In his debut six months as CEO of the Bertelsmann<\/strong> company \u2013 a position he only took up on July 1, 2023 \u2013 Coesfeld has issued multiple executive orders that have completely changed the global strategy of the firm. Some quick examples:<\/p>\n For Coesfeld<\/strong>, these and other recent gear-shifts at BMG<\/strong> all come in preparation for what he calls “tectonic shifts” affecting the music rights business.<\/p>\n Some of these “tectonic shifts”, says Coesfeld<\/strong>, are being driven by changes in the way young people listen to and create music. But more than anything else, they’re driven by a clear slowing in the revenue growth curve of music streaming in mature markets like the US and UK.<\/p>\n When MBW<\/strong> sits down with Coesfeld<\/strong> in BMG’s Berlin offices, the German exec states that these changing growth patterns have been the “driving force” for many of his structural alterations of the company over the past six months.<\/p>\n \u201cEveryone can look at these music streaming numbers and see declining growth rates.\u00a0A company like ours must recognize these facts, and deal with them.”<\/p>\n Thomas Coesfeld, BMG<\/span><\/p><\/blockquote>\n We point to recent stats out of the UK<\/a>, which showed annual retail spend on streaming subscriptions up just under 10% YoY<\/strong> in 2023 \u2013 a year when the likes of Spotify<\/strong> raised their flagship prices by the same percentage. (Conclusion: last year’s growth in the UK market primarily appeared to be achieved through price increases, rather than attracting new subscribers.)<\/p>\n \u201cEveryone can look at these streaming numbers and see declining growth rates,” says Coesfeld<\/strong>. “Growth will look different in the next five years compared to the past five years; a lot of the key drivers of previous growth, in terms of geographies, are getting closer to saturation point. A company like ours must recognize these facts, and deal with them.”<\/p>\n Adds Coesfeld<\/strong>: “I went over one of [MBW\u2019s] daily news briefings the other day, and there\u2019s a clear emerging industry consensus that the market is changing. I am very happy that we at BMG<\/strong> came to that conclusion very early on.\u201d<\/p>\n Interestingly, Coesfeld’s reaction to the “tectonic shifts” in music has seen him outright reverse several flagship initiatives of his predecessor in BMG\u2019s CEO seat, Hartwig Masuch<\/strong>. (Coesfeld acted as Deputy CFO and then CFO of the company, under Masuch, for two years before taking the Chief Exec position in 2023.)<\/p>\n In addition to the swift closure of BMG\u2019s film\/TV<\/strong> and live music<\/strong> initiatives \u2013 both launched by Masuch \u2013 Coesfeld has just announced the promotion of Thomas Scherer,<\/strong> formerly BMG\u2019s de facto<\/em> head in the US, to run BMG\u2019s global recorded music catalog division. (Scherer continues to additionally run BMG\u2019s US publishing operation).<\/p>\n This too effectively undoes a Masuch initiative: the merging of BMG\u2019s<\/strong> catalog and frontline marketing functions in recorded music, announced as recently as April 2023<\/a>.<\/p>\n And to cap it off, Coesfeld<\/strong> looks set to slash BMG’s ties to Roger Waters<\/strong> \u2013 a tentpole artist for the firm during the Masuch era \u2013 over the Pink Floyd star’s comments on Israel.<\/a><\/p>\n “I always come back to: What works for the artists and the songwriter, and what works for the fans? If something we’re doing is not adding any value to that, then there is no need for it.”<\/p>\n Thomas Coesfeld, BMG<\/span><\/p><\/blockquote>\n “Hartwig turned BMG<\/strong> from nothing, from a startup company, into a big company \u2013 the fourth largest self-distributed company in music,” says Coesfeld<\/strong>. “After 15 years under his leadership, that’s a phenomenal achievement.<\/p>\n “But the reason I acted so quickly here is because I’m convinced that, after a decade-plus of fast growth, you need a certain amount of consolidation internally. You need to say: ‘Okay, let’s recap. What worked? What didn’t?’<\/p>\n “I always come back to: What works for the artists and the songwriter, and what works for the fans? If something we’re doing is not adding any value to that, then there is no need for it.”<\/p>\n Specifically, we ask Coesfeld<\/strong> about BMG’s film\/TV unit \u2013 which this year boasts two Grammy-nominated productions in Moonage Daydream<\/em> and Lewis Capaldi: How I’m Feeling Now<\/em>.<\/p>\n “I looked at it and quickly figured that, to make real strides in film, you need to be much larger than we are,” says Coesfeld. “Only then do you really have a chance to win in that field.\u201d<\/p>\n He adds: “We are a relevant, large player in music, but we are definitely not a major. Clearly BMG is in a different spot to the ‘big three’; there are things we can accomplish, and things we can’t accomplish, given our size.”