Current Finance Trends in Music Asset Acquisition

Let’s Dance: Private Equity plays a major part in the music ecosystem paying 15-25x annual cash flow for royalties. Since 2020, several billion dollars have been invested in music royalities led by the largest PE sponsors in the world, including Blackstone, Apollo Global Management, Inc., KKR, & The Carlyle Group. Francisco Partners the brilliant technology-software focused PE firm, led by Dipanjan Deb purchased a controlling stake in the best PE music specialty asset manager, Kobalt Music. Kobalt recently sold a catalogue comprised of Weeknd, Lorde and others for $1.1 billion to a KKR-led team, with another sponsor selling its music royalties (Shakira & Nelly) for $465 million. The music business has always been big business, but the original creative mind who revolutionized the monetization of music rights was Mr. Space Oddity himself, David Bowie. Bowie Bonds were the first music-backed bond sold in the capital markets, allowing the artist to receive a windfall in the 1990’s when Moody’s, S&P and Fitch rated his music-backed bonds. The bonds matured 10-years after issuance, and the rights to the income reverted to David Bowie. Thanks to the demise of Napster, and the business models of Spotify and Apple Music, top recording artists receive payment for every song played. Music royalties are classified as Master or Composition, whereby the Master is the IP or rights to reproduce or distribute the sound recording that belongs to the recording artist or record label; whereas the Composition represents the rights based on the lyrics, harmonies, or melodies of the song that belongs to the songwriter or publisher. As Prince famously said in a Rolling Stones article “if you don’t own your own masters, the master owns you”. Taylor Swift’s Eras Tour has topped $4 Billion, the most profitable in history, which comes after her legal battle with a promoter who purchased her music rights from her producer. Given the steady cashflows for royalties, financing is based on an LTV attachment point and DSCR. Financing costs have soared over the past two years, so returns are now upside down for some of the PE sponsors, with creditors earning more interest income than the royalty stream earned by equity, a condition that is not particularly favorable at this current juncture. This explains why there has been very few transactions in 2023 given costly financing. During the past two years, as interest rates have risen, the price paid for music royalty cash flow streams has fallen nearly 20%. For instance, if a buyer were to pay 20x cash flow expecting to earn a 5% return (unleveraged), and the newly adjusted multiple subsequently traded at 16x, then the value would decline by ~20% as the new buyer requires ~100bp higher yield. A publicly listed UK listed music royalty company trades at a discount to its NAV as its share price has declined 50% from 2021.

Yesterday Bill Ackman's Pershing Square bid $64bn for Universal Music Group. Most people will read this as a music industry story. I think it is more like a capital markets story, and the music industry happens to be where it is playing out first. Four things matter. One. Music catalogues are now treated by big institutional investors as a long-duration income asset. Pension funds, insurers and private equity have put billions into music rights over the last five years because the royalties are predictable, they last for decades, and they tend to rise with inflation. That's a real shift. Ten years ago no serious institutional portfolio held music. Today plenty do. Two. The major labels trade at a lower multiple than pure catalogue funds. The reason is that a major label like UMG isn't just a catalogue. It also runs an active business of signing and developing new artists, which is expensive and risky. Investors mark the whole company down to account for that risk. Ackman is betting the markdown is too big, and that moving UMG from Amsterdam to a New York listing would close part of the gap because US investors pay closer attention and value the asset differently. Three. AI licensing is a wildcard nobody is pricing properly. The major labels are suing AI companies for using their music without permission, and at the same time quietly licensing catalogue to other AI companies for money. Either way, a new revenue stream is opening up. The labels are better placed to capture it than the pure catalogue funds, because the labels have the lawyers, the relationships and the operating infrastructure. The catalogue funds mostly don't. Four, on valuation. At €55.8bn the bid values UMG at c. 20x its 2025 adjusted EBITDA of €2.81bn. For context, private catalogue deals in 2024 were c. 16x for publishing and 13-14x for recorded music, according to Shot Tower Capital's annual review. Premium iconic catalogues have gone higher, into the 20s. So Ackman is paying a multiple above the average for passive catalogue and below the very best. He is essentially saying UMG as a whole deserves to be valued like premium catalogue, on the basis that the operating business and the AI optionality add real value on top. Whether that is right or not, the bigger point is what the bid signals. Music has finished its journey from creative industry to financial asset class. I thik most allocators with media exposure have not updated their frameworks for that yet. I covered this sector for over twenty years. The next eighteen months will be the most interesting period to cover it in a long time. The things to watch are how UMG's other major shareholders (Bolloré Group, Vivendi and Tencent) react, the Spotify margin trajectory, and the first credible AI licensing settlement. One final point for any board reading this: if your strategy deck still treats music as "creative industries", your strategy deck is several years out of date. As usual, this is not investment advice.

