*This article was published in FYI Music News on September 10, 2015 and is reproduced here with the permission of the writer, David Farrell.
Robert Ott isn’t exactly a household name at home in Canada but over the past eleven years he has quietly built a global empire out of Toronto, transforming a music publishing start-up into a global music rights juggernaut that has invested close to 500 MILLION American dollars acquiring catalogues and content. The company is ole and today it controls catalogues that include songs recorded by artists such as The Backstreet Boys, Beyonce, Blake Shelton, Britney Spears, Carrie Underwood, Eric Church, Jay Z, Justin Timberlake, Kelly Clarkson, Madonna, Michael Jackson, One Direction, Rihanna, Rush, Taylor Swift, and Timbaland.
Last year, ole was honoured with the US Independent Music Publisher of the Year award, recognizing the firm’s extraordinary accomplishments, including successfully placing ole legacy co-writer Chris Wallin’s song “People Loving People” on Garth Brooks’ comeback album, Man Against Machine. The song became Garth’s first single since 2007.
This week, the Canadian Country Music Association is honouring Ott with the 2015 Leonard T. Rambeau International Award in Halifax. This CCMA Award of Achievement recognizes an individual who has demonstrated extraordinary effort in assisting the aims and initiatives of the Canadian country music industry internationally. FYI caught up with this exceptional entrepreneur shortly before he flew out to the Maritimes for the Country annual gala. This FYI Music ‘Conversation with …’ offers insights into the company’s extraordinary growth, the complex world of song publishing and rights management, and leveraging assets in the digital age.
I’ve heard it said that you were born to be a music publisher. Give us a thumbnail on those really early days when you spent time playing in Top 40 cover bands in high school and college, and then moved into the music publishing world in the mid ’80s with your first publishing company, Lunar Music.
When I was playing in bands during high school and college, I’m not sure I had aspirations beyond the weekend ahead. When I then got a bit more serious, I realized that I was always the guy who organized the shows, created the set lists, and made sure we were paid. I had a natural affinity for the business side of things. I never wanted to be second best at anything, so I had to figure out what my personal strong suit might be, what I loved, and then how to bring those things together.
I always loved songs, even more than certain artist interpretations. I learned that publishing was the sector of the business that was involved at the inception of the song with the writer, with the development of the story of that song, and the writer’s career. At the same time, that this was a complex, detail-oriented part of the industry, and certainly the road less traveled. All of that worked for me, though to some, it was like aspiring to be the triangle player in the band.
I started Lunar Music when I was 19. I realized that I needed songs and approached Sam the Record Man with the idea that they circulate posters I had made in their stores across Canada. The posters were a take-off on the U.S. Marines poster featuring a soldier with a guitar and the tag line, “We’re looking for a few good songs.” I got 3,000 tapes in the mail, but only one good song! Not much has changed on that front…
From there, I signed a couple of writers to up the quality odds and started producing airplay records of the best songs that would make enough money to keep the machine rolling. In those days I was the publisher, producer, label, marketing department, radio promoter, etc. The original 360. I learned a lot during this era about what it takes to go from the inception of a song to the dollars.
You then made a pitch for venture capital to establish the rights management company. Was it an easy pitch or did you get a lot of rejections, and how were you able to convince the ‘suits’ that you could deliver better returns on a constant basis than other market instruments?
Near the end of my seven-year tenure running BMG Music Publishing Canada, I was in discussion with some Bay St. private equity players who liked the annuity nature of music publishing royalties. At the time, and still today, these funds were feeling unsettled about their reliance on the stock and bond markets. Moreover, they wanted something that was anti-cyclical to the markets. That, even more than the returns, was what they needed to be convinced of in regards to rights management. Actual experience has proven to me that our sector really is non-correlated to markets, and therefore, it will remain attractive.
Ole describes itself as “Majorly Indie.” What were your thoughts behind the company philosophy represented by that phrase, and do those things still apply in today’s changing music market?
When you get started, it’s important to know what your core values and vision will be. Not only because it’s a touchstone as an entrepreneur when the tough moments appear but also so that as your culture widens, everyone inside and outside of the company understands how to behave and what to expect of you. Majorly Indie means that we set out to have the reach of a major in terms of global scope, infrastructure, and more while never losing the personal touch of an indie with our stakeholders, clients, and creators and retaining that flexible, entrepreneurial, indie attitude.
From the beginnings of the company about 11 years ago, ole has been very aggressive in making acquisitions. What was the philosophy behind that, and has any part of that philosophy changed over time?
