Downtown Music Publishing Exec: SoulCycle, Fitness Centers Represent Major Licensing Opportunities
August 11, 2015 at 1:13 PM (PT)
Writing on MEDIUM.COM, DOWNTOWN MUSIC PUBLISHING VP Business Affairs & Operations ANDREW SPARKLER points to successful fitness/upscale spin company SOULCYCLE's upcomingt IPO as an excellent example of the performing rights organizations' overlooking a valuable source of music licensing revenue in their concentration on streaming services and Internet radio.
With instructors claiming "music is the most important part of what we do at SOULCYCLE," SPARKLER questions whether ASCAP and BMI are maximizing the fees being paid by these fitness centers under "general licensing," an umbrella classification which covers bars, restaurants, hotels, concert venues, sports arenas and other businesses not classificed as television, radio or new media, which accounted for $226 million of the combined $1.88 billion collected by the two PROs in 2013. That compares to the less than $90 million collected from new media licenses in that same period.
As part of its IPO filing, SOULCYCLE lists total revenues of almost $112 million in 2014 from 36 existing locations, with projected 2015 income of $140 million, and plans to expand to 250 locations with expected revenues of $775 million.
SPARKLER points out BMI's music license for fitness clubs states the maximum fee for a gym like this shall not exeed $2,123 a year, which is .01% (1% of 1%) of a single location's $3.1 million in revenue in 2014.
SPARKLER reveals that fitness center revenue has increased over 104% in the U.S. since 2000, concluding that both ASCAP and BMI should look to this potentially lucrative area in lieu of their battles against new media.
"Of course, increasing fitness club revenues and improving distribution accuracy are not a panacea for the PROs, but they do represent actionable items that would make a very meaningful difference to songwriters. Thankfully, the new leadership of both ASCAP and BMI have publicly stated their intent to innovate. But in order for them to thrive in this fiercely competitive environment, perhaps both organizations can clip in and start peddling along a bit faster."