<\/p>\n Coesfeld’s fair estimation of BMG’s size<\/strong> versus the music rights market\u2019s giants also seems to sit a little in contrast to his more naturally oppositional predecessor, who once proclaimed BMG<\/strong> as “the fourth major”<\/a>.<\/p>\n This perhaps helps inform how and why BMG<\/strong> was willing to jump into bed with Universal Music Group<\/strong> for a new physical distribution partnership<\/a> in recent months. Is Coesfeld<\/strong> ushering in a more collaborative attitude at the music company than we saw in its grow-fast-and-break-things era?<\/p>\n “Collaboration and having an open mindset is usually a good prerequisite for doing business with people. Philosophically, that is the spirit with which I want to steer this corporation.”<\/p>\n Thomas Coesfeld, BMG<\/span><\/p><\/blockquote>\n “I am firmly of the view that when dealing with corporations, you are dealing with people,” he says. “Collaboration and having an open mindset is usually a good prerequisite for doing business with people. Philosophically, that is the spirit with which I want to steer this corporation.”<\/p>\n Indeed, Coesfeld<\/strong> is broadly supportive of efforts from Universal’s leader, Sir Lucian Grainge<\/strong>, to shift streaming royalty payments towards professional artists via “artist-centric” royalty models that have already influenced the likes of Deezer and Spotify<\/strong>.<\/p>\n \u201cI absolutely welcome the discussion because streaming economics need to change,” says Coesfeld<\/strong>. “Artist-centric is a good step forward in the right direction to fight technologies which are basically playing the system and taking away royalties from rightsholders and artists.”<\/p>\n He adds: “I’m glad that Universal, as market leader, is taking a first step in that direction.\u201d<\/p>\n Despite Coesfeld’s<\/strong> realism about music\u2019s slowing streaming revenue growth, he remains bullish about the broader future for music rights.<\/p>\n Like Sir Lucian Grainge, he is a believer that ‘superfans’<\/strong> will be willing to pay more for a closer and\/or more specialized digital relationship with their favorite artists.<\/p>\n Coesfeld<\/strong> also believes there is substantial headroom for the major streaming services to increase their prices in future.<\/p>\n “If you just look at the impact of inflation on the value of money since Spotify<\/strong> launched in the US 13 years ago, that alone would mean that the price should now stand somewhere else,” he says.<\/p>\n “Then if you compare what an hour of consumption costs consumers today between different media \u2013 music, video, and others \u2013 it’s clear that music is still underpriced. That\u2019s unfair to artists, and we know there’s room to further increase streaming prices from the very low churn rates we’ve seen in the markets where prices at the likes of Spotify<\/strong> have already risen to date.<\/p>\n “There is a willingness to pay for music out there \u2013 and a willingness to pay more for it.”<\/p>\n Coesfeld offers further cause for positivity when it comes to the music rights acquisitions market \u2013 a space in which BMG<\/strong> has been an active player going back a decade-and-a-half.<\/p>\n Following a period of “high uncertainty” caused by rising interest rates, says Coesfeld<\/strong>, the past six months has seen a “healthy recovery” in terms of BMG\u2019s deal flow.<\/p>\n He says, “Whether the market peak was in 2021 or 2020, prices are definitely lower today than they were then \u2013 but they\u2019re not dramatically lower.\u201d<\/p>\n Coesfeld believes that those who can be considered “fully-fledged music companies”<\/strong> are best positioned to take advantage of the current M&A market, as opposed to institutional investors “who may want to flip a catalog in two or three years’ time”.<\/p>\n “My expectation is a lot will trade in this market in the months ahead.”<\/p>\n Thomas Coesfeld, BMG<\/span><\/p><\/blockquote>\n The other month saw one of these “fully fledged music companies”, the pension-backed Concord<\/strong>, pay nearly half a billion dollars<\/strong> to acquire a portfolio of rights sold by Round Hill’s UK-listed fund<\/strong>.<\/p>\n Does Coesfeld<\/strong> expect more consolidation like this to play out \u2013 and will BMG<\/strong> be involved?<\/p>\n “We\u2019re active catalog buyers in the market, and as a large corporation with a long investment horizon, we are very committed to music,” he says.<\/p>\n “As for more large-scale transactions? That will depend on the investors\u2019 risk appetite and their assessment of music\u2019s growth potential. My expectation is a lot will trade in this market in the months ahead.”<\/p>\n A fair bit of ink in the financial press so far has been spilled on Coesfeld\u2019s familial ties to BMG owner Bertelsmann. Coesfeld<\/strong> is the grandson of Reinhard Mohn<\/strong><\/a>, the late German billionaire who transformed Bertelsmann into a multi-pronged media empire in the 20th Century.