Exigen and Music Industry Labels Launch Royalty Services L.P.
Universal, Warner Music Group, Exigen and Lightspeed Venture Partners form Joint Venture to Handle Increasing Royalty Processing Volumes for Transactions Such as Sale of Downloads and Mastertones
Universal Music Group, Warner Music Group (WMG), Exigen Group and Lightspeed Venture Partners today announced the formation of a new joint venture to develop and provide core royalty processing services.
The new company, Royalty Services L.P., will build and operate systems to process royalties for the millions of transactions currently handled by the information technology departments of Universal and WMG. The new software platform is being designed to process royalty transactions in accordance with both Universal and WMG's individual policies and will maintain the confidentiality of their respective royalty information.
Royalty Services L.P. also plans to offer its royalty transaction processing capabilities to other organizations in the media industry, affording them the opportunity to lower their processing costs. This Business Process Utilitya model will extend the economies of scale to new customers.
Exigen, the business process software and services company, was selected by Universal and WMG to provide the software and ongoing operational services for the joint venture because of its track record in delivering measurable financial value through process innovation.
"Universal and WMG can achieve considerable benefits by processing their royalty transactions over an infrastructure that can then benefit both peers and smaller labels through economies of scale," said Greg Shenkman, CEO at Exigen Group. "This process utility model, where companies with similar needs come together in a joint venture to procure technology, is quickly gathering momentum as a new way of doing business. It similarly motivates customers and providers to dedicate resources in a manner designed to reduce operational costs."
"This initiative will convert our investments in necessary, but non-differentiating operations into services providing real value to the industry," said Joe DeTullio, CIO at Universal Music Group. "By sharing the investment in infrastructure with other parties in the industry, and handing the operational responsibilities to an expert in process improvement, we minimize our upfront risk and maintain our market responsiveness."
"Volumes of royalty transactions continue to grow, driven in part by alternative distribution channels. We needed an innovative and cost-effective solution for processing the increasing number of transactions," said Tsvi Gal, CIO at Warner Music Group. "This joint venture provides a way forward that will sustain the quality of service to our artists and distributors without being distracted by the constant upgrading of our own royalty system in order to adapt to the requirements of the ever-changing recorded music marketplace."
Lightspeed Venture Partners will be providing institutional investment for Royalty Services L.P. "Lightspeed is very excited to be involved in this joint venture with Universal, Warner and Exigen," said Ken Elefant, senior associate at Lightspeed Venture Partners. "We recognized the opportunity that this unique business process utility model presents for the future in the handling of a large amount of royalty transactions. We believe that other organizations will also be able to contribute to and benefit from this model as well."
"Legitimate online music distribution is just starting to mature as a significant component of the music industry," said Mike McGuire, research director with GartnerG2. "With the value of single downloads in the US expected to increase from $140 million to $920 million by 2008, record labels have to ensure their infrastructure and processes can handle increasing transaction volumes. Shared services will emerge as an important solution for tackling this type of challenge across all industries, not just music."
About Universal Music Group
Universal Music Group is the world's largest music company with wholly owned record operations or licensees in 71 countries. Its businesses also include Universal Music Publishing Group, one of the industry's largest global music publishing operations.
Universal Music Group consists of record labels Decca Record Company, Deutsche Grammophon, DreamWorks Records, Interscope Geffen A&M Records, Island Def Jam
Music Group, Lost Highway Records, MCA Nashville, Mercury Nashville, Mercury Records, Philips, Polydor, Universal Music Latino, Universal Motown Records Group and Verve Music Group as well as a multitude of record labels owned or distributed by its record company subsidiaries around the world. The Universal Music Group owns the most extensive catalog of music in the industry, which is marketed through two distinct divisions, Universal Music Enterprises (in the US) and Strategic Marketing & Commercial Affairs (outside the US). Universal Music Group also includes eLabs, a new media and technologies division.
Universal Music Group is a unit of Vivendi Universal, a global media and communications company.
About Warner Music Group
Warner Music Group, with its broad roster of new stars and legendary artists, is the world's largest privately held independent music company. The company is home to a collection of the best-known record labels in the music industry including Atlantic, Elektra, Lava, Maverick, Nonesuch, Reprise, Rhino, Sire, Warner Bros. and Word. Warner Music International, a leading company in national and international repertoire operates through 37 affiliates and numerous licensees in more than 50 countries. Warner Music Group also includes Warner/Chappell Music, one of the world's leading music publishers, with a catalog of more than one million copyrights worldwide. For more information about Warner Music Group, visit our corporate website at http://www.wmg.com.
About Exigen Group
Exigen Group is a global provider of business process software and services focused on lowering the total cost of operations for companies in services industries. The Company applies industry-specific expertise to identify inefficiencies in core business processes and uncover likely cost savings or revenue growth opportunities. The Company implements its business process management software solutions to automate, transform and aggregate processes and delivers further efficiencies through onshore and offshore outsourcing services, Exigen Process Backbone(TM) software, and Exigen Business Process Utility or BPUO technology. Focused on the financial services, insurance, government and communications industries, Exigen solutions are used by industry leaders around the world including AIG, Bell Canada, ING Advisors Network and Prudential Securities. Exigen is a privately-held company headquartered in San Francisco with offices throughout North America, Asia Pacific and Europe. Further information about Exigen Group can be found at www.exigengroup.com.
(C) 2004 Exigen Properties, Inc. All rights reserved. Exigen and the Exigen logo are registered trademarks and Process Backbone, Business Process Utility, and BPU are trademarks and service marks of Exigen Properties, Inc. All other trademarks are property of their respective owners.
About Lightspeed Venture Partners
Lightspeed Venture Partners combines extensive venture capital and operating experience to assist entrepreneurs in creating industry-leading technology companies. Lightspeed manages over $2 billion in funds and focuses on early stage investments in software, communications, enterprise infrastructure, semiconductors, electronic design automation and business process outsourcing. The Lightspeed partners have contributed to the success of over 250 companies including Adaptec, Auspex, Brocade, Ciena, Electronics for Imaging, Federal Express, Galileo Technology, Genesys Telecommunications Labs, Growth Networks, Informatica, Kiva Software, KLA-Tencor, Maker Communications, Phone.com, Quantum Effect Devices, Sirocco Systems, Telogy and Vantive.
Source: Warner Music Group