In order to patiently develop great talent, you also have to have cashflow and satisfy investors. Buying catalog is one way to establish cashflow in the near-term so that you have that time to develop the writers to create the great songs that will pay future dividends. We also felt that we could collect and add value to assets in a better way than some other vendors because of our scale, resources, and outlook. We remain very aggressive in this area and, if anything, are getting more aggressive. We’ve deployed around $100 million per year on average for the last three years.
Ole’s acquisition of the music publishing catalog of Sony Pictures Entertainment for film and television releases between 1993 and 2012 was a real game-changer for ole. How did that come about, and what were the implications for the company?
This was a transformative deal for ole. We had built a great, efficient company, but this deal doubled our revenue overnight and radically increased margins to 70%. This obviously has an incredibly positive effect on our ability to attract capital for more acquisitions. The process was an auction and very competitive between 10 or so parties, so it was a great test of our internal M&A capability. The outcome speaks to the maturity of our deal-making capabilities – we simply have the best team in the game.
You began the move into the production music space in the spring of 2011 with your own division Clear. Over the past four years, ole has built that presence through the acquisition of The Music People, MusicBox, and more recently, Jingle Punks, which has created one of the world’s largest production music libraries. Going back five years, what were the opportunities you saw that made ole move so aggressively into this space?
Developing a production music division (or, as we think of it now, branded music), has always been an aspiration. It’s a very complementary business for ole and even more so now given how the Jingle Punks come at it. These guys are so aggressive and entrepreneurial it’s inspiring. We’ve always thought that adding value and being proactive about creating new business is what makes a company great. Jingle Punks is 100% value add, and the numbers they generate are astonishing. I’m very excited about this vibrant and complementary platform at ole.
You seem to be acquiring and making larger acquisition deals year by year. What type of companies or catalogues out there would be on your radar next?
Some of our current expansion targets include master catalogs, A/V catalogs, A/V Over the Top (OTT), digital distribution rights, and developing digital content. We’re well capitalized to continue our acquisitive behavior going forward.
Do you ever cold-call companies/catalogues that you’d like to acquire that may not already be on the block (for sale), or are these always brought to you by lawyers and brokers when they are known to be for sale in the marketplace?
All the time. We develop most of our deals internally and view ourselves as a solution provider for both larger companies and those with core businesses that differ from ours. We come to these players with ideas for revenue generation, service relationships, capital gains, and more. This is one of the major ways that we stay out of auctions and deals that are too rich.
After establishing yourself so significantly in country music and Nashville first, then television and film music, followed by pop/urban with the Rami Yacoub and Timbaland deals, progressive rock with the Rush deal, and more recently, your serious entree into production music with the Jingle Punks company acquisition, what is next?
It’s our strategy to buy and build platforms. You’ve noted some areas above that denote genres and sectors. We intend to build scale on all of these and many more. A new emerging key sector is data, and I would expect to see us show up in that space. We already own patents for technology such as search functionality for production music, and we’ve also built some leading-edge data analytics software for copyright management that has been a game changer for our clients.
You got your first major executive position with BMG Music Publishing Canada. Tell us how that came about and the story behind that very professional resume you put together that obviously impressed the executives over there.
I used to have a book of contacts that I would call every month no matter what to gain intel on the opportunities out there. There were a few hundred names in the book, so this was a big job and also expensive in an era when phone bills weren’t as cheap as they are today. Sometimes, it was between making the rent and making the calls.
I learned in advance that the gentleman who had the job at BMG was going to leave and asked him if he would put in a good word. He did, and then I called Ron Solleveld, who was in charge in New York, and made my case. Six months later, I got the role. I remember the eventual job interview – one question – “What have you been doing lately?” After 90 minutes on that topic, I got up and left the meeting. Got the phone call the next day. Ron was obviously an astute assessor of talent — smile.
I had moved to Los Angeles in my mid-20s to progress my music business career, and I figured I needed something “Hollywood” to stand out. So, I made up a three-fold brochure that sold me as a product. That was my resume. I reiterated this for the BMG opportunity. It was always a surprisingly well-received idea.
Now that you have acquired the masters and song catalogues of iconic and historic Canadian labels Anthem Records and Mark-Cain Music Publishing, is this likely to become a new trend for ole? Buying other Canadian (or international) indie labels’ masters and publishing catalogues combined? Or buying more masters, period?
We don’t do one-offs, so I think it’s fair to say that we will go further down this road.
