Hartwig Masuch: BMG’s billion-dollar aim BMG will turn over comfortably more than $600m in 2019, after seeing its YoY revenues rise 11.4% in the first six months of the year. The company’s CEO, Hartwig Masuch, tells MBW that Bertelsmann-owned BMG now expects to generate one billion dollars per year as soon as 2022. Yet, as the old saying goes, revenue is vanity... but profit is sanity. And, as excited as he would be to see BMG’s annual sales hit ten figures, Masuch is determined to keep his focus on the latter measure. The Berlin-based exec acknowledges that “a [$1bn turnover] is definitely a target
company’s operating EBITDA margin shot up even faster, by 16.7% (to €49m/$56m) in the same period. This means that BMG’s operating EBITDA margin now sits at a very healthy rate of 18.2%. Impressively, BMG has secured this level of profitability despite basing its business on giving far more money to artists, as a rule, than traditional major label deals. Typically, BMG offers a recorded music deal which sees artists receive a 75% share of revenue, with 25% retained by the company. This split buys the artist core services like royalty collection, product management
“WE’RE GROWING OUR EBITDA. WE’RE ABLE TO KEEP A VERY RATIONAL COST BASE, WHILE STILL PARTICIPATING IN ALL THE GLORY AND FUN OF THE MODERN MUSIC BUSINESS.” we set ourselves over the next three to five years”, but notes that a number of market factors – including a “big crisis” in industry valuations – could affect BMG’s fiscal journey, whether positively or otherwise. (For example, if industry valuations suddenly sink, BMG might be able to snap up some tasty music rights at attractive prices, accelerating its revenues.) Importantly, Masuch adds: “We won’t be losing any sleep if, after five years, our revenues aren’t at [$1bn] but our profit [margin] stays where it is today.” His point: BMG is, increasingly, a more profitable company. Its revenues might have risen 11.4% year-on-year in H1 2019 (to €269m/$305m), but the
and accounting, while other label services – including marketing spend, PR and physical distribution – are layered on via optional additional costs. Masuch, who credits BMG’s expanding profit margin to the “scalability” of his company’s publishing and recordings catalog as streaming grows globally, told MBW: “One of the most important achievements in the past 10 years was that we were able to transform the music industry cost structure that is necessary to bring artists global success. “That’s why you see us growing our EBITDA without [major] acquisitions on a [typical artist deal rate of] 75/25 or 70/30. We’re able to keep a very rational cost 85
