ANNUAL FINANCIAL REVIEW BMI Sets New Benchmarks In Performing Right Income, Royalty Payments MI earned more than $901 mobile, social networking and website strength, a blurring of conventional million in revenues for its categories, and we now license more lines between genres and media out- 2008 fiscal year, marking the than 6,500 digital media properties, lets became increasingly evident: The first time any copyright orga- an increase of more than 50% over the most successful hits featured innovative nization has topped the $900 prior year. International revenues were blends of urban, Latin, country and pop Bmillion mark for music performance also a bright spot, accounting for $238 artists and styles, while veteran stars and revenues and a 7.2% percent increase million, or more than 26% of BMI’s “tween” idols relied more and more on from the previous fiscal year. BMI also revenues. Growth in revenues from a combination of radio, television and set a historic high in royalty distribu- film exposure. tions, and will disperse more than $786 Within the robust urban genre, million to our affiliates, an 8% percent BMI’s financial results BMI represents hip-hop and r&b roy- increase over the prior fiscal year. alty including T-Pain, Kanye West, These financial benchmarks are a direct Sean Garrett, Chris Brown, Rihanna, result of the creative efforts of our song- for fiscal 2008 mark the TI, Dallas Austin, Lil’ Wayne, Gnarls writers, composers and music publish- Barkley’s Cee-Lo Green and OutKast’s ers, who have helped build a catalog first time any copyright Big Boi, along with explosive song- of music whose depth, breadth and writer, producer and artist Polow Da popularity are unequaled anywhere in organization has topped Don, who illustrates the increasing the world. ability of writer/producers to move be- While traditional broadcast radio the $900 million mark tween urban and pop genres. In today’s and television accounted for an im- rapid-fire pop-culture climate, cross- pressive $340 million, or about 38% for music performance genre success is becoming increasingly of revenue, our leadership in licens- prevalent. Versatile BMI songwriter/ ing the explosive growth of music revenues. producers including will.i.am, J.R. in cable, satellite radio and satellite Rotem, Kara DioGuardi and Jeffrey television brought in revenues of Steele create crossover ready hits. more than $208 million, accounting the performance of music in retail BMI also represents stars leading the for more than 23% of our domestic and service establishments, including “tween” revolution, including pop licensing income. New Media rev- restaurants, bars and the hospitality culture phenomenon Miley Cyrus/ enues increased to a total of $15 mil- industry, also increased, totaling $97 Hannah Montana, Aly & AJ, the Jonas lion, due in large part to growth in the million. Brothers and the Naked Brothers Band. Our strategic use of technology, TOTAL REVENUE (millions) including the development of new and ROYALTY DISTRIBUTIONS (m illions) $1,000 enhanced web-based tools for song- $800 $ 900 writers, composers, and publishers, $700 $ 800 allowed us to grow our business while $600 $ 700 lowering overhead to 11.7%, the low- $ 600 est in company history. $500 $ 500 $400 $ 400 Repertoire $300 $ 300 The quality and depth of BMI’s roster $200 $ 200 and repertoire once again provided the $ 100 impetus for unparalleled success in the $100 0 performing right arena during the past $ 0 2004 2005 2006 2007 2008 year. While each music format displayed 2004 2005 2006 2007 2008 3 32% 71.6% Website 17% Western Europe Music 10.2% Subscription Services Asia-Pacific 9.2% 10% Canada 37% Local Radio Mobile Streaming 4.3% Latin America 4% 4.1% Television Eastern Europe Streaming (including Turkey & Israel) .6% ANNUAL FINANCIAL REVIEW Africa Artists with Luis Guerra, Wisin & Yandel and Los “tween” REVENUE SOURCES appeal Tigres del Norte topped charts around (percent by category) generated the world. enormous airplay In the surging rock genre, BMI’s roster numbers this includes Nickelback, 3 Doors Down, year, led by Miley Cyrus, Red Hot Chili Peppers, the Raconteurs, 26% International 7000 Aly & AJ, 21% Cable & Satellite the Jonas Maroon 5, Linkin Park, Kid Rock, Fall 6000 Brothers and Out Boy and more. Legends with staying the Naked 13% power embody BMI’s classic rock family: Broadcast 11% 5000 Brothers Band. Television General Licensing The Eagles, Pink Floyd, Alice Cooper, Eric 4000 Clapton, The Who, Elton John and numer- 25% Radio 2% 3000 ous others remain in high demand. New Media 2% BMI composers continue to dominate Other 2000 the jazz field, as BMI represents the ma- 1000 jority of the 100 National Endowment 0 for the Arts Jazz Masters Fellowship re- by Steve Jablonsky. BMI television music 2004 2005 2006 2007 2008 cipients, the highest honors that our na- composers also maintained their competi- tion bestows upon jazz musicians. In the tive edge, boasting theme or background contemporary classical music