You have offices in Nashville that keep your ear to the ground in country music and in Los Angeles that keep you visible with the pop/urban acts. You also have the ole-Bluestone co-venture with Timbaland and other co-ventures with Chris Taylor’s Last Gang Entertainment and Ron Kitchener’s Roots Three Music. What’s next, offices in Asia, London, Europe, or more co-ventures?
We’ve been very careful about going beyond North America, where we have offices in Toronto, New York, Los Angeles, Nashville, and Santa Monica. You can over-extend yourself pretty quickly and learn some hard lessons about general overhead, foreign HR, taxes, and other situations. It would be my preference to keep the ole footprint to North America and continue to develop our direct collection relationships or act via strong local partners in other jurisdictions, as we do now. We’re going to build on the platforms we’ve established and expand into some of the new ones that I’ve described above.
Do you see ole in a position to soon start buying out its international competitors?
This is always on the table, and we certainly would at the right time and right price.
You recently established ole’s own YouTube channel. How is that going? Are you able to better monetize your songs this way?
We have established an MCN with more than 3 billion views to date. Given our scale, we wanted to have direct relationships here to collect and monetize ole’s massive copyright catalog and to serve our roster and other stakeholders in a proactive manner that includes creating our own content. We’re doing ground-breaking deals and have begun to host full A/V catalogs on YouTube for our film/TV clients, which is an entirely new extension of our service offering.
Tell us about the formation of ole Digital and your expectations for that division moving forward.
I often say that this division of our company is building the house that we will all move into. It’s obvious that our industry’s future is online and digital, so we want to be on the front of that trend. As a company, because we’re so heavily involved in the A/V space, we are going through disruptive change not only in music but also in TV and film. Being of service to and advocating for our clients now will help us better understand the challenges we will face and allow us to develop solutions for the future. The “ostrich” approach will not work in this area.
It’s no secret that you are driven to keep ole on the leading edge of technology. What are some of the processes and systems that you have put in place that you are particularly pleased with at this point?
I would say that our proprietary copyright collections data systems are very important for us and will lead to important partnerships within the next year. There are two key areas that any modern rights management company has to be focused on today. Content is certainly still king, but there are sectors that have realized the importance of building and charging tolls on the highway on which content travels. There are a lot of parties taking advantage of owning the ‘highways’ these days and benefiting disproportionately. Without excellent data analytics, monitoring, and collection, there’s no point in owning content.
Keeping order of the billions of data code flowing in from an exponentially expanding universe of online music companies must be a huge challenge, and chew up a considerable amount of cash. People think transparency is the click of a button, but it’s anything but. I know this is a growing issue for the societies. Can you comment?
We rapidly went from processing a couple hundred thousand lines of data per quarter to processing a hundred million. This is an exponential issue in terms of understanding data, and no one has it figured out yet, especially those with massive legacy system issues. One major issue with transparency is bad deal-making with new services in which they aren’t required to provide granular reporting. Garbage in, garbage out. I think the industry has to stand up for itself and demand clean data vs. false imperatives to ‘get the deal done.’
If you were in a position of political influence in Washington and Europe, what legislative changes would you make insofar as copyright ownership and remuneration?
In a perfect world, I would get rid of the consent decrees in the U.S., which are blatantly out of date and could hinder efficient, central licensing in publishing. I would create better equity between master and publishing streaming rates rather than the current ~12:1 and enforce clean, transparent data reporting from services using our content to drive billion-dollar market caps. And that’s only for Monday…
In general, what are your feelings today about government legislation, or lack thereof, affecting the music publishing industry?
My feeling is that the publishing industry itself is somewhat to blame for creating this situation because we don’t aggressively get ahead of our issues publicly and with government. We’re far too reactive for an industry that is so economically and culturally important.
I’m not sure why the government is so involved in setting rates for our business in the modern era. Currently, this situation is being successfully leveraged by third-party services to create massively inequitable payment for content and establish their own forced monetization schemes. It’s like being in a fist fight with both hands tied. Looking back in a few years, I believe we’ll see that digital services made far more money off our content than we ever did. What other business sector outside of a farm co-op would be forced into this kind of situation?
It’s always interesting to me that when it’s time to show the world what Canada is all about, like with the Olympics, we always put our artists out front. But when it comes to protecting them and our content industry, we put them last. I don’t believe that there are user rights. Content is an asset like any other, and there are owners and customers, just like any other business. Can I just go down to a car lot and take a car because I believe everyone has a right to have a car?