Music‑rights investing isn’t a new niche, large capital has been here for decades: - 1997: David Bowie pioneers “Bowie Bonds” ($55 M, 10‑year notes) - 2017‑2021: KKR, Blackstone, Apollo deploy >$4 B into catalog funds - 2023: Concord closes a $1.8 B AAA‑rated royalty ABS, 3× oversubscribed - 2024: S&P tracks music‑royalty securitisations at 11–15 % IRR Why institutions like the asset class - Predictable cash flows — royalties land quarterly, tied to streaming, radio, sync. - Low correlation — music revenue held steady while IG credit spreads widened 150 bps in recent rate hikes. - Global tailwinds — recorded‑music revenue grew 14% YoY (IFPI), with streaming still early in many regions. - New liquidity — ABS structures bundle hundreds of songs into rated notes, tradable across fixed‑income desks. What investors gain - Lower financing costs, enabling higher bids on quality catalogs - A diversifier that behaves more like infrastructure than equities - Target yields often in the 12–15 % range Music is still art—just rendered as a dependable cash‑flow stream. That makes it as relevant to pension funds and family offices as it is to playlists. At Bolero, we level the playing field allowing anyone to acquire music rights and access those financial performances. We fractionalise publishing and master rights into liquid “Music Shares” while offering quarterly revenue distributions, and providing a secondary market for exit. In short, we give family offices and private clients the same toolkit that institutions have used for decades—so they, too, can add a cash‑flowing, low‑correlation line to the portfolio and capture the upside of a fast‑growing, truly global industry. Want to know more? Hit me up!

The majors just invited Wall Street to the table. In every other industry, we know exactly what happens next. Warner Music Group just acquired the Red Hot Chili Peppers' recorded catalog for over $300 million — through its joint venture with Bain Capital. That single deal represents roughly half of the $650 million WMG has deployed through the JV since its launch. Sony is doing it with Singapore's sovereign wealth fund GIC. UMG has Chord Music Partners. Every major now has a financial partner writing bigger cheques than they could alone. This is not a music story anymore. It's a capital markets story wearing a music costume. Look at what happened in real estate, in healthcare, in infrastructure, when strategic operators and institutional capital converged: prices re-rated upward and stayed there, the window for independent buyers narrowed fast, and assets that were once accessible to mid-market players became the exclusive domain of scaled capital. Music is following the exact same playbook — just a decade later. For catalog owners, the message is simple: you are no longer just negotiating with a label. You are negotiating with a label backed by a fund with a mandate, a return target, and a deployment timeline. That changes the dynamic — in your favour, if you understand it. What industry do you think music most resembles right now — and what does that tell you about where prices go from here? 🔗 https://lnkd.in/e3qAmfjC #MusicDeals #CatalogStrategy

WARNER MUSIC & BAIN CAPITAL TARGET RED HOT CHILI PEPPERS CATALOG—$300M BET ON RECESSION-PROOF ASSETS Warner Music Group and Bain Capital are forming a $1.2 billion joint venture to acquire iconic music catalogs, with their first major play aiming to secure the Red Hot Chili Peppers’ masters for over $300 million . 🎸 Why This Deal Matters • The Chili Peppers catalog includes massive hits like “Californication”, “Under the Bridge”, and “Give It Away”, generating an estimated $26 million in annual revenue . • The band is reportedly seeking up to $350 million for the full masters set, reflecting a valuation at 17–23× net label share—well above the 14.2× average for iconic catalogs . 📊 The PE Catalog Boom • Music royalties are increasingly attractive as recession-resistant assets—streaming continued growth during COVID, and live revenue has shown resilience in economic downturns . • This follows other big catalog deals: David Bowie’s catalog ($250M, 2022) and David Guetta’s ($100M, 2021) . • Other PE players like Blackstone and Apollo are also aggressively acquiring major catalogs, signaling an industry-wide consolidation . 🎯 Strategic Angle • Warner brings music expertise, while Bain provides capital power, making them a top-tier force in music IP acquisition . • Owning the catalog offers value in streaming royalties, sync licensing, and new revenue streams via NIL (name, image, likeness) rights . ⚠️ Risks to Consider • Catalog multiples have started cooling—from 16–18× in 2022 to 13–14× in 2024—though iconic assets still command higher prices . • Rising interest rates could reduce the present value of future royalties, tightening margins on such acquisitions . Bottom Line: Warner and Bain’s $300M bid for the Chili Peppers’ catalog is a high-stakes play in a booming music IP market. With robust cash flows and brand longevity, the catalog is a prize asset. But paying premium multiples carries risks if macroeconomic conditions shift. As PE reshapes the music landscape, this deal could mark a pivotal moment in the commodification of cultural soundtracks.

