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Cloud shift helps music publisher BMG keep pace with streaming

CIO Sebastian Hentzschel explains the benefits of cloud, making rapid royalty payments and democratising analytics.

Music publishing giant BMG was launched in October 2008, days after Swedish entrepreneurs Daniel Ek and Martin Lorentzon debuted a novel online streaming service. Little can the BMG founders have imagined the transformational impact the latter company, Spotify, would have on the music industry.

The growth of Spotify and rival services over the past decade has led to digital streaming becoming an important income source for artists. According to the IFPI’s Global Music Report, in 2019 global streaming revenue grew 8.2% and now accounts for more than half of the recorded music market.

Though in many cases these platforms pay musicians a fraction of the sums they would have previously earned from physical album sales, their popularity among users (the IFPI report says there were 341 million active subscription streaming accounts in 2019) means they cannot be ignored. And with Covid-19 causing the cancellation of many potentially lucrative tours and festival dates, streaming income is more important than ever.

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For companies such as BMG, the streaming boom has generated a lot more administrative work when it comes to paying artists, which is why it recently decided to move its royalties system into the cloud to facilitate timely and accurate payments.

BMG CIO: billions of lines of royalty code are a significant challenge

Now the world’s fourth-largest music company, BMG offers recording and publishing services and works with high-profile artists including George Ezra, Kylie Minogue and Iron Maiden, as well as holding the rights to the work from the likes of David Bowie. Founded after its parent company, Bertelsmann, sold its stake in the now-defunct Sony BMG label, it is a relatively new business compared with many of its peers. And despite its modern set-up, CIO Sebastian Hentzschel tells Tech Monitor handling the rapid switch to streaming still presented a significant challenge.

BMG CIO
BMG CIO Sebastian Hentzschel. (Photo courtesy of BMG)

“Previously everything in the industry was very regional, with cassette and CD sales and different retail set-ups for different regions,” says Hentzschel, who joined BMG a year after it was founded. “We’re lucky to have started in the internet age when networks were already strong, so we always took a global view. But music got very digital very quickly, the data volumes started growing exponentially and that put a strain on our systems.”

BMG now has to process billions of lines of income it receives from around the world across myriad streaming services, as well as from areas such as TV and radio. Streaming is by far the most common source, generating 1,500–2,000 times more transactions a year than physical album sales, Hentzschel says. Dealing with all this data through on-premise tech solutions gave the CIO and his team a few sleepless nights – and busy weekends.

“At first we were loading lots of data into Oracle and hoping it would work,” he recalls. “It was falling over way too often, and we would end up working weekends to make sure things were calculated correctly because you’re talking about billions of lines of code. We then changed to Hadoop, and things increased in speed tenfold. That was a huge change straight away.”

Ensuring musicians get paid on time

Hentzschel hopes the switch to the cloud, which involved moving 1,500 components, servers, and databases to Google Cloud, will be another paradigm shift, making the process even faster and allowing BMG to scale-up compute power quickly to deal with future streaming growth. “When you do on-premises you’re still having to look at things like the type of switches you use and the network throughput you have,” he says. “So that was another one of the triggers [to move to the cloud] because we’re not in the business of infrastructure management – I don’t want to have to be dealing with things like that.”

As well as helping BMG on an operational level, he is confident the new system will hit the right note for the company’s artists. “We collect on behalf of our artists and writers, and it traditionally takes a lot of time for people to see what’s going on and the money they’re getting,” he says.

“We want to get that process as close as possible to real time, so that if income from Indonesia comes in for one of our artists from Spotify, it can quickly be made available [to the artist] as a collection. That’s where cloud comes in handy and the modules we can use make a tangible difference.”

The new cloud platform will plug into the company’s myBMG app and client portal, where musicians can view royalty and copyright information. Launched in 2017, it is now central to the way BMG communicates with clients.

“An app will never replace an artist or songwriter’s personal relationship with BMG – ultimately we’re a music company not a technology company,” Hentzschel says. “But myBMG is a key element in BMG’s commitment to fairness and transparency.”

Democratising analytics to find new talent

In future, Hentzschel hopes to use Google Cloud’s analytics features to boost new and existing clients. “Our hypothesis is that analytics will be able to help us detecting new artists,” he says. myBMG currently allows up-and-coming singers and musicians to pitch to work with songs from BMG’s stable of writers, and digital tools could perhaps be deployed to sift through the applications to identify the most suitable voices for a particular track or style of music.

Analytics could also inform marketing, Hentzschel says. “You might run a cross-media campaign and be able to analyse whether it has had an effect on streaming in a particular month,” he explains. “From that, you could derive which kind of events have an impact for different genres.”

Hentzschel is keen to ensure this kind of activity is undertaken by teams across the business, not just the IT department. “Cloud gives us the tools to democratise advanced analytics, and I don’t want IT to be a blocker of that,” he says. “We’re very good at global collaboration in BMG – if we have a US artist they are not siloed in the United States but are part of an international structure of teams that work closely together.

“The same can be applied to advanced analytics, and I think that collaboration in this area can give us a sustainable advantage.”

Home page photo by Caron Watson/Shutterstock.

Matthew Gooding

News editor

Matthew Gooding is news editor for Tech Monitor.