SOCAN Acquires SODRAC

By FYI Staff

Canadian music rights bodies SOCAN (the Society of Composers, Authors & Music Publishers of Canada) and SODRAC (Society for Reproduction Rights of Authors, Composers and Publishers in Canada) have merged operations, it was announced Tuesday.

The integration of the management of public performance rights and reproduction rights offers cost efficiencies and helps to leverage licensing arrangements with a varied set of clients such as broadcasters and music streaming services.

SOCAN has already made a foray into mechanical rights collections through its acquisition of US-based Audiam in 2016.  

The rights body reported revenues of $350-million in 2017 and a membership base totaling 150,000 songwriters, composers and music publishers. SODRAC has approximately 9,000 members, most of whom work in the francophone markets, and has revenues in the range of $7-million, but the agency has also seen a significant reduction in income with the decline in CD sales.

What follows is the official announcement made by SOCAN on Tuesday.

SOCAN and SODRAC integrate music rights management in Canada

 Both organizations announced today (Tuesday, July 31) that SOCAN’s acquisition of SODRAC has closed, enabling SOCAN to offer an integrated approach to the management of both performing rights and reproduction rights of songwriters, composers and music publishers.

The combination of SOCAN (the Society of Composers, Authors & Music Publishers of Canada) and SODRAC (the Society for Reproduction Rights of Authors, Composers & Publishers in Canada) is a historic moment for music rights in Canada, and broadens the choices available, notably for music publishers and self-published writers, for the licensing of the reproduction right.

For the first time in Canada, a single organization – SOCAN – will be able to license, track and distribute all royalties for both music performing rights and mechanical rights.

A transition period will result in the full integration of the organizations. Efficiencies in overhead expenses and operations will be sought and ultimately passed along for the benefit of members.

"SOCAN is thrilled to complete a made-in-Canada solution for music rights-holders in this country and worldwide," said SOCAN CEO Eric Baptiste. "This transaction fits perfectly with SOCAN's goal of leading the global transformation of music rights, and SOCAN's past and ongoing commitment to create alliances within the Canadian music ecosystem. With the full integration of SODRAC's assets and expansion into mechanical rights, the combination of public performance and reproduction rights increases efficiencies, leverages licensing relationships, and reduces operating costs, resulting in even more music royalties going to those who have earned them."

"The integration of SODRAC into SOCAN is the result of many years of discussions and negotiations," said Lise Aubut, Chair of SODRAC's Board of Directors and co-founder of SODRAC in 1985. "Today, this concentration of energy and resources has become essential in a context where markets are globalized, copyright media is de-materialized, 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."

The integration of the management of public performance rights and reproduction rights will have many advantages, including:

• One-stop musical works registrations.

• More timely and accurate distributions and reduced operating costs for all rights-holder members.

• Unified licensing for businesses using music.

• An à la carte representation of reproduction rights for all.

• Increased efficiencies through leveraged licensing relationships.

SODRAC's expertise in the visual arts and crafts sector, which involves more than 40,000 creators and rights-holders, will continue within SOCAN.

The SOCAN and SODRAC teams are hard at work to bring the companies together harmoniously. SODRAC's management team and employees will become employees of SOCAN. SODRAC's current General Manager Alain Lauzon will continue his work as a special consultant to SOCAN's CEO.

With SOCAN's innovations and acquisitions, including SODRAC, no music rights organization in the world has such a comprehensive ability to monitor, collect, and distribute royalties for music rights-holders. SOCAN is proud to offer an expanded suite of services to digital service providers, music creators and music publishers, benefiting its members, and positioning the company as the world leader in the digital music age.

SOCAN continues to power many facets of the Canadian music industry, looking for opportunities to lead the global transformation of music rights, providing leading-edge services to music rights holders. In 2016, the organization launched its Royalty Guru service and API portal, acquired Seattle-based MediaNet and New York-based music technology company Audiam

– Additional information is provided in an FAQ.

