Bertelsmann Music Group

Bertelsmann Music Group, commonly known as BMG, was the music division of German media company Bertelsmann and one of the major international record businesses of the late twentieth and early twenty-first centuries. Its roots lay in the 1985 creation of RCA/Ariola International, a joint venture intended to combine the recorded-music operations of RCA Records with Bertelsmann’s Ariola Records and associated labels, including Arista Records. The BMG name was formally established in 1987. The group operated across several parts of the music industry. Its recorded-music activities included labels and artist catalogues inherited from RCA, Ariola, Arista, and other acquisitions. It also developed a substantial music-publishing business. BMG Music Publishing, formerly RCA Music Publishing, became a major administrator and owner of musical copyrights, with activity in popular, classical, Christian, and international repertoire. Its represented or controlled catalogues included works associated with artists and writers such as Elvis Presley, Bob Dylan, Christina Aguilera, Coldplay, Iron Maiden, Maroon 5, Shania Twain, the Cure, Kylie Minogue, Dido, and many others. The publishing operation also included or represented catalogues through businesses such as Zomba Music Publishing and Brentwood-Benson Music Publishing. BMG expanded beyond music during the 1990s. In 1994 it acquired the Italian publisher Casa Ricordi, a historic business founded in 1808. In 1998 it sold BMG Interactive, the company responsible for publishing the early Grand Theft Auto series, to Take-Two Interactive; Bertelsmann received a minority stake in Take-Two as part of that transaction. A decisive transformation came in 2004, when Bertelsmann and Sony combined their recorded-music divisions in the Sony BMG joint venture. The transaction reduced the number of major global record companies from five to four. BMG and Sony retained separate operations in Japan, while the joint venture handled the principal combined recorded-music business elsewhere. Bertelsmann’s publishing operations were not included in the merger. Bertelsmann sold its 50 percent interest in Sony BMG to Sony Corporation of America in 2008 for $1.5 billion. Sony restored the business to the Sony Music Entertainment name, ending Bertelsmann’s direct participation in the principal recorded-music joint venture. BMG Music Publishing had already been sold to Universal Music Group in 2007 for €1.63 billion and was subsequently integrated into Universal Music Publishing Group. After exiting most recorded-music operations, Bertelsmann retained selected European recording rights and the BMG trademark. With financial backing from KKR, it established BMG Rights Management as a music-rights company focused on publishing, recorded-music rights, and artist and songwriter services. BMG Rights Management became the successor platform for Bertelsmann’s continuing music activities, while the historical Bertelsmann Music Group ceased to operate as the former integrated record-company division.

Bertelsmann’s modern music business developed from its Ariola Records operation and its expansion into international recorded music. In 1985, Bertelsmann and RCA created RCA/Ariola International to consolidate the companies’ label activities. The arrangement brought together RCA’s recorded-music assets with Ariola and related Bertelsmann labels, including Arista. The Bertelsmann Music Group name was adopted in 1987, establishing a recognizable corporate identity for Bertelsmann’s global music activities. During the 1990s, BMG broadened its portfolio through acquisitions and diversification. Its 1994 purchase of Casa Ricordi added one of Italy’s best-known music-publishing houses to the group. Casa Ricordi had been established in 1808 and brought historical classical and contemporary catalogues into BMG’s publishing interests. BMG also operated in interactive entertainment through BMG Interactive. In 1998, that business was sold to Take-Two Interactive; it had published the early Grand Theft Auto series. Bertelsmann took a minority interest in Take-Two in connection with the sale. Music publishing became an important part of BMG’s identity. BMG Music Publishing, previously RCA Music Publishing, developed a large international network and controlled or administered more than one million copyrights according to descriptions of the business. Its repertoire extended across popular music, classical works, contemporary Christian music, and regional catalogues. Through acquisitions and sub-publishing arrangements, the company handled material connected with businesses and catalogues including Zomba, Famous Music, Walt Disney, Roadrunner, Leiber & Stoller, Fremantle, Pete Waterman, and Malaco. The company acquired Complete Music in 2006 and operated Brentwood-Benson as a Christian-music publishing business. The recorded-music landscape changed in 2004 when BMG and Sony created Sony BMG. Their joint venture combined the two companies’ recorded-music interests and was one of the largest structural changes in the global label sector. The transaction left BMG Music Publishing outside the venture and preserved distinct arrangements in Japan. Although Sony BMG operated as a major international record company, Bertelsmann later sought to reduce its exposure to recorded music. In 2007, Bertelsmann sold BMG Music Publishing to Universal Music Group. The acquired publishing activities were folded into Universal Music Publishing Group, and the BMG Music Publishing brand was discontinued. In October 2008, Sony Corporation of America bought Bertelsmann’s half of Sony BMG for $1.5 billion. Sony subsequently renamed the company Sony Music Entertainment, ending the historical BMG role in the combined recorded-music operation. BMG Japan was ultimately reorganized into Sony Music Japan in 2009. Bertelsmann nevertheless retained selected European recordings and the BMG trademark. Using those assets as a foundation, and with capital support from KKR, it created BMG Rights Management. The new company concentrated on music rights, publishing, catalogue administration, and services for artists and authors. It became a successor to Bertelsmann’s continuing music interests, but it was not the same integrated major record company represented by the historical Bertelsmann Music Group. The original BMG therefore belongs principally to the history of Bertelsmann’s recorded-music division, Sony BMG, and the transition toward specialist music-rights management.

