What are music royalties?
Music royalties are payments that are made to recording artists, songwriters, composers, publishers, and other copyright holders for the right to use their intellectual property. Song copyrights typically last for 70 years after the death of the last remaining songwriter.
Why Invest in Music Royalties?
Three top reasons to invest in music royalties:
Industry Growth – Music industry resurgence, entering growth cycle due to streaming. In 2019, global recorded music revenues grew 9% YOY with paid streaming subscription revenue growing by 34%.
Correlation – Lack of equity market correlation. Using Universal Music Publishing Group as a proxy for royalty performance, the chart below shows that revenues grew through the Global Financial Crisis.
Value-Creation Opportunities – Numerous potential value-enhancing opportunities exist to provide further upside. Often a song that is owned by an artist or songwriter is not exploited to its full potential as the artists typically lack familiarity in how to create further upside. Music fund managers can employ several techniques to create value that include:
- Playlisting: Managers can work with curators of influential playlists to market their songs and increase streaming volumes. Often mangers will employ individuals that possess strong relationships with curators at Spotify and Apple Music.
- Synchronisation: A “synch” is a one-time license fee that can be generated by working with music supervisors and marketers to place the songs within: movies, TV shows, advertisements, video games, amusement park rides etc. – one-time fees can be between $10,000 and $250,000.
- Re-recording: If the copyright of the publishing is owned (the lyrics and melody) the manager receives royalties from covers and remixes of the song. Publishing strategies can be employed to have other bands and artists release new covers of the song to modernize the music and generate more listening.
Mr. Gershon has been in the music industry for 30 years and has managed various English alternative bands (e.g., Love and Rockets, Cocteau Twins and The Sundays), discovered The Smashing Pumpkins and managed the band from 1993-1997, formed Outpost Recordings in 1995, a joint venture with Geffen Records where Outpost’s first four records under his management were certified as being gold or platinum, was hired in 1996 by Richard Branson to run 2nd Virgin Records and signed The White Stripes, The Black Crowes and Moby to the label, and was part of Sony/BMG where he marketed various rock acts including Chevelle, Incubus, Ozzy Osbourne, Los Lonely Boys and Cyndi Lauper. Mr. Gershon is currently a partner in n3 Media and pursues ventures in various Broadway musicals in addition to managing various artists including Bryan Ferry and OK Go.
Kyle is an Analyst on the Music Fund team at Barometer and is responsible for valuation of prospective investment transactions, monitoring of existing investments and developing relationships with musicians and songwriters.
Previously, Kyle was a Royalties Coordinator at Dine Alone Records where he was responsible for calculating artist royalties, assisting with acquisition underwriting and general FP&A.
Kyle graduated with both a Bachelor of Arts in English and a Bachelor of Music from Queen’s University. Kyle has passed the CFA level 1 exam.
Mr. Michaelson has been in the music industry for 25 years and managed The Smashing Pumpkins, Echo & the Bunnymen and The Sundays from 1993-2000, was an Executive at Virgin Records from 2000-2002 where he worked with David Bowie,The Rolling Stones, Janet Jackson and George Michael, was appointed by Elton John to the executive management team at Twenty First Artists from 2007-2012 and was hired by Madonna and Michael Bublé to assist them on various live performance projects and to consult on new releases from 2005-2011. More recently,
Mr. Michaelson has been a consultant at L25 Group, raising capital for music firms by syndicating equity investments and assisting with financing institutional debt.
Raymond is an Analyst on the Music Fund team at Barometer Capital and is responsible for the valuation of prospective investment transactions, fundraising and investor relations.
Prior to joining Barometer, Raymond was an analyst with Dream Unlimited and worked on the Development and Strategic Finance teams overseeing the strategy of 5 publicly traded real estate investment vehicles, with $15 billion of assets under management.
Raymond holds a Bachelor of Commerce degree (Honours) from the Queen’s School of Business, and is a level three candidate in the CFA program.
Clive is a Senior Advisor at Barometer Capital and has over 45 years of experience in the finance industry, with 14 years in the insurance industry, 21 years in the pension and other institutional investment consulting industry and 10 years in the alternative investment area.
Clive moved to Canada in 1983 and joined Towers Perrin as a retirement consultant. He was promoted to the position of Global Practice Leader for asset consulting in 1994. In 1999, Clive retired from Towers Perrin and co-founded York Investment Strategies Inc., a hedge fund advisory company focused on consulting with institutions on the role of hedge funds in a portfolio. In 2012, Clive set up his own company to work with pension funds and investment organizations in the area of financial and risk management. In 2017 he started to work with Barometer Capital on various projects and assisting in the development of the Music Royalty Fund.
During his career, Clive has consulted to a broad spectrum of organizations on financial management and the use of alternative investments in a portfolio.
Clive is a CFA Charterholder and is a member of the CFA Institute.