Inside Sony's Cuban Coup
The company's deal to license Egrem, the island's largest music catalog, was the culmination of two years of diplomacy and secret meetings.
Long before President Obama hinted at thawing diplomatic relations between the United States and Cuba, Sony Music had its sights set on the island -- more specifically, its largest music catalog. On Sept. 15, the company revealed it had signed a multiyear global licensing deal for the entire Egrem catalog, comprising some 30,000 tracks dating back to 1964.
While the deal culminated just weeks after Cuba opened its doors to the States in July, the path to it involved two years of secret meetings and diplomacy to the still-Communist country. Sony Music executives tell Billboard the process began in January 2013, during a meeting in New York between Sony International's board of directors and its Latin regional team. International CEO Edgar Berger sensed a major untapped opportunity in distributing Cuban music on a global scale. Why not, he asked, look into existing catalogs?
Egrem (Empresa de Grabaciones y Ediciones Musicales, or Enterprise of Recordings and Musical Editions), Cuba's national record company, was founded in 1964, after the nationalization of the country's music industry, and operated as a monopoly until the 1980s, when independent labels began to return. Its vast catalog ranges from the old salsa of Buena Vista Social Club alumni Ibrahim Ferrer and Omara Portuondo to the jazz of Grammy winners Irakere and timba band Los Van Van.
Following the initial 2013 meeting, Wade Leak, Sony Music senior vp/deputy general counsel, requested authorization from the U.S. Department of the Treasury for a team of executives to travel to Cuba. Sony entered into the transaction pursuant to the "informational materials" exemption under U.S. sanction rules for Cuba administered by the Office of Foreign Assets Control, an exemption that applies to music and other works of art.
Sony found ambassadors in its own roster: Eduardo Cabra of Calle 13 and Diana Fuentes, a Cuban artist signed to Egrem in Cuba and to Sony for the world. The pair arranged a phone call between Egrem managing director Mario Angel Escalona Serrano and Afo Verde, Sony's Chairman and CEO for Latin America, Spain and Portugal.
"Had we not gone through them, it would have been much more complex," says Verde. "Their help allowed for a warmer introduction, as if we were meeting mutual friends." By August 2014, a Sony delegation was on its way to Cuba.
That first trip essentially sealed the deal. Verde, an Argentine national, had vacationed in Cuba and was familiar with its music. On this visit, the Sony team (Leak, Verde and senior vp A&R Alex Gallardo) visited Egrem's fabled Areito Studios in Havana, and Fuentes held a listening session for her new album. By the end of the trip, both parties agreed to work toward a global distribution agreement.
It took five more treks to Cuba to finalize a deal made more complex by the scope of the catalog and the restrictions in place for negotiating with the country. The deal was inked at Areito by Egrem managing director Mario Angel Escalona Serrano, Berger and Verde.
"Sony Music is honored to bring this iconic music -- representing over five decades of Cuban culture -- to all corners of the world," says Berger.
And while some material has been licensed previously, it has never been available globally or on this scale. The arrangement does not yet include signing new acts, however; the first release under the deal will be Los Van Van's latest album, La Fantasia: Homenaje a Juan Formell, a tribute to the group's late bassist and arranger.
An ebullient Verde says, "It's hard to find a music catalog in the world where the professional training of the artists is of such high quality. Cuban musicians can both excite the listener and dazzle with their virtuosity -- and that's something you hear in each of these recordings."
A version of this article was originally published in the Sept. 26 issue of Billboard.