1. 2009BMG Japan folded into Sony Music Japan

   The separately operated BMG Japan entity is reorganized into Sony Music Japan.

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2. 2008Sony acquires Bertelsmann’s Sony BMG stake

   Sony Corporation of America purchases Bertelsmann’s half of Sony BMG for $1.5 billion, after which the company returns to the Sony Music Entertainment name.

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3. 2007BMG Music Publishing sold to Universal

   Universal Music Group acquires BMG Music Publishing for €1.63 billion and integrates it into Universal Music Publishing Group.

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4. 2006Complete Music acquired

   BMG Music Publishing expands its publishing portfolio through the acquisition of Complete Music.

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5. 2004Sony BMG joint venture begins

   Bertelsmann and Sony merge their recorded-music divisions in the Sony BMG joint venture.

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6. 1998BMG Interactive sold to Take-Two Interactive

   BMG sells its video-game publishing business, which had published the early Grand Theft Auto series, to Take-Two Interactive.

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7. 1994Casa Ricordi acquired

   BMG acquires the historic Italian music publisher Casa Ricordi, founded in 1808.

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8. 1987Bertelsmann Music Group is established

   The BMG name is formally adopted for Bertelsmann’s music division.

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9. 1985RCA/Ariola International is formed

   RCA and Bertelsmann establish a joint venture combining RCA Records with Bertelsmann’s Ariola and associated label activities.

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A global music company combining recorded-music labels with music publishing and copyright exploitation, later repositioned around rights management rather than ownership of a traditional major-label network.

• BMG recorded-music labelsRecorded music1987

  The historical recorded-music business brought together RCA, Ariola, Arista, and related label assets under Bertelsmann’s international music division. It operated as a major-label network until the recorded-music interests were placed into Sony BMG in 2004 and Bertelsmann exited through the 2008 sale.

• BMG Music PublishingMusic publishing

  BMG’s publishing arm, formerly RCA Music Publishing, managed a large international catalogue spanning popular, classical, Christian, and regional music. It represented or controlled works associated with numerous prominent artists and publishers and was sold to Universal Music Group in 2007.

• BMG Rights ManagementMusic rights management2008

  Created after Bertelsmann’s withdrawal from the Sony BMG recorded-music venture, BMG Rights Management retained selected rights and the BMG trademark while focusing on publishing, recording rights, catalogue administration, and services for artists and authors.

• BMG InteractiveVideo-game publishing

  A former Bertelsmann interactive-entertainment business that published video games, including the early Grand Theft Auto series, before being sold to Take-Two Interactive in 1998.

• 2008Exit Sony BMGM&A

  Bertelsmann decided to withdraw from the principal recorded-music business while preserving selected rights and the BMG trademark.

  What changed. Sony Corporation of America acquired Bertelsmann’s 50 percent stake in Sony BMG.

  Aftermath. Sony Music Entertainment resumed the Sony business name, while Bertelsmann established BMG Rights Management as its continuing music-rights platform.

  Sale price. $1.5 billion (2008)

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• 2007Sell BMG Music Publishing to UniversalM&A

  Bertelsmann separated its publishing operation from the recorded-music joint venture and monetized the publishing business.

  What changed. BMG sold BMG Music Publishing to Universal Music Group for €1.63 billion.

  Aftermath. Universal integrated the business into Universal Music Publishing Group and retired the BMG Music Publishing name.

  Sale price. €1.63 billion (2007)

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• 2004Combine recorded-music operations with SonyM&A

  Bertelsmann and Sony sought to consolidate their recorded-music businesses during a period of structural change in the global music market.

  What changed. The companies created Sony BMG, combining their principal recorded-music divisions while leaving BMG Music Publishing outside the venture.

  Aftermath. The transaction reduced the number of major global record companies from five to four and made Sony BMG one of the sector’s largest businesses.

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• 2002Compact-disc price-fixing settlementControversy

  BMG and other major music companies were included in a settlement concerning alleged industry use of minimum-advertised-price practices to limit discounting and maintain higher CD prices. The settlement required monetary payments and distribution of CDs to public and nonprofit organizations; the companies did not admit wrongdoing.

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• 2008Bertelsmann sells its Sony BMG stake to Sony

  Sony Corporation of America acquired Bertelsmann’s 50 percent interest in Sony BMG for $1.5 billion. The venture was then returned to the Sony Music Entertainment name.

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• 2007BMG Music Publishing sold to Universal Music Group

  Bertelsmann sold BMG Music Publishing to Universal Music Group. Universal subsequently integrated the business into Universal Music Publishing Group and retired the BMG Music Publishing name.

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• 2004Bertelsmann and Sony establish Sony BMG music joint venture

  Bertelsmann and Sony combined their recorded-music divisions in a joint venture, bringing together major label assets and reducing the global major-record-company group from five companies to four.

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1. Bertelsmann Music Group