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Warner Music’s Global Deal for BMG’s Catalog Sets Up Showdown With RED

The first high-profile release from BMG's new consolidated distribution deal with the Alternative Distribution Alliance will be Blink 182's seventh studio album, California, which is expected to hit…

The first high-profile release from BMG’s new consolidated distribution deal with the Alternative Distribution Alliance will be Blink 182’s seventh studio album, California, which is expected to hit the street on July 1.

With the addition of most of the BMG catalog to its offering, Warner Music Group’s ADA will once again be challenging RED as the largest indie distributor in the U.S. RED has been hovering around the 4 percent market share mark for the last three years, while ADA fell to 3.17 percent in 2015, from 3.44 percent in 2014, and 4.01 percent in 2013.

So far this year, ADA has bounced back to 3.6 percent under the regime of Eliah Seton, who was named president in April 2015 and who sources say is finding his footing. Sources say he was instrumental in bringing the BMG deal to WMG, which was first reported by Music Business Worldwide.

According to sources, BMG’s record label operations is already generating about $100 million globally, and about one-third of that is in the U.S. While BMG began its revival in 2008 by first pursuing music publishing opportunities, after it completed the sale of its music assets to Sony Corp., it actually held back about 200 album master recordings from the Sony deal. But it wasn’t until 2013 when it acquired Sanctuary and Mute as part of the divestiture’s the Universal Music Group made in order to keep the EU Commission’s regulatory agency happy about its EMI Recorded Music acquisition, that it began aggressively pursuing a recorded music strategy too. Since then, it has also acquired Union Square, Infectious, S-Curve, Vagrant, and Rise.

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With all of those acquisitions, it inherited more than 50 distribution deals around the globe, sources say. While it is consolidating most of its releases with ADA, the deal allows for some carve-outs. “We intend to continue our successful relationships for selected releases with Sony Music internationally, with PIAS (ex-US), Absolute Label Services (UK), and GoodToGo (Continental Europe),” according to a memo — obtained by Billboard — written to BMG employees by the company’s CFO Dr. Maximilian Dressendörfer. Moreover, that letter stressed that it would honor commitments to current suppliers, with sources saying that product would shift as the various distribution contracts expire, most of which is set to occur later this year, if not in 2017. So for the time being, the ADA deal will concentrate on new BMG releases, those sources say, except for Rise, which has already been with ADA.

Since 2013 it has been aggressive in making both music publishing and record label acquisitions, but BMG has moved strongly into organic growth through songwriter and artist signings too.

In the U.S., it already has signed and released such albums as Janet Jackson‘s Unbreakable, which has scanned 253,000 in the U.S.; Iron Maiden‘s Book of Souls, at 166,000 units; and Alabama‘s Southern Drawl at 74,000. Other signings include Bryan Ferry, Rick Astley, Alt-J, Danny Gokey, Jack Savoretti and Within Temptation, as well as OK Go and Emerson Lake & Palmer for Europe.

In order to handle its release schedule, the BMG team has about 55 staffers between its Los Angeles operation and Rise Records, with Jon Cohen heading up the label day-to-day operations in the U.S. According to the Dressendörfer memo, the company has assembled a steering committee to implement its new supply chain arrangement, coordinated by Ben Katovsky and including Silvia Montello (operations), Dan Macleman (finance), Peter Stack (catalogue recordings) and Alistair Norbury (frontline recordings).