Music

After Playing a Part in the Weirdest Scam in Music, This Organization Is Making Good on Its Comeback

For much of the last decade, the Spanish collective management organization SGAE was part of one of the weirdest stories in the music business. Over the years, the collective management organization combined larger-than-life misbehavior (“Going to brothels after dinner was normal,” former senior executive Pedro Farré told El País in 2017) with an only-in-the-entertainment-business royalty accounting scheme called “la rueda” (the wheel) in which television companies played music to which they controlled the rights on late-night shows at barely audible levels in order to get back some of the money they paid SGAE in royalties.

Such songs became known as “witches’ music,” since they were played during “the witching hour,” often on astrology programs that could last for hours, and some were barely changed arrangements of public domain classical compositions registered to television executives and their relatives. In 2017, police raided SGAE headquarters.

How much of this was amusing, as opposed to outrageous, varied directly with whether any of the money belonged to your company or creators with whom you worked, and in May 2019 the collecting society trade association CISAC took the unusual step of ejecting SGAE. Within months, hundreds of creators notified SGAE that they intended to withdraw their rights and alternatives began to emerge, including the Barcelona-based UNISON. That seemed to put more urgency behind the reforms that were already taking place, and two years later SGAE rejoined CISAC and began to rebuild the trust of creators, publishers and other CMOs.

Since then, SGAE has stabilized and turned itself around, a process that solidified and gained ground under new CEO Cristina Perpiñá-Robert, who was appointed a little more than a year ago. Last year, the organization took in €349.1 million ($377.7 million, using the average 2023 conversion rate) and distributed €354.1 million ($383.1 million), according to its 2023 financial results, which will be announced on May 10. (Distributions are higher than revenue in 2023 because of special payments from broadcasters that SGAE received in 2022 and disbursed in 2023.) Those numbers represent a 24.9% gain in revenue and a 26.6% increase in distributions, and they arguably understate SGAE’s biggest achievement: Giving publishers and creators confidence that they’re distributing royalties in a fair way.

Over that same period, the number of SGAE members with authors rights grew from 36,956 to 83,148 as it celebrates its 125th anniversary. Perpiñá-Robert has also helped make SGAE something of a hub for digital rights for Latin American repertoire. SGAE is also benefitting from the global popularity of Spanish-language music, especially a new wave of Spanish urbano musicians like Quevedo and Bad Gyal.

“For them to see SGAE as something that’s not old and bureaucratic, that’s been really good,” says Perpiñá-Robert, who previously worked at SGAE, then left for CISAC and returned last year. The Spanish CMO never had the scale of SACEM (the French CMO) or PRS (in the U.K.), and that may not change – the Spanish economy is much smaller than those of France and the U.K. But it could become a kind of specialist hub. “Everywhere is, in Europe, local music is doing better,” Perpiñá-Robert says. But only a couple of countries manage to export that local music around the world.

Since the European Commission opened up competition among CMOs to manage rights online, two major hubs have emerged to license music for online use in Europe and some other territories: SACEM and ICE, the latter of which is a joint venture of PRS, GEMA (Germany) and STIM (Sweden). (Each society still collects for offline uses of music in its home country.) They compete to represent rights from creators, publishers and even other societies, and the conventional wisdom is that most of the smaller societies will become dependent on these, while those in the middle will get squeezed. But the rise of Latin music offers SGAE another path forward.

“We’re trying to become a pan-European hub for digital for Latin American music,” says Perpiñá-Robert. SGAE collects online royalties in Europe for all the Latin American societies except those in Mexico and Brazil. (Some international superstars from Latin America sign directly to ASCAP or BMI, which make their own international deals.) With CMOs, scale leads to scale – smaller societies that lack the resources to handle the amount of data now needed to manage royalties accurately tend to get smaller, while bigger ones tend to invest, grow and then invest and grow more. And there’s never been a better time to represent any kind of Latin music rights.

As SGAE improves its reputation, its past is also getting another look. Former SGAE president Teddy Bautista, who once faced possible jail time on charges of misappropriation of funds, was acquitted, along with others. And even “la rueda” was more of a failure of organizational governance than anything else: SGAE followed its own rules, but broadcasters gamed them.

SGAE still faces its share of challenges, including a UNISON lawsuit for anti-competitive behavior. But it has already made serious progress toward earning back trust, and it could go from a problem child to a serious player.

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