Latest / The Bob Lefsetz Podcast / Merck Mercuriadis

Transcript

Merck Mercuriadis · The Bob Lefsetz Podcast

• 0:08
  Speaker 1: Welcome, Welcome, Welcome to Canadian Music Week. In the Bob
• 0:12
  Speaker 1: Left Sets the podcast. My guest today is Murk Peculiadest,
• 0:17
  Speaker 1: who runs the hottest company in music today, the Hypnosis
• 0:21
  Speaker 1: Songs Fun Mark. How's it going, Bob, It's a pleasure
• 0:25
  Speaker 1: to be with you, mate for a long time. Okay,
• 0:28
  Speaker 1: So you're constantly signing new acts, new catalogs. Do you
• 0:33
  Speaker 1: reach out to people or do they approach you? Um,
• 0:37
  Speaker 1: it's a combination of both. I would say that of
• 0:40
  Speaker 1: the deals that we make are you know, people that
• 0:44
  Speaker 1: who's music that I'm listening to, and when I'm listening
• 0:47
  Speaker 1: to that music, it makes me reach out and turn
• 0:49
  Speaker 1: around and tell people that, you know, I admire the
• 0:52
  Speaker 1: work that they're doing and that I would like them
• 0:54
  Speaker 1: to be a part of Hypnosis. But it's it's generally
• 0:57
  Speaker 1: a long courtship. I I generally build the relationship with someone.
• 1:01
  Speaker 1: In my case there you know, many of these relationships
• 1:05
  Speaker 1: are relationships that have been built over ten, twenty thirty
• 1:08
  Speaker 1: forty years at the time that I've been in this business.
• 1:11
  Speaker 1: So you know, it's it's it's there's a bit of
• 1:15
  Speaker 1: a love affair that's been going on for a long
• 1:18
  Speaker 1: period of time generally before I approach anybody. But then,
• 1:22
  Speaker 1: of course, on the back of success, you have a
• 1:24
  Speaker 1: lot of people that pick up the telephone and want
• 1:26
  Speaker 1: to be a part of what you're doing as well. Okay,
• 1:28
  Speaker 1: let's talk about a couple of specific cases. You recently
• 1:30
  Speaker 1: signed the Red Hot Chili Peppers. How did that come
• 1:32
  Speaker 1: together so that when I can't talk about Bob and
• 1:36
  Speaker 1: I apologize for that, But that's a deal that uh
• 1:41
  Speaker 1: under n d A and that is is a deal
• 1:44
  Speaker 1: that is is not something that we can talk about publicly,
• 1:48
  Speaker 1: and I apologize. I should have said that at the
• 1:50
  Speaker 1: very beginning. Okay, is there a deal that would be
• 1:53
  Speaker 1: representative that you can talk about relatively recent? Sure, we
• 1:56
  Speaker 1: can talk about Neil Young, we can talk about Lindsay Buckingham,
• 1:59
  Speaker 1: we can talk about and let's talk about Shakira. Okay,
• 2:03
  Speaker 1: let's start with Neil Young. How did you what was
• 2:07
  Speaker 1: the entreaty with Neil Young? Did you reach out to
• 2:09
  Speaker 1: him or do you reach out to you? Well, you know,
• 2:12
  Speaker 1: I've had a relationship with Neil for about twenty five years,
• 2:17
  Speaker 1: maybe longer. Um I was very close with his manager,
• 2:22
  Speaker 1: Elliott Roberts, sadly who's no longer with us anymore. And
• 2:27
  Speaker 1: Elliott was a bit of a mentor to me. We were,
• 2:30
  Speaker 1: you know, we had a very similar approach to the
• 2:32
  Speaker 1: way we did things, always integrity, lead um and Frank Geronda,
• 2:37
  Speaker 1: who was Elliott's lieutenant for many many years and is
• 2:40
  Speaker 1: now Neil's manager, was also part of of of that
• 2:44
  Speaker 1: circle of of of friends around Neil, and it was
• 2:49
  Speaker 1: there therefore very easy. I mean. The funny thing about
• 2:52
  Speaker 1: the Neil deal was that when I first started to
• 2:56
  Speaker 1: see investors, uh four or five years ago to educate
• 3:00
  Speaker 1: them on the idea of songs as an asset class um,
• 3:06
  Speaker 1: and I would explain to them, you know, the way
• 3:09
  Speaker 1: that certain artists cared about music, and that it would
• 3:13
  Speaker 1: be you know, the kind of equivalent of uh, you know,
• 3:17
  Speaker 1: the songs being metaphorical children, uh, if you like. And
• 3:21
  Speaker 1: therefore these were very emotional transactions that uh the artists
• 3:26
  Speaker 1: would find uh, you know, difficult, and that they would
• 3:29
  Speaker 1: want to make sure that they were putting those songs
• 3:31
  Speaker 1: into the hands of the right people. I always used
• 3:35
  Speaker 1: Neil as the example. I had over a hundred and
• 3:37
  Speaker 1: seventy seven meetings with investors in the first twelve or
• 3:41
  Speaker 1: thirteen months of of of hypnosis as an idea, and
• 3:45
  Speaker 1: in every one of those meetings, Neil was always the
• 3:48
  Speaker 1: example of the sort of artists that would do business
• 3:52
  Speaker 1: with me as opposed to doing business with other people,
• 3:55
  Speaker 1: because they would know that I cared about the music.