Q&A

Q: Why did SOCAN enter into this transaction?

A: SOCAN has long seen the opportunity to bring reproduction rights and performing rights together as a win for both rights holders and licensees. As many uses overlap there are obvious efficiencies to be gained that will allow more royalties to pass through to the rights holders.

Q: Is this a merger or an acquisition?

A: The transaction is a non-monetary acquisition of SODRAC assets by SOCAN. After a transition period, all SODRAC activities will be fully integrated with those of SOCAN and SODRAC will be dissolved.

Q: Did this transaction require the approval of SOCAN members?

A: No, there was no need for SOCAN members to approve the transaction, as SOCAN already has the right to administer reproduction rights, and any other right contemplated by the Copyright Act, pursuant to its articles of incorporation filed with Corporations Canada. That said, the transaction was approved unanimously by the SOCAN board of directors.

Q: Will SODRAC continue to run as it currently does?

A: No, in order to realize the efficiencies we want to provide, we will need to integrate the operations of SODRAC alongside SOCAN. We are also very happy to announce that starting immediately there is a new model that includes non-exclusive, a la carte options and lower commissions for certain uses.

Q. How does this fit in with Audiam?

A: Audiam continues to manage digital reproduction rights for their clients in Canada and primarily in the US. In Canada, the transition period will allow SOCAN to consider and implement further integration activities between all aspects of its operations, including Audiam, ultimately benefiting rights holders and licensees.

Q: Is the Reproduction Rights part of the business managed by SOCAN's Board of Directors?

A: Not directly.

The day-to-day operations of SOCAN, including reproduction rights, will continue to be the responsibility of SOCAN management. However, there will be a newly formed Reproduction Rights committee of the SOCAN Board, that will include directors of SOCAN alongside some of the directors who sat on the SODRAC board at the time of the transaction.

Q:  As a SOCAN member, will I need to join SODRAC in order to have my reproduction rights handled by SOCAN?

A: No, SODRAC will be dissolved. SOCAN will soon be able to let you choose if and how you would like SOCAN to manage the reproduction rights that you control.

If you are already a SODRAC member, you will receive a new service offer that will enable you to terminate your agreement with SODRAC and give SOCAN the right to administer your reproduction rights.

Q: As a SODRAC member, what do I need to do to ensure that I continue to receive mechanical royalties?

A: When you sign up with SOCAN for us to handle your reproduction rights, your agreement with SODRAC will automatically terminate, however your distributions will continue along the current schedule for the time being. We anticipate that distributions for broadcast mechanicals will soon improve as we bring them alongside the performing rights distributions.

Q: Will SODRAC continue to exist under that name?

A: SODRAC's services will be completely integrated into SOCAN's operations by the end of the transition period and the SODRAC brand name will be phased out. Eventually SODRAC will be dissolved altogether.

Q. How is SOCAN Reproduction Rights different from SODRAC?

A: The new offer allows publishers to select what they would like SOCAN RR to license onan a la carte basis, rather than a full assignment. This will provide more flexibility to publishers. Due to efficiencies in operating reproduction rights along with performing rights, we will also be able to offer lower commissions in key areas of digital and broadcast mechanicals.

Q. Will the information about my works that SODRAC has – including splits on the reproduction rights side automatically transfer over to SOCAN?

A: Yes, so long as you sign up with SOCAN we will handle migrating your data and you will not be required to re-register your works. The same applies for artworks, as we are also ensuring that all the information related to works of members in the visual arts & crafts sector migrates to SOCAN.

Q: Who do I call to talk about my Performing Rights and Reproduction Rights?

A: You will continue to have representatives to answer your questions including Reproduction Rights specialists. As we move through our transition, we will have consolidated statements for you and one representative to answer all questions.

Q: Will SOCAN/SODRAC's footprint in Quebec remain strong?

