For much of the last decade, Spanish collective management organization SGAE has been part of one of the strangest stories in the music industry. Over the years, the collective management organization compounded inappropriate behavior (“Going to brothels after dinner was normal,” said former senior executive Pedro Farré El País in 2017) with an entertainment-only rights accounting system called “la rueda” (the wheel), in which TV companies played music they controlled rights to in late-night broadcasts at barely audible levels in order to get back some of the money they paid SGAE in royalties.
Such songs became known as “witches' music” as they were played during the “witching hour”, often on astrology programs that could last for hours, and some were slightly altered arrangements of classical public domain compositions registered to television executives and their relatives. In 2017, police raided SGAE's headquarters.
How much of it was fun, as opposed to outrageous, varied directly with whether any of the money belonged to your company or the creators you worked with, and in May 2019 the collective agency trade association CISAC took the unusual step of ejecting of SGAE. Within months, hundreds of creators notified SGAE that they intended to withdraw their rights, and alternatives began to emerge, including Barcelona-based UNISON. This seemed to put more urgency behind the reforms already underway and two years later SGAE rejoined CISAC and began to rebuild the trust of creators, publishers and other CMOs.
Since then, SGAE has been stabilized and turned around, a process that has stabilized and gained ground under new CEO Cristina Perpiñá-Robert, who was appointed just over a year ago. Last year, the organization collected 349.1 million euros ($377.7 million, using the average 2023 conversion rate) and distributed 354.1 million euros ($383.1 million), according to its 2023 financial results, the which will be announced on May 10. (Distributions are higher than revenue in 2023 due to special payments from broadcasters received by SGAE in 2022 and disbursed in 2023.) These numbers represent 24.9% revenue growth and 26.6% growth in distributions and arguably underestimate SGAE's greatest achievement: Giving publishers and creators confidence that they are distributing rights fairly.
Over the same period, SGAE's copyright membership has grown from 36,956 to 83,148 as it celebrates its 125th anniversary. Perpiñá-Robert also helped make SGAE a digital rights hub for Latin American repertoire. SGAE also benefits from the worldwide popularity of Spanish-language music, especially a new wave of Spanish urbano musicians like Quevedo and Bad Gyal.
“For them to see SGAE as something that's not old and bureaucratic, that was really good,” says Perpiñá-Robert, who used to work at SGAE, then left for CISAC and returned last year. The Spanish CMO has never had the scale of SACEM (the French CMO) or PRS (in the UK), and this may not change – the Spanish economy is much smaller than France and the UK, but it could become a kind of specialized node. “Everywhere in Europe, local music is doing better,” says Perpiñá-Robert. But only a few countries manage to export this local music around the world.
Since the European Commission opened up competition between CMOs for online rights management, two major hubs have emerged for the licensing of music for online use in Europe and some other regions: SACEM and ICE, the latter of which are a joint venture of PRS, GEMA (Germany) and STIM (Sweden). (Each society still collects for offline use music in its home country.) They compete to represent rights from creators, publishers, and even other societies, and the conventional wisdom is that most of the smaller societies will depend on them, while these waists will be squeezed. But the rise of Latin music offers SGAEs another path forward.
“We're trying to become a pan-European hub for Latin American digital music,” says Perpiñá-Robert. SGAE collects online rights in Europe for all Latin American societies except those in Mexico and Brazil. (Some international superstars from Latin America sign directly to ASCAP or BMI, who do their own international deals.) With CMOs, scale leads to scale—smaller societies that don't have the resources to handle the volume of of data now needed to accurately manage rights are getting smaller, while larger ones tend to invest, grow, and then invest and grow more. And there's never been a better time to represent any kind of Latin music rights.
As SGAE improves its reputation, its past also gets another look. Former SGAE president Teddy Bautista, who once faced possible jail time on embezzlement charges, he was acquitted, with others. And even “la rueda” was more a failure of organizational governance than anything else: SGAE followed its own rules, but the broadcasters played by them.
SGAE continues to face its share of challenges, including being sued by UNISON for anti-competitive behaviour. But he's already made serious strides toward regaining confidence and could turn from a problem child to a serious player.
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