Investment companies step up offers to independent labels — Rolling Stone
Investment companies, including entities linked to private equity funds, are increasingly offering independent music labels and artists deals to sell recording rights and music catalogs. Aaron Schultz, the owner of Bastard Jazz Recordings, said this activity could threaten the independent music ecosystem, Rolling Stone reports.
According to Schultz, over the course of one week he received six to eight inquiries from representatives of companies buying catalogs. He believes that after major performers, investors have turned their attention to mid-sized and small independent labels. Bastard Jazz Recordings, which specializes in soul and funk, has three employees.
Interest in smaller catalogs
Patrick Clifton, executive director of the international independent music organization ORCA, said that broader institutional capital is entering the industry — not only from private equity funds, but also from large pension funds. According to him, independent companies are attracting attention because of the potential value of their catalogs and rights.
For buyers, even a catalog with moderately successful tracks can be an attractive asset because of revenue from streaming or licensing music for films, series and advertising. Duetti CEO and co-founder Lior Tibon said that this summer the company lowered the minimum financial-history threshold for investments in master recordings from two years to six months. In January, Duetti announced that it had raised $200 million for further catalog acquisitions.
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Concerns of labels and artists
Schultz said that one potential buyer offered $1 million for the entire Bastard Jazz catalog, while another offered $50,000 for a single track that he believes is worth significantly more. Several other sources told the publication that low initial offers and mass mailings are common practice in this market.
Harrison Bennett, manager of the electronic duo Zeds Dead, noted at the same time that selling part of the rights can sometimes benefit an artist who needs a substantial lump sum — for example, for tour lighting. Christina Benson, a representative of Sweet on Top, said that some catalog buyers invest in them and can give them new life. At the same time, she stressed the importance of whether the new owner will develop the acquired assets rather than merely wait for their value to rise.
Clifton expressed concern that independent labels are being bought up faster than new ones emerge and become successful. In his view, a healthy music ecosystem requires a balance between companies of different sizes.
