Ole’s first ten years has been nothing short of amazing. The Canadian company was founded on Sept. 28, 2004 by current Chairman/CEO Robert Ott and Chairman in Memoriam Tim Laing. It began with a $100 million investment from the Ontario Teachers Pension fund which currently owns all the ole publishing assets. That investment has now expanded to over $300 million generating an estimated annual NPS to be north of $40 million. Ole’s catalog includes over 45,000 songs and 60,000 hours of film and TV music.
Laing, whose career titles included investment banker, radio personality and broadcast journalist confided at lunch with this writer a few years ago that the the initial Pension Fund investment had been secured by showing that publishing was a highly diverse investment compared with the fund’s more traditional holdings.
Prior to launching ole, Robert Ott was VP/GM of BMG Music Publishing Canada. He is a five time past President of the Canadian Music Publishers Association and current board member. He also sits on the Board of the Canadian Musical Reproduction Rights Agency (CMRRA). Ole, now one of the world’s ten largest publishers, is known as a savvy buyer of catalogs, the most recent of which was from Rush and estimated to have sold for about $25 million.
In the following NEKST interview Ott discusses why he remains bullish about buying catalogs in a singles driven world and how he values them. He speaks about publisher issues such as Consent Decrees, explains why music publishers are now becoming rights management companies and shares the three point plan which ole has successfully followed.
NEKST: When you launched ole what was your strategy to grow the company? Have you held true to that plan over the past ten years?
Robert Ott: Well the good news is that we did have a plan. Our three point strategy was pretty simple. One was to make profitable acquisitions, the second was to add value to those properties once we acquired them, and finally to establish and build a brand. We had a bit of insight at the time into how Napster and Torrent sites (file sharing) were affecting the mainstream music business so we were able to navigate that situation a little bit by focusing on an area of music we felt was under serviced—film and television music. We put a great deal of effort into acquiring TV and film assets and building an admin business in that space. It was—and still is—part of our core strategy.
NEKST: Are you still bullish on buying catalogs in today’s singles-driven world?
Robert Ott: Yes, it’s more of a singles market today, but a lot of these catalogs, for example Rush, were created when there was an album market. The music was distributed as albums and therefore are in the environment on a more global basis as complete bodies of work which makes them attractive. The job becomes more about policing the royalty environment and then adding value to the works by promoting them to sync and in other ways. That’s where the add value part becomes dominant.
NEKST: How do you value a catalog to determine a good deal?
Robert Ott: Everything has a price, but some things have prices you shouldn’t pay. A catalog’s past performance is a predictor of the future so you have to look at it first, then decide what you think the future might hold for the songs and also what you as a company can bring to the party. If you actually can make good on the promise of being proactive, adding value and doing a great job in administration, then you can probably afford to be a bit more aggressive.
NEKST: By aggressive you mean bid a bit higher for it?
Robert Ott: Exactly. When ole began we were always very conservative because we wanted to be around for the next year. [laughs] We couldn’t afford be too adventurous. Now as a more mature company, it’s sometimes possible for us to be selectively aggressive when we want to be.
NEKST: Your initial investment of $100 million has grown to over $300 million!
Robert Ott: We’ve continued to deliver on the promise to be profitable that we made to our investor ten years ago and we aren’t planning on disrupting that trend anytime soon. I’ve certainly heard a lot of doom and gloom over the years that the end is coming, but we haven’t seen that at ole. It’s been 10 years of solid growth and the last 18 months we’ve had around 150% growth! It’s been a great ride so far which I put down to the fact that we have really amazing people. As I’ve said many times in my quarterly addresses to the company we are only 60 people, but we aren’t just any 60 people. We’ve gotta be the best in order to compete as a relatively small company against a much bigger industry.
NEKST: You’ve have offices in Toronto, LA, Nashville. What’s your hottest location and are you planning to add another?
Robert Ott: Each area does different things. Nashville of course covers the country music business and LA handles Pop/Urban plus sync and licensing. We also have an LA production music company, Music Box, that is very successful. Toronto handles the administrative, finance and human resources backbone of the company plus a lot of additional back office functions. So each business location has its own mandates and unique reasons to exist. They are all strong in their own way. For the short term we will remain in that configuration. Our goal for many years has been to fight the war on two fronts; Canada and the US and not to overcomplicate the situation by moving overseas. Although I should add that we have numerous direct relationships with foreign collectives so that we can be more directly aware and involved in those collections.
NEKST: Speaking about collections how does your admin business operate?
Robert Ott: About 90% of our admin assets are directly owned. Doing a great job collecting royalties from all those assets is essential and no one looks after your money the way you do. So we immediately built a strong admin business. Another thing we’ve done which I don’t think you can buy from a third party is how we’ve customized our data handling. I read a statistic somewhere that says that 90% of the world’s data has been created in the last two years. I can vouch for that in the publishing world. We’ve gone from 100s of thousands of lines, to millions of lines of data. To help support that load we’ve built software that not only solves for what’s there, but solves for what is not there. Anybody that feeds that job to a third party had better hope they are also building tools like that to assist them in policing their works around the world. Data analytics and building a strong infrastructure is critical for the future of IP and we have been focusing hard on that area. Of course having external admin clients is good business and keeps you on your toes. The process of delivering great client service forces everyone to be better internally.
NEKST: A big issue for U.S. publishers is Consent Decrees. Would you like to see them changed?
Robert Ott: It doesn’t seem possible for music publishing to continue to exist in a non free-market environment when other parts of the music industry are all operating in a free market. I can’t come over to your house and use your car just because I like it. I have to rent it or make a deal with you in a free market. For some reason that doesn’t apply to music and intellectual property. It seems like it’s a human right to access our property which is unique in the U.S. business environment. The Consent Decrees have to be amended so our business can be allowed to reorganize itself and develop for the coming decades.
NEKST: Streaming music or access appears to be the future, but the companies are all struggling economically. Is there a model for them that can work?
Robert Ott: There are exciting streaming business models that can work for the same reasons radio works. For example, value add types of services that create playlists and help people make sense of the music environment like radio used to do. I miss not having more local programming where you heard about new music in a way that educated you about where it came from, who the band was and why they wrote the songs. Streaming services have an ability to fill that gap. I’m glad to see lot’s of streaming competition, it’s good for publishers and labels.
NEKST: What’s the future for publishers look like?
Robert Ott: I expect the modern era will include doing a lot more artist development and it’s an exciting trend. Lately, we’ve adopted the business nomenclature of Rights Management, seeing ourselves operating in a broader rights management role. In that direction we have a direct deal with YouTube and are managing assets on behalf of clients in the master and audio visual realms. We are also in the secondary rights business, audio visual retransmission and I see us getting into neighboring rights in the near future. Music publishers have a natural ability to manage complex rights environments and data sets so it is our role to extend the scope of our rights management activities. We’re excited to be celebrate our tenth year in business. We’ve stuck to our three simple goals and built an incredible staff. Sometimes keeping things simple is the key to success.