BMG's Zach Katz on Smart Acquisitions, Partnering With Icons & Betting on Facebook & Netflix
Since Zach Katz ascended to president of repertoire and marketing at BMG U.S. in July 2016, the company has scored a No. 1 album on the Billboard 200 with Blink-182, made its largest label acquisition with the $103 million purchase of BBR Music Group, partnered with Facebook, signed Pitbull to a publishing agreement and made a deal with Netflix to manage the streaming outlet's music rights outside the U.S.
As Katz, 46, sits in his 16th floor office in a high-rise in the mid-Wilshire section of Los Angeles, it's clear he's just getting started. In 2016, BMG worldwide generated roughly $500 million, with 75 percent coming from its publishing division and 25 percent from recorded music. Katz vows to make that an even 50-50 split within three years. "We're buying catalogs [and] signing artists," he says. "We're going to live up to doubling this business." They're already seeing results: For the week ending Nov. 2, BMG debuted four albums to the top 10 of the Independent Albums chart, a first for the company. Additionally, on Tuesday (Nov. 7). BGM writers busbee and Nate Cyphert took home song of the year honors at BMI's Country Music Awards for writing the Florida Georgia Line smash, "H.O.L.Y."
Katz, a former lawyer and artist manager for Sean Kingston and Jason Derulo, graduated from USC and Loyola Law School, and has worked at BMG since 2012. The company re-founded in October 2008 (following its merger and subsequent sale to Sony) and quickly ramped up through $1.5 billion in acquisitions, including Vagrant and S-Curve Records, as well as deals with artists like Janet Jackson and John Fogerty. The company also has moved into books and films, with a forthcoming documentary on Joan Jett as its inaugural cinematic release.
"We want to be the sandbox filled with as many valuable toys as possible," says the Moscow-born father of two, who moved to Los Angeles at age 7. "The creative commitment is super important."
In Q3, BMG had an 8.3 percent market share, top among all indie publishers, due in part to your share of the remix of "Despacito" with Justin Bieber. What does that mean for BMG?
We love frontline music, and we love, love, love iconic artists, so we're not focused on having market-share conversations. This is a result of us having a great campus of writers and producers who we're getting into a very good groove with. If we were super focused on being in a market-share conversation, our investment decisions would be very different.
So is "Despacito" a fluke?
It's not a fluke. "Despacito" came from having an eight-year relationship with["Despacito" co-writer] Poo Bear and having a writer who's been with us for a long time having success. I don't want to give the impression that we disregard frontline, but it's frankly a much smaller focus for us than developing writers early and being their co-pilot from day one.
How did your time as an artist manager influence how you do your job at BMG?
In coming here, I promised myself that I was going to be the kind of publisher that I would have been proud to work with with I was outside as a manager, rather than somebody who cut me a check and disappeared, which was my experience a lot of the time. So the creative commitment is something super important.
In January, BMG purchased BBR Music Group, home to Jason Aldean among others. Why were they the right fit?
We've been in Nashville on the publishing side, but nothing was really a perfect match [on the recorded side]. BBR was a company that was independent, young and ambitious. We lined up in terms of our philosophy and values. We wanted to continue allowing this roster of artists we acquired to evolve in [a pop] direction. We've had our artists in rooms with pop-leaning writers and producers, and we'll continue doing so. We also really believe that country music and music that comes from Nashville is ready, more than ever before, to live outside the U.S.
How are your staffers who were in Las Vegas for the Route 91 Harvest Festival and Aldean's performance doing after the mass shooting?
We had several people there, and thank God nobody was injured, but people were massively traumatized. We're just giving them as much room as we possibly can, and as much support. Whatever it takes.
In February, BMG made a deal with Netflix to manage its music rights ex- U.S. Is that an area any smart publisher should be looking at?
One hundred percent. The smart music companies are going to give you the [admin] service but will ask, "How else can we help you creatively? We have this whole library of music. We have these relationships. We have creativity that lives here. What are you guys trying to do?" You'd be surprised how many people we talk to -- sizable studios with other publishers -- who say, "We try to engage them creatively, and it falls on deaf ears." Shocks me.
What do you want out of the deal you just entered into with Facebook?
We would love to be able to create content with them audio-visually, and I think we're going to. Two, their reach into data is immense, so for them to be able to share information with us. We want to be able to understand how the music that we've invested in lives on their network. The data's super important.
Sales of individual songwriter catalogs are booming, with multiples of up to 20 times. Is that too much?
Those multiples are insane. The concept of multiples, in our view, is outdated. A pop catalog will peak in three to four years and will, after that, generate 20 percent of what it did during those three years. So if you're putting a multiple on something, you're going to lose your butt. Evergreens are different. But there are a lot of new companies that overpay. I'm not sure they've thought through their end goal, because these catalogs are going to crash.
You want half of BMG's revenue to come from recorded music within three years. How do you get there?
One is to identify the right catalogs to purchase. Two is to work with iconic artists. There's a lot who've been abandoned. I think we're proving to people that these artists need to be paid attention to. I remember when we [signed] Janet Jackson and Blink-182, people were like, "They're all yours." Now, our competitors are saying, "They're stealing from us!" These artists have all of a sudden become important to our competitors. Third, intelligently stepping out on front line artists.
Many of your record deals have the artists retaining ownership of masters and making at least 50 percent of the net. How is that sustainable?
It's sustainable due to our unwavering commitment to staying lean and mean. No redundancies in infrastructure or manpower. We have 600 people worldwide while others have between 4,000 and 6,000.
Why is your love for iconic artists so strong?
They've influenced so many artists influencing culture today. The goal is to take these established [acts] a step higher. We don't say, "That's a lemon with a couple drops left. Let's squeeze those last drops." It's, "How do we grow a lemon tree?"
Nickelback is going to sell probably more outside the U.S. altogether than they did in the U.S. We're really one global community. There's a ton of upside there.