On the latest Music Business Worldwide Podcast, Tim Ingham, founder of MBW, is joined by the CEO of Amra, Tomas Ericsson (pictured).
Amra is a global digital collection society that happens to be owned by Kobalt Music Group.
Since Kobalt acquired and relaunched Amra in 2015, the collection society has become a fast-growing business in its own right: in the 12 months to the end of June 2022 – the last year for which public financial information is available – Amra generated over USD $110 million in revenue.
Amra’s clients today include Kobalt’s global publishing business, plus other significant independent music publishers, including Anthem Entertainment and Armada Music Publishing.
Prior to joining Amra and Kobalt, Tomas Ericsson was Deputy CEO of Swedish collection society STIM, and he was the Managing Director of ICE until 2009. (At that time, ICE was a joint venture between STIM and the UK’s PRS For Music; it would later welcome Germany’s GEMA as a third stakeholder.)
On this podcast, Ingham asks Ericsson about the changing landscape for songwriter royalty collection, the opportunity ahead – and the fact that Amra has, to date, invested more than $50 million upgrading and expanding its core technology.
Listen to the full podcast above (29 minutes) or read an abridged and edited version below…
How does Amra differ from a traditional PRO?
Amra is a traditional pro in many ways: we represent songwriters just like any other PRO like ASCAP in the US or PRS in the UK, and we collect on their behalf around the world from other PROs under so-called reciprocal agreements.
However we only [collect via reciprocal agreements] for offline earnings, so that’s radio, TV, broadcast, live, and so on. When it comes to digital collections, we license and collect that entirely on our own. That’s why we’re different.
We license all the DSPs directly in over 200 territories, and we receive the data and the money directly from these sources for all these territories, without it passing through a [local] PRO or some other intermediary.
What proportion of global songwriter royalty collections these days is from ‘digital’ – which you collect direct around the world – and what proportion is ‘offline’, in terms of radio, TV, live etc?
When we started, just looking at the US, in 2014/2015, we saw that about 25% of the royalties collected came from digital sources.
Last year, that same picture was about 65% to 70% of all royalties being digital, and we believe that will grow to 80% to 85% within three to five years. It could even happen faster.
This was why we took the bet to build [Amra’s] technology. We looked at that [trajectory] and took the bet on [digital royalty collections growing their share of the ‘pie’].
Around the world, there are incumbent PROs, each of whom has costs associated with admin, resources, employees, etc. A big part of that is tied up in collecting royalties from offline rather than digital sources. How does that picture change as digital becomes the majority of the publishing industry’s earnings?
This will be one of the biggest challenges [for the industry] in the coming three to five years – for PROs to change the way they work in many ways.
There are a lot of PROs out there that have already [started doing] that. For example, PRS, Stim, and GEMA have created ICE to pull that digital processing part for them [collectively].
“This will be one of the biggest challenges [for the industry] in the coming three to five years – for PROs to change the way they work in many ways.”
Nevertheless, as long as offline royalties need to be collected in any territory, you need resources and a process for dealing with that territory. I don’t think that will ever go away entirely.
But from the perspective of songwriters, if you become a member of a [local PRO], you don’t [always] really know how your money is collected – whether it’s through reciprocal agreements or directly licensed. It’s a complicated structure but it can be done [more] effectively, which is why we built Amra.
One of the loudest grievances I hear from music publishers is exactly what you describe: reciprocal agreements mean people being paid money from a local PRO, who pays it to another PRO, and the money moves slowly down the pipe. Maybe the original PRO takes a commission or deduction; maybe the second PRO in the chain does. The visibility is lacking – and these issues are still going on in 2024!
Absolutely they are still going on.
It astonishes me that it’s still going on in particular in digital collections, where it [should be] 100% transparent in terms of what data you can get from services.
you put a story out recently that Amra has, to date, invested more than $50 million in its royalty tech. What improvements has that investment led to?
The [product of that investment] is the absolute backbone of what we do in our business model, and $50 million is a lot of money!
