The non-compete constraints of Azoff's exit deal with Live Nation won't be a factor after 2014. He remains arguably the best closer in the music biz, and it wouldn't be a surprise to see some of the Artist Nation companies once aligned with him come back onboard when they're contractually allowed to do so.
While many will focus on his expected expansion of the artist management roster, probably rebuilding the Front Line Management network and leveraging MSG's live industry leadership, the most intriguing element of AMSGE is a new music rights business that could shake up the business significantly, particularly for those in the digital music space like Spotify and Rdio.
The new global music rights division is a performance rights organization -- a 90% interest in a music publishing venture run by CEO Randy Grimmett and COO Sean O'Malley. The division is about "the acquisition, development, licensing and exploitation of copyrighted works for the purposes of music publishing, co-publishing, licensing, administering, developing a musical library and acting as an agent on behalf of such works," according to an announcement.
This sounds like a publishing house, but Azoff calls it a "boutique" PRO for "what we feel has been an underserved group of very important writers out there," he says. "ASCAP and BMI have hundreds of thousands of members. We'll probably have 100." In terms of leverage, clout trumps sheer numbers, Azoff believes. "It's about how much market share those 100 control, and returning the ability to those 100 to control what happens, especially with their digital licensing." Industry sources, who have been aware of the plans, say the model will not be too dissimilar to SESAC's more focused model, which allows the PRO to pay a higher royalty share to its artists.
Due to the fact that ASCAP and BMI operate under a consent decree, they have less control over the royalty rates they can charge digital services on behalf of songwriters. SESAC is a privately held business and able to charge higher rates. Some major publishers like Sony/ATV have withdrawn their songs from the PROs in order to negotiate better rates directly from services like Pandora. An even more focused PRO with major songwriters and the aggressive clout of Azoff will be a game-changer.
At the very least, AMSGE is a new animal in its broad scope, and one that could make a lot of noise as an immediate major player. "Everybody in the business whines, 'There's no place to go. There's only three record companies and Live Nation and AEG,'" Azoff says. "Hopefully, people will think of us as a place equal to one of those [companies] to come [to us] with a great idea or a great project."
So in the end, AMSGE is in the idea business, and has the leverage and resources to bring ideas to reality. This is also a "venture capital play" from MSG's perspective. Dolan says the company will be acquisitive "using the assets of both Azoff Music Management and MSG and a bunch of cash." As Azoff puts it, the new entity is "putting out a sign that says, 'Come see us if you've got a great idea, because we have the management ability and financing ability, and we're looking for great new businesses.'"