Hartwig Masuch on BMG's coronavirus response

Hartwig Masuch

Yesterday, CEO Hartwig Masuch talked us through BMG's stellar 2019. But 2020 has been hit by the coronavirus pandemic, which is having a huge effect on every sector of the music business.

So how is a company like BMG – the fourth biggest label in the UK and also a global publishing powerhouse – dealing with the crisis?

Well, nearly 900 BMG staff worldwide are now working remotely – a transition helped, BMG says, by access to its single global technology platform, which combines the company’s recorded music and publishing operations. Similarly, artists and songwriters are being updated via the MyBMG app.

But two staff members have so far tested positive for the virus and BMG is battling the pandemic’s negative impact on live performance, sync and physical sales.

Nonetheless, Masuch sounded relaxed when he called in from his home outside Berlin, where he has, he said, been doing a lot more cooking than usual during Germany’s lockdown.

“It’s a very different life to going to the office every day,” he said.

His growing global staff are going through the same experience, but Masuch says the company benefits from its manageable staff levels, rather than having to manage thousands of people all working from home.

“We’ve always looked at possibilities to work remotely,” he says. “And we always set very flexible arrangements. Right now, 850 people can work from home and we don’t see any impact on our ability to market and keep things going. Which is very comforting.”

Our main concern is to make sure our creative partners keep their ability to deliver music

Hartwig Masuch

The company, which has found huge success with deluxe physical releases but also has a burgeoning streaming presence, is placing greater emphasis on digital marketing during the crisis.

“The physical side is obviously impacted through retail closures, but wherever there’s a chance to interact with the market, we use it,” he said. “We are focusing massively on digital marketing opportunities and looking at our skillsets. How can we increase digital and social media presence for our repertoire?”

BMG’s 2019 results showcased a powerhouse performance, with revenues soaring by more than 10%. But Masuch admitted the pandemic would have an impact on next year’s figures.

“There will be a couple of months with a massive impact on the physical business which we can’t ignore, especially if we don’t try to overcome it by acquisitions,” he said. “On the other hand, acquisitions might be coming to the market after the crisis, some catalogues might become available because people are more aware about the long-term [prospects] of capital markets and the economy in general.

“But, on a like-for-like basis, it’s probably very difficult to come up with the same numbers, based on the fact that the physical business will suffer. Although the physical business is becoming smaller anyway and hopefully we can make good a lot of volume losses by better product through our D2C channels: fan editions and the like.”

No one yet knows how long the current situation will last, but Masuch expects an impact on EBITDA of around 10%.

“That wouldn’t be the end of the world, given the scope of this crisis,” he said. “But our main concern is to make sure our employees can overcome this crisis without too much damage, and that our creative partners keep their ability to deliver music. We don’t want the crisis causing them to give up their love for music to pursue other things. We really hope we can support people who run into trouble to stay on track.”

* To read Hartwig Masuch on BMG’s 2019 financial figures, click here. To make sure you can access Music Week wherever you are, subscribe to our digital issue by clicking here.

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