One collecting society to rule them all

The prevailing assumption about collecting society consolidation is that it reduces friction. One stop shop, cleaner data, fewer payment delays. That sounds right until you look at the actual mechanics of how royalties flow.

SOCAN's acquisition of CMRRA from SoundExchange means Canadian performing and mechanical rights are now licensed through a single organisation. The stated aim is operational efficiency. The actual effect is something less benign.

What consolidation actually does to data

A collecting society is a data company that happens to handle money. Every royalty payment starts with a usage report, matched against a repertoire database, then distributed through a chain of rights holders. Where two societies operate separately, each maintains its own dataset. Errors can be cross-referenced. Missing matches in one system might exist in the other.

Under common ownership, the data may remain in separate systems for now, but the incentive to keep them independently audited disappears. That is efficient until one dataset has errors and the other no longer has the institutional motivation to surface them. The industry already struggles with black box royalties and unmatched income. Consolidation reduces the number of genuinely independent datasets by replacing two with organisations that share governance.

For catalogue buyers, this matters. Diligence relies on comparing distributor reports against collection society data. When there is only one collection body, the comparison surface shrinks. Unmatched income becomes harder to detect, not because it disappears but because there is no independent counterparty holding a different view of the same data.

The licensing power question

The second-order effect is less technical and more structural. A collecting society that controls both performing and mechanical rights in a territory holds a monopsony position. Licensees have nowhere else to go. That is not inherently bad, but it changes the incentive structure.

When competition between collecting societies exists, each has an incentive to reduce clearance friction and improve payout speed to attract rightsholder mandates. Consolidate and the incentive shifts from competing on service to maximising market coverage. The market structure itself changes.

This is not theoretical. The MLC in the United States was designed precisely to solve the mechanical licensing fragmentation problem for eligible digital uses. It has distributed over two billion dollars since 2021. That is good. It also means there is now a single point of failure for the US blanket mechanical licensing system — physical products, synchronisation, and voluntary direct licenses remain outside its scope. SOCAN's move mirrors the same pattern, just on the Canadian side.

What this means for valuation

Catalogue valuations encode a risk premium for collection infrastructure. The more fragmented the collection landscape, the higher the risk that income goes uncaptured. Consolidation should, in theory, reduce that risk and compress the premium.

The counter-argument is that concentrated collection power introduces its own risk. A single organisation facing technical failure, governance problems, or regulatory action affects all rights holders in that territory simultaneously. The risk does not disappear. It changes shape.

The practical answer is to model it. A catalogue heavily weighted towards Canadian income now faces different collection risk than it did six months ago. The old model assumed two independent collection bodies. The new model assumes one. The adjustment may be small, but it is directionally important.

This is not just a Canadian story. The MLC in the United States already consolidated mechanical licensing. PRS for Music and MCPS in the United Kingdom share infrastructure without full merger. Germany is working through similar questions. The trajectory is clear. The number of independent collection bodies will keep shrinking. The people building models on the assumption that each territory has separate performing and mechanical administrators should update them. The people buying catalogues on the assumption that collection risk is static should reconsider.

Collection society consolidation is not a neutral operational improvement. It is a structural shift in how income flows from licensee to rights holder. The efficiency argument is real. The concentration argument is real too. Both need to be in the model.