field, sev- music in 76% of last fall’s primetime net- en of the 10 most frequently performed work programs and in 17 of the top 20 of living American composers are affiliated those shows, while composers Katreese with BMI. BMI’s preeminence in musical Barnes, Jeff Beal, George Fenton and theatre was also reinforced this year, as William Ross each took home prime-time Passing Strange won a Tony Award for Emmy Awards. Best Book of a Musical and top honors for its creative hive at the 53rd Annual Operations Drama Desk Awards. BMI’s global leadership role among per- The trend of U.K. acts enjoying sub- forming right organizations32% is rooted in 71.6% Website 17% Western Europe our ability to reduce overheadMusic without stantial achievements stateside10.2% contin- Subscription Services ued this year. London’sAsia-Pacific Amy Winehouse diminishing the quality of service offered 9.2% 10% Canada capped off a staggeringly successful year to our affiliates, licensees37% and interna- Local Radio Mobile Streaming with five Grammys, the most ever4.3% in one tional partners. We continue to employ Latin America 4% year for a British woman, and numerous4.1% tools and strategies designed to improveTelevision Eastern Europe Streaming (including Turkey & Israel) U.K.-based artists, including.6% Corinne both operational efficiency and productiv- Africa Bailey Rae, KT Tunstall, Snow Patrol, ity, as the increase in new music licens- Natasha Bedingfield and James Blunt, ing sources and delivery platforms offers continue to populate the upper reaches of the charts. NEW MEDIA LICENSEES BMI’s dominance in the country format Music in film remains a key com- is carried by an invigorating combina- ponent of our repertoire,26% as BMI com- 21% International 7000 tion of new faces and veterans: Toby posers Cablehave & musicSatellite in 82% of the 100 Keith, Tim McGraw, Faith Hill, Brooks top-grossing films of the past year. The 6000 13% Broadcast 11% 5000 & Dunn, Keith Urban, Martina McBride three highest-grossingTelevision filmsGeneral of last year, Licensing and Vince Gill remain at the forefront, which at last count had grossed nearly 4000 25% while Carrie Underwood, Taylor Swift, $1 billion domestically,Radio were scored2% by 3000 New Media 2% Miranda Lambert, Rodney Atkins and BMI composers: Spider-ManOther 3 by newly 2000 Josh Turner joined the genre’s top ranks. crowned Richard Kirk Award recipient 1000 Shrek The Third BMI’s Latin trendsetters remain interna- Christopher Young, by 0 2004 2005 2006 2007 2008 tional superstars: Shakira, Juanes, Juan Harry Gregson-Williams and Transformers 4 ANNUAL FINANCIAL REVIEW performance data. Diligent implementa- INTERNATIONAL REVENUE tion of refined operating procedures also (percent by region) helped us deal with a 15.7% increase in music performance data from foreign performing right societies. In March 2008, we launched a new, automated 32% 71.6% Website 17% application dubbed SuperQ, which is Western Europe Music 10.2% Subscription Services designed to process electronic cue sheets. Asia-Pacific In addition to streamlining processing 9.2% 10% Canada 37% Local Radio procedures and organizing large amounts Mobile Streaming of information, the program provides en- 4.3% Latin America 4% hanced data protection. 4.1% Television Eastern Europe Streaming In the past year, BMI launched a (including Turkey & Israel) .6% major revision of the online affiliation Africa process, greatly reducing the complexity of joining BMI via the Internet. Over the traditional relationships in the midst of past 12 months alone, BMI added almost the digital revolution. On the legislative 30,000 new songwriters and composers front, BMI has been actively engaged to its rolls, with the vast majority joining in many issues put forward in the 110th online. The company also launched an Congress, specifically the Performance 26% enhanced version of Online Services for Rights21% Act and theInternational Orphan Works bill. 7000 Cable & Satellite major publishers, allowing them to regis- We have been monitoring the status 6000 ter new works and manage existing cata- of 13%Performance Right Act and assist- Broadcast 11% 5000 Television General log more efficiently. An increased em- ing Congress in draftingLicensing competent phasis on eCommerce has also led to the language for both bills in an effort to 4000 25% introduction of an internally developed ensure pre-existingRadio royalty streams2% for 3000 New Media system that allows for the electronic pro- songwriters, composers and2% music pub- BMI’s dominance in the contemporary rock Other 2000 sphere is reflected by the ongoing success cessing of licensee payments, reducing lishers remain strong and unimpeded. of such acts as 3 Doors Down, Hinder and BMI’s costs in licensing administration BMI is also notably involved in vital 1000 Maroon 5, among many others. significantly. copyright issues abroad, as new media 0 2004 2005 2006 2007 2008 unprecedented challenges and opportuni- are increasingly serving international ties.