For us [the main reason] to invest so hard is: Can we process quicker? Can we process with more accuracy? Can we invest in machine learning and other AI technologies that can find [royalty/song] matches that probably weren’t there [before]?
We’re talking about hundreds of billions of lines of data that have to be processed continuously, all the time, throughout the year. If [via tech] we’re able to actually process [Amra’s non-matching rate on digital services] down to literally zero, we see an enormous uptick in value for our clients.
“We have almost doubled, our collection value in the long tail over the last three years.”
Obviously, the big songs, the traditional catalogs of pop, rock, and so on, those matches are always accurate and have been for many years. But where you see a big discrepancy is when you get down into the long tail, where generally people feel that there’s no value there. There’s massive value there!
We have almost doubled, our collection value in the long tail over the last three years because we can process everything down to zero, and we find everything.
When Kobalt first acquired Amra, there were many questions about how Amra would stay impartial for third-party clients vs. looking after Kobalt’s own catalog. Ten years on, how are you ensuring that impartiality?
We realized pretty quickly that we needed a very strict separation between the two companies. We hired Deloitte to run a full-scale business separation process and basically underwrite our separation from a governance standpoint, an employee standpoint, an access-to-data standpoint — from every aspect that could be considered.
One example is that Amra receives full usage data from all the DSPs – all the plays, all the clicks, regardless if it’s for songs that we control or not. That data can obviously not be shared with anyone at Kobalt or any of our other clients, so there are very strict access restrictions or access processes between the companies.
“Kobalt only sees its own data, earnings, and numbers. The same is true for our other publisher clients.”
Kobalt only sees its own data, earnings, and numbers. The same is true for our other publisher clients.
All the rights [Amra represents] are licensed under the same structure. We process everything in the same way. There is absolutely no preferential treatment of Kobalt.
There’s been a lot of discussion over the past year about for-profit PROs after BMI decided to go down that route before being acquired by New Mountain Capital. ASCAP publicly goaded BMI for making that move! Amra is obviously part of a private, for-profit company. What’s your general view on the for-profit vs. not-for-profit debate?
Even before I came to Amra, when I was working as Deputy CEO for STIM, my perspective was that it should not matter whether you run your business as a not-for-profit or a for-profit, so long as the structure and the business model create more value songwriters.
“It should not matter whether you run your business as a not-for-profit or a for-profit, so long as the structure and the business model create more value songwriters.”
I can’t judge whether or not that’s happening for the other for-profit entities – but we do know that there are a lot of not-for-profit entities out there, such as ASCAP, such as PRS, and others that are very good, very effective and do their job well. They actually have a commercial mindset around how they operate.
When Francisco Partners took over as the majority owner of Kobalt, FP actually highlighted Amra as a particularly exciting growth opportunity within the Kobalt Music Group structure. How has the transition from the previous ownership to the Francisco Partners ownership been for you, and how well aligned are you on the future?
It’s been a very good partnership [with FP]. In my opinion, it’s a much more active partnership [than you might assume]; it’s very engaged ownership, which is really helpful – [especially] because of [FP’s] background and their experience from other tech and music-related tech.
If you could change one thing about the music business right here and now what would it be and why?
This idea of being able to directly license and collect [from DSPs], getting all the data and the money directly, is going to continue to become more and more valuable.
However, some legislative environments outside the United States prevent that from happening. For instance, in South Korea, Amra is not able to license for legal reasons; the same goes for Argentina.
“There are a few small [territorial] exceptions out there that stand in our way [of 100% global collection] from a legal standpoint. So it would be very helpful if that could change!”
There are a few small [territorial] exceptions out there that stand in our way [of 100% global collection] from a legal standpoint. So it would be very helpful if that could change!
The other thing is data sharing. If we can find a way to share more matches and data with each other—particularly the larger platforms in our space—it would help clean [everyone’s] data more, it would help prevent disputes, and it’s something we should look at and embrace.
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