• 3:58
  Speaker 1: They would know that I amderstood that these were emotional transactions,
• 4:03
  Speaker 1: and that they looked upon these songs as metaphorical children
• 4:06
  Speaker 1: that they've given birth to in the form of songs,
• 4:09
  Speaker 1: and that they would want to know that those songs
• 4:11
  Speaker 1: were going into the right hands. And you know, I've
• 4:14
  Speaker 1: made my reputation and my success with artists and songwriters
• 4:19
  Speaker 1: and producers as opposed to at the expense of artists
• 4:22
  Speaker 1: and songwriters and producers, and therefore I have a pretty
• 4:25
  Speaker 1: good name in the artistic community. They know that I care,
• 4:29
  Speaker 1: they know that I'm prepared to fight on behalf of
• 4:31
  Speaker 1: the songwriters and the artists and the producers. And they
• 4:34
  Speaker 1: also know that, you know, perhaps most importantly, that while
• 4:38
  Speaker 1: I'll always want to, you know, enhance the earnings and
• 4:42
  Speaker 1: enhance their reputation, at the same time, I would never
• 4:45
  Speaker 1: do that at the cost of protecting their legacy. The
• 4:48
  Speaker 1: legacy is always the most important thing. And protecting the
• 4:52
  Speaker 1: value of the songs and protecting how the songs are
• 4:55
  Speaker 1: used as paramount. That's that's inherent. You know, when you
• 4:59
  Speaker 1: look at someone like you young, you know, on the
• 5:01
  Speaker 1: one hand, the songs are as valuable as they are
• 5:04
  Speaker 1: because Neil is an incredible artist and a wonderful songwriter.
• 5:09
  Speaker 1: But equally well inherent in that is the way that
• 5:12
  Speaker 1: he's conducted himself over the past sixty years. The reason
• 5:15
  Speaker 1: why people like you and I look up to Neil
• 5:18
  Speaker 1: is because of that conduct. And I've read you write
• 5:21
  Speaker 1: about Neil. Uh, you know, read what you've written about
• 5:24
  Speaker 1: Neil many many times over the decades, and you have
• 5:27
  Speaker 1: a similar passion to mind most of the time. And
• 5:30
  Speaker 1: that's partly based on the fact that Neil is a
• 5:33
  Speaker 1: guy that we can believe in. Okay, but walk us
• 5:35
  Speaker 1: through the process of making a deal with Neil. Did
• 5:38
  Speaker 1: you hear that he wanted to sell or did you
• 5:41
  Speaker 1: approach Frank and tell him, Hey, I think this is
• 5:44
  Speaker 1: an opportunity for you here. It's a it's a courtship
• 5:49
  Speaker 1: that that has existed from the time that hypnosis started.
• 5:54
  Speaker 1: Um And of course you know sometimes the artist will
• 5:57
  Speaker 1: get to a place where they be it's the right
• 6:00
  Speaker 1: time for them to make a deal like this, and
• 6:03
  Speaker 1: other times it will never be the right time to
• 6:05
  Speaker 1: to to to make a deal. In Neil's case, UM
• 6:09
  Speaker 1: probably last October he decided that this was the right
• 6:15
  Speaker 1: time for him to make a deal and to uh,
• 6:19
  Speaker 1: you know, put the songs and let me just stop
• 6:21
  Speaker 1: you for a second. That was totally independent of you
• 6:25
  Speaker 1: talking to him. He basically woke up in bed one
• 6:27
  Speaker 1: day and said today's the day, okay, correct continually and
• 6:32
  Speaker 1: and and instructed his team that it was it was
• 6:35
  Speaker 1: time to find uh, you know, the right people to
• 6:38
  Speaker 1: do to make a deal with UM. So from that
• 6:41
  Speaker 1: point it became very easy. You know, the lawyer and
• 6:44
  Speaker 1: Frank reached out to me. I told them what I
• 6:47
  Speaker 1: was prepared to do, literally within a matter of seconds.
