SoundExchange Acquires CMRRA


Who is CMRRA?

CMRRA is shorthand for the Canadian Musical Reproduction Rights Agency Ltd., a music licensing collective representing music rights holders ranging in size from large multi-national music publishers to individual songwriters. The rights owners that CMRRA represents own or administer the vast majority of songs recorded, sold and broadcast in Canada. On their behalf, CMRRA issues licenses to individuals or organizations for the reproduction of musical works on various media such as CDs and other physical products for the purpose of online music distribution including music downloads, streaming and webcasting, as well as for broadcasting operations by radio, television, satellite and on-demand services. CMRRA also administers the collection and distribution of private copying royalties for the works in its repertoire.

Why is SoundExchange acquiring CMRRA?

The acquisition of CMRRA will provide SoundExchange with an exciting new opportunity to enter the music publishing administration market. The transaction comes at a time of increasing consolidation in the marketplace, so this is another example of the changing market. We are thrilled to expand our world-class services to a new sector of the music industry!

Will the CMRRA-SODRAC INC. (CSI) joint venture continue following the acquisition?

CSI currently serves an important function for CMRRA and SODRAC. We intend to continue this joint venture for the foreseeable future and utilize the services CSI provides.

How do SoundExchange and CMRRA fit together?

Both organizations have expertise in their respective markets: the music publishing reproduction rights market for CMRRA, and the sound recording performance market for SoundExchange. We believe there are key areas, such as aligning our comprehensive databases to offer sound recording and musical works information, as well as technical infrastructure and business process initiatives, which could increase efficiency to the entire music industry and make us stronger together than we are if we remained separate entities.

Who will run the new company?

CMRRA and SoundExchange will continue to work independently and serve their respective customers while also searching for collaborative opportunities, such as sharing core services. Day-to-day management will remain the same at CMRRA. In terms of the corporate structure, CMRRA will be owned by SXWorks, a new subsidiary in SoundExchange’s corporate structure, which is focused on providing administration services to the music publishing sector. The board of directors of SXWorks will include five music publishers. We have also established a Canadian Publishers Committee to provide direction on important issues impacting music publishers’ business is Canada. SoundExchange President and CEO Michael Huppe will lead SXWorks as Chairman of the new company.

Will the CMRRA office continue to be run in Toronto?

Yes, we will maintain CMRRA’s offices in Toronto. Our Canadian business is the core of CMRRA’s current operations. No change in the day-to-day operations of CMRRA is anticipated.

Will fees at SoundExchange or CMRRA increase as a result of this transaction?

We believe that the integration and acquisition costs will not have a significant impact on the administrative rates of either SoundExchange or CMRRA. We intend to increase new business and implement efficiencies with some of our core functions, which will cut costs.

If I am a publisher and a label, will I have to register at both SoundExchange and CMRRA?

Yes. SoundExchange and CMRRA will continue to operate independently and service different parts of the music industry. SoundExchange will continue to administer digital performance rights in sound recordings in the United States, and CMRRA will continue to represent reproduction rights in Canada.

Will SoundExchange and CMRRA offer one license to cover sound recording and publishing rights?

Not at this time. We do, however, foresee a time in the future when the data and technical solutions that we offer may make it possible for rights owners to identify and track their interests in both sound recordings and publishing at a “one-stop shop.”

How does CMRRA support SoundExchange’s long term goals? And why invest in a reproduction rights CMO?

CMRRA has a strong and stable reproduction rights licensing business and established publisher and licensee relationships. In addition, there are opportunities to expand and leverage that business as part of a more comprehensive rights administration service. Ultimately we see the combination of sound recording and music publishing administration filling the back-end transactional needs of an evolving marketplace.

What will happen to CMRRA?

Like the rest of the CMRRA work force, CMRRA’s staff is vital to the organization’s success, and we plan to keep the current staff on at CMRRA at the current time.

Who are CMRRA’s key competitors in the market today, and does the acquisition affect the competitive landscape?

CMRRA represents more than 85% of the Canadian market related to the reproduction rights and has few direct competitors. The acquisition will help CMRRA be more visible outside Canada and attract new international songwriters and music publishers who may not yet be aware that reproduction royalties are available for them in Canada or aware of how to access those royalties. This represents a significant untapped market that we are well positioned and eager to service.

Is SoundExchange planning any follow-on acquisitions?

SoundExchange continually evaluates opportunities to expand our service to the industry.

Press Assets

SoundExchange Acquires CMRRA: Industry Quotes in Support of SoundExchange Purchase

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Michael J. Huppe, President & CEO, SoundExchange