Artists and labels are still underpricing their catalogs by 3–5x. After working with thousands of labels and artists at Madverse Music Group, one thing is clear: most people in music still think in “advance amounts,” not in asset values. They negotiate like they’re selling songs, when in reality they’re managing long-duration cash flows that behave a lot more like yield assets than merch. Over the last few years, we’ve seen: Younger catalogs that look “small” on paper but are early in their decay curve Publishing that consistently trades at higher perceived multiples than masters once the catalog matures Emerging regions like India, Latin America, and Africa attracting serious attention from sophisticated buyers What does that actually mean for you as a creator or indie label? -> Think in revenue, not lump sums Stop asking “What advance can I get?” and start asking “What multiple on my last 12 months’ net revenue does this imply?” A 2x vs 6x decision today changes your next decade. -> Separate masters, publishing, and geography Different rights and regions price differently. Treating everything as one blended “deal” usually benefits the buyer, not you. -> Build infrastructure before you negotiate Clean metadata, airtight registrations, and predictable reporting don’t just reduce leakage, they improve perceived quality of your catalog and the confidence behind any multiple. That’s why we obsess over distribution rails, publishing administration, and rights management at Madverse. When the back end is clean, the front-end deal terms get stronger. The bigger shift: music isn’t “just” income anymore, it’s infrastructure-backed IP that capital markets increasingly understand how to price. The question is less “Will someone buy my catalog?” and more “Am I structurally positioned to capture its real value without giving up control?” #MusicTech #MusicBusiness #CreatorEconomy #MusicFinance #IPOwnership #IndependentMusic

The music industry has seen a surge in interest from institutional investors, private equity firms, and music companies seeking to acquire music catalogs. This trend is driven by the increasing value of music rights in the streaming era, where evergreen songs continue to generate significant revenue across digital platforms, sync licensing, and other monetization avenues. Why Are Investors Interested in Music Catalogs? 1. Predictable and Passive Revenue Streams Music royalties provide long-term, stable cash flows, making them attractive as alternative assets—especially in uncertain economic conditions. With streaming platforms ensuring continued access to older catalogs, investors see music as a reliable income source. 2. Growth in Streaming and Global Expansion The rise of streaming services like Spotify, Apple Music, and Boomplay has transformed music consumption, allowing songs to generate revenue indefinitely. Additionally, emerging markets in Africa, Latin America, and Asia are contributing to the industry’s growth, further increasing catalog value. 3. Inflation Hedge and Diversification Unlike stocks and real estate, music rights are not directly tied to economic downturns, making them a strong hedge against inflation. Institutional investors and hedge funds are now treating catalogs like real estate or bonds. 4. Boom in Sync Licensing With increasing demand for music in films, TV, gaming, and commercials, catalog owners benefit from lucrative sync deals. For example, legacy songs often find new life in viral social media trends, boosting their long-term value. Recent High-Profile Catalog Acquisitions • Dr. Dre & Justin Bieber Deals: Dr. Dre sold portions of his catalog for over $200 million, while Justin Bieber’s catalog was acquired by Hipgnosis for $200 million. • Bob Dylan & Bruce Springsteen: Bob Dylan sold his catalog to Universal Music for over $300 million, while Bruce Springsteen’s catalog was acquired by Sony for an estimated $500 million. What This Means for the African Music Market While Western artists dominate the big-money deals, Africa’s music industry is also attracting investors. Companies like Uptique Music are working toward structuring African music rights management and catalog acquisitions in a way that suits the ecosystem. As Afrobeats, Amapiano, and other African genres gain international traction, we may soon see African superstars making multi-million-dollar catalog deals. The music catalog acquisition trend is just beginning, and as streaming and licensing opportunities expand, artists and rights holders must understand their intellectual property value. Investors, on the other hand, must recognize the nuances of music rights and how to navigate catalog exploitation for sustainable returns. Let’s discuss: Do you think African music catalogs are currently undervalued? What needs to change to attract more investment?

Music IP continues to take center stage in the structured finance conversation, with giants such as KKR and Goldman Sachs getting more involved. Hipgnosis is restructuring. KKR is scaling its catalogue fund. Goldman just securitized streaming royalties from huge artists like Post Malone. Streaming data has transformed royalty income into a cash-flow engine that can be modeled like consumer credit. And investors are finally treating it that way... pricing consistency over novelty and leaning into older, durable tracks with long-tail value. This isn't a side show anymore. It’s an emerging sleeve of esoteric ABS with real institutional momentum. The next test? Underwriting discipline as deal volume grows. Just as importantly, a clearer view on what makes music IP different from (or better than) other entertainment assets like film and gaming. If cash flow predictability becomes the new collectible, expect structured credit desks to hire analysts and leaders who are familiar with both Billboard and bond math. Source: https://lnkd.in/eiETVfwi Reuters