• 6:50
  Speaker 1: And ultimately, and you know, when you you have a
• 6:53
  Speaker 1: career like Nils and and and you know you've got
• 6:56
  Speaker 1: sixty years almost worth of incredible songs You've got obviously, uh,
• 7:01
  Speaker 1: you know understand what the how the marketplace feels about
• 7:06
  Speaker 1: your your catalog and your songs. But I was very
• 7:10
  Speaker 1: confident that what I proposed to them right from the
• 7:13
  Speaker 1: get go would prevail. And indeed it did, and the
• 7:15
  Speaker 1: deal was done within about thirty days. Okay, so you're
• 7:19
  Speaker 1: saying that within a matter of seconds you had a
• 7:22
  Speaker 1: number that you could give them. What it wasn't wasn't
• 7:27
  Speaker 1: even minutes, it was seconds. So how did you come
• 7:31
  Speaker 1: up with that number? Because you know, as you may know,
• 7:36
  Speaker 1: you know, the sort of general discussion around catalog sales
• 7:42
  Speaker 1: is based on a multiple um. So for me to
• 7:45
  Speaker 1: be able to express the multiple that I was prepared
• 7:48
  Speaker 1: to pay for Neil just took a matter of seconds.
• 7:51
  Speaker 1: You know. By that point, I was already you know,
• 7:54
  Speaker 1: the better part of two billion dollars invested. I knew
• 7:58
  Speaker 1: what these catalogs were trading ends for. And you know,
• 8:01
  Speaker 1: the one thing that I'm never gonna do. And it
• 8:03
  Speaker 1: doesn't matter whether you're as famous as Neil Young or
• 8:06
  Speaker 1: you know, whether you're you're you're someone that you know,
• 8:09
  Speaker 1: maybe as a decade into your your career, your life,
• 8:12
  Speaker 1: I'm never gonna mess a great creator around. You know,
• 8:15
  Speaker 1: my my modus opper endi is too. And this has
• 8:18
  Speaker 1: been this way throughout my career. You know, if I
• 8:22
  Speaker 1: believe that I should pay a dollar I'm not going
• 8:25
  Speaker 1: to offer ninety cents and then let you talk me
• 8:28
  Speaker 1: up to a dollar. I'm going to offer a dollar,
• 8:31
  Speaker 1: and then if you want more, I'm gonna justify why
• 8:34
  Speaker 1: I believe it's a dollar. So it's it's you know.
• 8:37
  Speaker 1: My My approach is always to be as real as
• 8:41
  Speaker 1: I possibly can be, and then if there's effort and
• 8:45
  Speaker 1: time that's required to then explain and to justify why
• 8:48
  Speaker 1: that's the number, and then I'm prepared to do it.
• 8:51
  Speaker 1: But I don't. I don't try to nickel and dine people.
• 8:53
  Speaker 1: I think that, you know, one of the things that
• 8:55
  Speaker 1: I set out to do when I started hypnosis, there
• 8:58
  Speaker 1: were three three goals. The first goal was to establish
• 9:02
  Speaker 1: songs as an asset class that could rival golden oil um.
• 9:07
  Speaker 1: The second was to use the leverage of hypnosis to
• 9:11
  Speaker 1: then help to change where the songwriter sits in the
• 9:14
  Speaker 1: economic equation, because despite the fact that they're delivering the
• 9:17
  Speaker 1: most important component to an artist having success, they are
• 9:21
  Speaker 1: the low man or woman on the in the economic equation.
• 9:25
  Speaker 1: And then the third goal was to destroy the concept
• 9:30
  Speaker 1: of traditional publishing, where someone gives you a check but
• 9:34
  Speaker 1: doesn't really add much value beyond that and to replace
• 9:37
  Speaker 1: it with song management. As as an artist manager, you know,
• 9:41
  Speaker 1: I manage people with responsibility because I understand that. You know,
• 9:46
  Speaker 1: first of all, I can't play the guitar, I can't
• 9:48
  Speaker 1: sing a song, I can't write a song. The only
• 9:51
  Speaker 1: thing that gives me a seat at the table with
• 9:53
  Speaker 1: these great people is that I take my responsibility seriously
• 9:56
  Speaker 1: and I think that that same responsibility should be extended
• 10:01
  Speaker 1: to these great songs that make the world go round.