A: Yes. SOCAN has an important office in Montréal and SODRAC is headquartered in Montréal. We will continue to place strong emphasis on our collective focus on the Quebec marketplace. During the transition period, both teams will stay in place. As we move towards full integration, we foresee and look forward to an even stronger presence in Quebec.

Q: Will other rights that SODRAC manages continue to be represented?

A: Yes, the integrated services offering will continue to manage music reproduction rights as well as those in visual arts and crafts in Canada. If you are a member in the visual arts & crafts sector, SOCAN will, along with the key employees of SODRAC, take over the management of your exhibition, reproduction and public communication rights of use for your artistic works. Given the expertise and infrastructure of SOCAN, this transition is very positive for you as it means an efficient continuity of your services with a greater power of representation, negotiation and advocacy.

Q: What does this mean for the joint “CSI" approach between CMRRA and SODRAC?

A: We expect changes to unfold during the transition period. Based on preliminary discussions with CMRRA, it is likely that the "CSI" concept will be phased out over time

Q. Is SOCAN Reproduction Rights open to anyone?

A: If you are a publisher or a self-published creator then you can engage SOCAN RR to administer on your behalf for particular uses. If you have already granted your reproduction rights to a publisher, SOCAN will take direction from your publisher.

Q. How do I join SOCAN Reproduction Rights offer?

A. Even if you are a SOCAN member, this will not be automatic. On our website at www.socan.ca/reproductionrights there is an agreement that allows you to select which uses you would like SOCAN to represent on your behalf.

Q. If I decide as an existing SOCAN member to allow SOCAN to also manage my reproduction rights, will I have to re-register my works?

A: We have your works, so no need to register them again. However, we will require you to provide us the documentation on how to distribute the reproduction rights royalties (share splits.) In performing rights, the royalties are typically split between the publisher and creator. In reproduction rights the royalties are typically paid to the publisher.

Q: Will my data be used by Audiam?

A: We do not provide access to SOCAN data to any other company, including subsidiaries.

Q: Will I need to register works as 50/50?

A: No, we will ensure that the publishing agreement prevails in determining how the reproduction right shares are handled.

Q. If I choose SOCAN to represent my reproduction rights abroad, will the shares be revised to 50/50 or 33/66?

A: No, any foreign revenue will be paid according to how we submit the work details including the shares. This means, if you as a publisher are collecting 100% of the reproduction rights, that will be how the work is declared in other territories.

Q. What if I sign up to SOCAN as a creator and then get a publishing deal?

A: Once you sign a publishing agreement, your publisher now controls your reproduction rights. SOCAN will follow the terms you agree upon with your publisher, which typically means that SOCAN will adjust its records to collect and pay your reproduction rights to your publisher.

Q: What does this mean for the future of music rights consolidation in Canada?

A: It means the future is brighter than ever. SOCAN enjoyed another record-breaking year in 2017 in almost every financial aspect of its performing rights administration. SODRAC and SOCAN combining is great news for music rights in Canada, with a consolidated approach improving efficiencies, accuracy and, ultimately, more royalties for our respective members.

The agreement is great for businesses using music. With SODRAC and Audiam, the SOCAN Group is positioned to issue joint performing and reproduction right licenses for the rights and repertoire we represent.

At a time when Canadian Music is on top of the world, we are excited to be building a made in Canada rights management powerhouse, based on SOCAN's low administration costs, trailblazing transparency and world-leading data management abilities. The SOCAN Group already includes New York-based Audiam and Seattle-based MediaNet.

Q: Does this mean that music users will need to obtain yet another license from a new entity?

A: We are committed to finding solutions that will facilitate licensing in Canada and make the necessary processes easier at every level. This is a winning solution for both users and rights holders and we will collaborate with them all to maintain complete continuity.

Q: Does SOCAN have other expansion plans?

A: We continually look for ways to become a more efficient and multi-service organization as we deliver on the strategic vision, adopted by our elected board of directors in 2016 for the next five years, to lead the global transformation of music rights.