Introducing the Music Tech Ownership Ouroboros, 2025 edition ✨ The music-tech sector has come of age. What started as a relatively niche investment thesis five years ago has matured into a powerhouse market segment, drawing tens of billions in capital since 2020. For five years, we at Water & Music have been mapping these shifting power dynamics through our “Music Tech Ownership Ouroboros” — a living document that traces the complex web of investments, ownership stakes, and strategic acquisitions shaping music and tech. Our latest update adds over 30 new relationships to the map, primarily from growth investments and M&A deals in 2024. The takeaway: Private equity firms and major labels are locked in a battle for control over independent music infrastructure. As indie market share keeps climbing, owning the tech backbone is becoming as valuable as owning the actual rights. Highlights from 2024 include: - Hellman & Friedman's majority stake in Global Music Rights — making GMR the third PRO owned by a private equity firm - Virgin Music Group's acquisitions of Downtown Music ($775M), [PIAS], and Outdustry - Flexpoint Ford's growth investments in Create Music Group ($165M) and Duetti ($34M) - KKR's acquisition of Superstruct Entertainment ($1.4B) and debt financing in HarbourView Equity Partners ($500M) - EQT Group and TCV's co-ownership of Believe (alongside CEO Denis Ladegaillerie), as part of taking Believe private - Vinyl Group's acquisitions of Serenade, Mediaweek Australia, Funkified Events, and Concrete Playground Link to the full interactive chart with sources is in the comments. Would love to hear what you think, and if any of these deals feel particularly standout or surprising to you! #musicbusiness #musicindustry #musictech #privateequity #musicinvestment #musicrights

Yes, I write a lot about sports. 🎾🏀🏈   And yes, our firm is called SportsInvest Advisory.   But let’s be honest, "Sports,Media&EntertainmentInvest" Advisory sounded a bit too long.   However, our focus spans the entire 𝐒𝐩𝐨𝐫𝐭𝐬, 𝐌𝐞𝐝𝐢𝐚 & 𝐄𝐧𝐭𝐞𝐫𝐭𝐚𝐢𝐧𝐦𝐞𝐧𝐭 𝐞𝐜𝐨𝐬𝐲𝐬𝐭𝐞𝐦.   Why?   Because each of these segments is worth looking into from an investment standpoint.   Just the other day I was talking about content (series, cinema) as an investment opportunity with Louis Ladreyt from Logical Content Ventures, a fund deploying capital in films and series.   And several years ago, we also started exploring 𝐦𝐮𝐬𝐢𝐜 𝐫𝐢𝐠𝐡𝐭𝐬 as a new asset class—one that has now captured the attention of leading PE investors. 🎵 👉 BlackRock backed Alignment Artist Capital to deploy $5M-$20M deals for artists and songwriters (2015). 👉 Blackstone committed $1BN to Hipgnosis Songs (now Recognition Music Group) to acquire music catalogues (2021).   👉 Apollo Global Management, Inc. committed $1BN to HarbourView Equity Partners, led by Sherrese Clarke (2021). 👉 Providence Equity Partners launched Tempo Music in 2019 with Warner Music Group, later exiting to WMG for $450M. 👉 KKR acquired Kobalt Music's catalogue for $1.1BN (2021). What sparked private equity's interest in music rights?   ✅ Market growth—check out Goldman Sachs' Music in the Air report (link in comments).   ✅ Low correlation to macroeconomic trends & financial assets.   ✅ Stable, recurring royalties revenues (5-10% yield).   ✅ But also (and that's even more interesting) value creation opportunities through IP expansion (licensing, events, entertainment). One of my favorite investment teams in this space?   🔥 Pophouse Entertainment.   Why?   First, because it boasts an outstanding founding team, including ABBA’s Björn Ulvaeus and EQT Group founder Conni Jonsson, led by CEO Per Sundin and chaired by Lennart Blecher, EQT’s Head of Real Assets.    Second, because I had the opportunity to first connect with Pophouse Entertainment back in 2022 (Shahriar Shokofan, Parham Benisi, Joakim Andersson) and I was impressed by their visionary approach in IP expansion.    🎯 Investment focus? Music catalogs and IP, covering three key rights: publishing, recording, and brand rights (NIL—artists’ name, image & likeness).   🚀 Value creation? An artist-centric approach that goes beyond passive catalog ownership, expanding and monetizing IP across the entire entertainment ecosystem. They launched ABBA Voyage—a concert featuring digital avatars of the Swedish pop icons, and The Avicii Experience—a tribute to the late Swedish DJ. On Monday, they announced a €𝟏.𝟐𝐁𝐍 𝐟𝐢𝐫𝐬𝐭-𝐭𝐢𝐦𝐞 𝐟𝐮𝐧𝐝—one of the largest debut private equity funds raised in Europe in the past decade.   They have already deployed about 30% of the fund, acquiring rights to KISS, Cyndi Lauper, Avicii, and Swedish House Mafia.   Huge congratulations to the entire Pophouse team for this fantastic achievement. 👏