Canada's SOCAN Acquires Reproduction Rights Organization SODRAC in Historic Deal: Q&A
SOCAN CEO Eric Baptiste explains how the arrangement will improve efficiencies and streamline operations of the rights groups.
Canadian performance rights organization the Society of Composers, Authors and Music Publishers of Canada (SOCAN) has acquired reproduction rights organization the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC). The non-monetary deal will improve efficiencies and streamline operations of the performing and reproduction rights groups.
This is the first time in the history of the Canadian music business that a single organization will be able to license, track and distribute all royalties for both performing and mechanical rights.
The boards for the two not-for-profits had been chatting about marriage for a while and went public with the talks in April last year. SOCAN has more than 150,000 members and SODRAC has over 9,000.
SODRAC currently has a joint venture with Canadian Musical Reproduction Rights Agency Ltd. (CMRRA), under the umbrella CSI (CMRRA-SODRAC Inc.). In 2013, SOCAN entered into similar discussions to acquire the CMRRA but talks fell apart and the plans were ultimately abandoned.
As part of the integration, SODRAC, in name, will eventually cease. A new Reproduction Rights committee of the SOCAN board will also be set up that will include directors of SOCAN, alongside some of the directors from SODRAC's board at the time of the transaction.
Lise Aubut, who co-founded SODRAC in 1985 and is chair of SODRAC's board of directors, said in a statement, "The integration of SODRAC into SOCAN is the result of many years of discussions and negotiations."
She continued, "Today, this concentration of energy and resources has become essential in a context where markets are globalized, copyright media is dematerialized, and the financial means necessary to defend rights in a digital world are prodigious. Music is borderless, and tracking musical works requires cutting-edge technology that provides services to a large number of music rights-holders and users."
SOCAN CEO Eric Baptiste spoke with Billboard about the acquisition, what it means for its members and its staff.
If this is a non-monetary acquisition, what was the incentive for the board members at SODRAC to move forward if it meant eventually the dissolution of the organization and potentially their jobs?
First, it's probably better to ask them, but I have some idea about that. I believe that board members of SODRAC have been seeing for a while the trend in collective rights management and the need to really be able to have scale, to have technology, to have big data capabilities, to really be able to deal with digital in a meaningful way. They recognized, I guess, that SODRAC on its own was not able to keep up with the need of the digital era and found with SOCAN that business line of reproduction rights could be handled more effectively, with more precision in distributions as well. I think that that is the motivation and these guys have been incredibly good at assessing their situation.
You tried to do this about five years ago with the CMRRA?
Yes and SODRAC as well. Both at the same time.
With one the talks fell apart and didn't with the other?
That's right. The first approach that has been considered for a while in this country was to try to not merge, but find a way to have an alliance between SOCAN, CMRRA and SODRAC, to agree to manage the two rights, performing and reproduction rights. Probably it was a bit too ambitious to try to get the three together, even without a corporate merger or acquisition. Doing it with one of the two reproduction rights organization probably, with the benefit of hindsight, was more within reach, more realistic than trying to square the circle.
SODRAC and CMRRA have a joint venture partnership. How will this acquisition affect that?
That's part of the discussion. We understand this partnership has been reduced in recent months, so we anticipate this partnership to be at the table and we'll discuss what is useful and what is possible for the rights holders and for the licensees going forward.
How is this going to affect, benefit, publishers, songwriters -- rights holders? What extra stuff do they have to do, or is it just a simple click of an opt-in button for your members?
Nobody who is currently with SODRAC will be automatically going into SOCAN -- they will have to opt-in. We are doing this because we believe that by having SOCAN managing that right as well, from the right holder's side, for the songwriters and the publishers, we offer them our scale, our data capabilities, our matching abilities to hopefully offer more accurate timely distributions and reduce costs. We hope to be able to reduce commission rights. For anyone or any company that chooses to go with our reproduction rights offering, the bottom line should be more money, better distributions, with more information, more access to general data. So that's good. And for the licensees, it's ultimately a one-stop shopping solution with one license for both rights.
Will this mean more work for SOCAN staff? And what's going to happen with the existing SODRAC staff -- will you be closing that operation?
Not fully no. We are transferring all the employees of SODRAC, at the date of closing, so they will transition to a SOCAN contract. We will, of course, re-organize the business lines over time. It will take between six months and a year to fully go through transition time between what was, before closing, what is two separate organizations and what is, on paper at least today, one independent organization. So we will re-organize. We will do this, but we've added the SOCAN staff at this point, so they are a resource and we will optimize as we always do at SOCAN.
Eventually everything will just be under SOCAN right?
Absolutely. The SODRAC name will disappear and the SODRAC staff will move to the Montreal office, between six months to a year maximum: A completely integrated operation, SOCAN is in charge, SOCAN values will apply, SOCAN good customer service will apply. It will be a different offering compared to the SODRAC offering, a different philosophy, and we are quite excited to be able to present that to our rights holders, the writers, but above all the publishers nationwide. The reproduction rights will be with SOCAN.
Could you have done this successfully five years ago? Or is it something tied in with the data management systems that you've been purchasing and now have in place?
We believe that SOCAN was able to do this five years ago. Four or five years ago, we were really attempting to ignite the three organizations, SODRAC and CMRRA, so that was the focus. When it became clear that this would not be possible, then everybody probably decided to reflect a little bit until we restarted the discussion. Those days are not easy, even in our world; there are some details that need to be ironed out. We could have been doing it with what we had at the time, but we are only stronger now with, for example, the older sound recording information that we've acquired from the MediaNet transaction a couple of years ago, the 67 million sound recordings that, of course, in this environment are a tremendous help in auto-matching streaming content.
So it's not software available now to better integrate tracking that maybe wasn't in existence five years ago?
It's not critical for that, actually, because it's applicable to performing rights as well. And with all the struggles that many organizations around the world had with coping with the 10,000-fold increase in operations, you have to manage both performance and reproduction acts, so it's value for both rights. It's critical for SOCAN to manage as accurately and as efficiently as possible with as little human intervention as possible. That's how you deal with the volume. That's how we say you drink from the fire hose without choking.
Those new data points that we've acquired through those other moves that we made, made it possible to really keep up with auto-match rights on streaming. That helps and that presents an advantage for the owners of mechanical rights because that high auto-match rate and capacity to limit the unidentified reproductions means more accurate distributions and, hopefully, putting more money into everybody's hands, including the publisher, the individuals, the unpublished songwriters and composers, but also the big publishers who are SOCAN members, as well.