company, noticed the young Bandier had long hair.
“He came into my office one day,” says Bandier from behind a desk decorated with figurines of Elvis Presley (one plays a tinny version of “Suspicious Minds”) and other music memorabilia. “He never looked at my eyes, only my hair. He said: ‘We think you’d be perfect to work on this project.’”
The hair may have marked the young New Yorker out as a potential music fan, but Bandier admits he was a novice when it came to its publishing law and licensing. “I had no clue what it was all about.”
That is not the case today. That first client led to a career in music publishing that has lasted four decades. He left his legal career behind in 1975 when he started a recording and publishing group with Samuel LeFrak, the property developer, and Charles Koppelman, a music executive, representing artists such as Barbra Streisand and Diana Ross. It was the start of a journey that would include more than 17 years running EMI Music Publishing and take him to the top of Sony/ATV, a joint venture between Sony and the Michael Jackson estate. He became CEO in 2007.
Rarely photographed without a beaming smile and a big cigar, Bandier was reunited with EMI Music Publishing three years ago when a Sony-led consortium acquired it for $2.2bn. The deal gave him overall responsibility for 3m songs ranging from the Motown catalogue to hits by The Beatles, Bob Dylan, Taylor Swift and Lady Gaga, and musicals, such as Singin’ in the Rain. “I can hum them all,” he laughs.
From the explosion of CD sales to digital piracy and the advent of downloads, much has changed in the industry over the course of his career. But it is in recent years that he has had to grapple with what he calls “the biggest challenge of my life”.
The industry’s evolution from the sale of physical goods — CDs — to downloads and now to online streaming has been tough for publishers to navigate. Sales of CDs have fallen sharply over the past decade and in the past 18 months downloads have also slipped, falling more than 10 per cent in 2014, as digital streaming and services such as Spotify have grown in popularity.
The performance royalty that songwriters and composers receive for a streamed track is much lower than the fee they would receive for a piece of music sold on CD or via download. “Here in America, the amount of money that songwriters make from streaming is minuscule,” says Bandier.
He points to interactive radio services such as Pandora, which pays out almost half its revenue to the artists that perform tracks but only about 4 per cent to Ascap and BMI, the two organisations that collect royalties on behalf of music publishers and songwriters.
Pharrell Williams’s “Happy”, the biggest selling song of 2014 — and published by Sony/ATV — is a case in point, he says. The track was played 105m times on Pandora in the first half of 2014 but generated royalties of only $6,300 to be shared between songwriter and publisher. “It’s absurd. The challenge is to get our songwriters fair rates for their work. We deserve a better deal.”
Performance royalty rates for audio- digital streaming services are compulsory and set by a US federal judge. Apple Music, the new streaming service Apple unveiled recently, has extra features, such as the inclusion of video elements, which meant Sony/ATV was able to negotiate its own rates.
Bandier is pushing for the ability to negotiate royalty rates with other streaming services too, but, under the current system, Sony/ATV would have to resign its memberships of Ascap and BMI before it could do so.
He has spoken before about exercising the “nuclear option”, which would entail removing Sony/ATV’s songs from royalty collection by Ascap and BMI and instead negotiating individual rates with digital music services. Ascap and BMI have collected royalties on behalf of music publishers for decades. If Sony/ATV were to end its membership of the two organisations it would become responsible for collecting royalties for clients from music wherever songs were played or performed. This would be a huge undertaking and involve collecting royalties from, say, the many thousands of bars and restaurants in America.
Such a move would be a last resort. Instead, he is hopeful that a US justice department review into how Ascap and BMI operate will give publishers more leeway to negotiate their own royalty rates. “There’s plenty of room for new digital services to be able to pay more money. We want them to exist and we want our 3m songs to be on them.”
That includes Spotify, which has become market leader in streaming, with 15m paying subscribers and 45m people using its free service. Spotify uses the free service to draw potential customers to its subscription service but many in the music industry — including Taylor Swift, who yanked her catalogue from the service last year — do not like it.
Bandier is among them. “I can understand Taylor’s view,” he says, adding that “45m people are listening to our songwriters’ work and they’re not being paid for it. If you made neckties and had 60m but gave 45m away for free you would be out of business in a few days.” He suggests limiting the free service to a few months.
Music has enduring value, he says. He mentions a commercial for the Victoria’s Secret underwear chain that licensed “I’m in the Mood for Love”, which is published by Sony/ATV. “While we’re sitting here another genius in an advertising agency is coming up with an idea to use one of our songs in a campaign.”
Sony/ATV, like other parts of Sony, was rocked by the cyber attack on Sony Pictures Entertainment at the end of 2014. Among the emails released by hackers was one from a senior Sony executive that discussed selling Sony/ ATV. “It’s not for sale,” says Mr Bandier, emphatically. “I’ve been assured of that.”
Despite the distractions of trying to secure better royalty rates, the consummate music man is upbeat about the future. The company has just had its “best year creatively and financially”, he says. At this year’s Grammy awards — where he received the President’s Merit Award — the Sony/ATV songwriters were represented in each of the five nominations for record of the year and song of the year. “We never had a situation before where we couldn’t lose.”
Hits, he says, can last for ever and songs that stand the test of time can generate income year after year. “I always tell people we’re in a penny business. We pick up bits and pieces like breadcrumbs and when you roll them all together you have a loaf.”
Culled from FT