<\/p>\n Many see Coesfeld\u2019s<\/strong> performance as BMG boss as a potential proving ground for him to one day take over the Bertelsmann<\/strong> empire.<\/p>\n What\u2019s been written about less, however, is Coesfeld\u2019s<\/strong> pre-BMG career history. Prior to joining BMG as Deputy CFO in 2020, Coesfeld was a member of the Executive Committee of the Bertelsmann Printing Group<\/strong>, and Chief Strategy Officer (CSO) at Mohn Media<\/strong> in G\u00fctersloh.<\/p>\n There, he managed a leading player in print media \u2013 an industry beset by challenges. Coesfeld<\/strong> describes running particularly one magazine group, aged 26, amid an industry that was posting minus-7% CAGR<\/strong>.<\/p>\n What did he learn from managing decline in this way \u2013 a backdrop that greatly differs to music’s streaming boom over the past decade?<\/p>\n “Firstly, you learn never to take growth for granted,<\/strong>” says Coesfeld. “People are right to say that the really big mistakes are always committed in growth phases. But managing decline is way harder than managing growth, because the mentality is different. The spirit is of things always being an uphill battle.<\/p>\n “As company leaders, we tend to overestimate our impact on things, when in reality \u2013 whether your industry is growing or not growing \u2013 there are so many factors working [for or against you].”<\/p>\n He adds: “What you learn is to focus on the things you can control \u2013 and that means prioritizing the right strategies, and putting people first. Do you have a good culture? Do you have a workplace that people enjoy? If you have those things, your clients will notice it.”<\/p>\n “As company leaders, we tend to overestimate our impact on things, when in reality \u2013 whether your industry is growing or not growing \u2013 there are so many factors working [for or against you].”<\/p><\/blockquote>\n Another big difference between Coesfeld<\/strong> and most of his peers in music rights? His age.<\/p>\n At just 34 years old, he was barely a teenager when the record industry was battling with Napster<\/strong>; when Spotify<\/strong> launched in Europe in 2008, he was just 18.<\/p>\n Does that youthfulness give him a different perspective on the market than veterans of the music biz?<\/p>\n He jokes: “Well, apparently, people think that at my age, you can lead a country like France!<\/p>\n “I guess you can see it as a bit of a changing of the guard in terms of the music industry, but if you define the music industry in its broadest sense, including tech players, it\u2019s nothing new.\u201d<\/p>\n Since BMG reformed as a new music company in 2008, its global headquarters have remained in Berlin. Yet over 60%<\/strong> of BMG’s revenues in H1 2023 took place in North America, with around a further 15%<\/strong> generated in the UK, according to Bertelsmann<\/strong> figures.<\/p>\n Following the news of BMG’s<\/strong> “doubling down” on investing in US repertoire \u2013 and its recent success with US country artists like Jelly Roll, Jason Aldean, <\/strong>and Lainey Wilson<\/strong> \u2013 what does this tell us about the direction of travel for the company, which seems to be more Anglo\/American in its shape every year?<\/p>\n “It’s great for us to be headquartered here in Berlin,” says Coesfeld<\/strong>. “There are definite advantages to spending time in the US and then detaching oneself from it. But for me, the US is the center of innovation in music, both for repertoire and for technology. So naturally the way we market and craft music, a lot of that is originating in the US.<\/p>\n “People have started asking me: Will Berlin be the headquarters of BMG<\/strong> in a year? Yes, it will. But in five years? I don’t know. The bigger question is, Does it matter?”<\/p>\n The words of an executive who prides himself on asking why things have ‘always been done this way’. And who isn’t shy about changing them \u2013 tradition be damned.<\/p>\n","protected":false},"excerpt":{"rendered":" The BMG boss discusses the sweeping changes he’s made at the Bertelsmann-owned company \u2013 and the future of music<\/p>\n","protected":false},"author":3,"featured_media":192229,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-192228","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interviews"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/192228","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/comments?post=192228"}],"version-history":[{"count":0,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/192228\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media\/192229"}],"wp:attachment":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media?parent=192228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/categories?post=192228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/tags?post=192228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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