• 10:04
  Speaker 1: But that's not what traditional publishing is. Let's get let's
• 10:08
  Speaker 1: get downe in the nuts and bolts. So if you
• 10:10
  Speaker 1: could make a deal or come up with a number
• 10:12
  Speaker 1: that quickly. Did they tell you how much they were
• 10:16
  Speaker 1: making from their catalog every year or is this something
• 10:19
  Speaker 1: where you investigate all the available acts yourself and see
• 10:23
  Speaker 1: how much they're making. So basically everything that we buy
• 10:29
  Speaker 1: is bought on verified data. So the artist will supply
• 10:33
  Speaker 1: the last three years of their publishing statements, the last
• 10:37
  Speaker 1: three years of their p r O statements, the last
• 10:41
  Speaker 1: three years of their you know, neighboring rights, sound exchange masters,
• 10:45
  Speaker 1: depending on what it is, that's that's that's on the
• 10:48
  Speaker 1: table um. But in the case of Neil, what I
• 10:52
  Speaker 1: gave immediately was the multiple that I was prepared to
• 10:56
  Speaker 1: pay for it. They then supplied me with that verified
• 11:00
  Speaker 1: aid to within a couple of days, they had the
• 11:03
  Speaker 1: formal offer back with that number, that yearly number times
• 11:08
  Speaker 1: the multiple that I was willing to pay, and we
• 11:11
  Speaker 1: were there very very quickly after that. What is the
• 11:14
  Speaker 1: multiple that I can't talk about I'm under n d A.
• 11:19
  Speaker 1: But but what I can, But in general, what I
• 11:22
  Speaker 1: can tell you is this is that I've now invested
• 11:25
  Speaker 1: over two billion dollars, about two point two billion dollars
• 11:28
  Speaker 1: at an average weighted multiple of fifteen. So I've I've
• 11:33
  Speaker 1: bought some catalogs for a lot more than a fifteen
• 11:36
  Speaker 1: times multiple, and I've bought some catalogs for a lot
• 11:39
  Speaker 1: less than a fifteen times multiple. But the average weighted
• 11:42
  Speaker 1: multiple across the two billion invested is fifteen times. Okay,
• 11:47
  Speaker 1: let's assume you pay fifteen times for your purposes. How
• 11:52
  Speaker 1: long a period of time do you calculate it will
• 11:54
  Speaker 1: take for you to recoup your investment. Well, it's probably
• 11:59
  Speaker 1: something that's closer to ten years time rather than fifteen
• 12:03
  Speaker 1: years time, because, of course, the context for all of
• 12:06
  Speaker 1: this is the explosive growth of streaming where when we started,
• 12:11
  Speaker 1: you know, just over three years ago, we had thirty
• 12:15
  Speaker 1: million paid subscribers to music streaming services. Today we have
• 12:19
  Speaker 1: four dred and fifty million paid subscribers. Then in addition
• 12:23
  Speaker 1: to that growth, you know, you've got uh things like
• 12:28
  Speaker 1: legislation that's taken place all over the world, such as
• 12:30
  Speaker 1: the Copyright Board ruling in the United States that has
• 12:34
  Speaker 1: given the songwriter a forty four greater share of the
• 12:38
  Speaker 1: pie incrementally between two thousand and nineteen and the end
• 12:42
  Speaker 1: of two thousand and twenty two. Now that's been appealed
• 12:45
  Speaker 1: by Spotify and by Amazon, but not by Apple, and
• 12:50
  Speaker 1: we believe that that increase will prevail. So by the
• 12:54
  Speaker 1: time you get to the end of a dollar's worth
• 12:58
  Speaker 1: of income that you bought will be worth a dollar
• 13:00
  Speaker 1: forty four if it was predictable, reliable income. And then
• 13:04
  Speaker 1: we go to work actively managing the songs better than
• 13:08
  Speaker 1: they've been actively managed for a long time, because you know,
• 13:11
  Speaker 1: the big publishing houses that administer many of these songs
• 13:14
  Speaker 1: when we buy them, they have as many as twenty
• 13:17
  Speaker 1: thousand songs per person. So as good as they are
• 13:21
  Speaker 1: what they do, they don't have the ability to be
• 13:23
  Speaker 1: able to affect the success of twenty thousand songs per person.
• 13:27
  Speaker 1: They just don't have the bandwidth to do it. We
• 13:29
  Speaker 1: operate on a basis of five hundred plus songs per
• 13:33
  Speaker 1: person UM, never more than a thousand songs per person.
• 13:37
  Speaker 1: We're adding all the time, so that ratio of between
• 13:40
  Speaker 1: five hundred and a thousand songs changes depending on where
• 13:43
  Speaker 1: we are between what we've acquired recently. So today we
• 13:47
  Speaker 1: have acquired a hundred songs from Andrew Watt um Grammy,
• 13:51
  Speaker 1: a winning Producer of the Year UM. But we're adding
• 13:55
  Speaker 1: more people to manage those songs and manage the songs
• 13:58
  Speaker 1: that are in the catalog on a glue basis, So
• 14:01
  Speaker 1: it fluctuates between having five hundred and a thousand songs
• 14:04
  Speaker 1: per person depending on where we are in that cycle. Ideally,
• 14:09
  Speaker 1: as we get to the point where there's a steady state,
• 14:12
  Speaker 1: it's five hundred songs per person as opposed to twenty
• 14:15
  Speaker 1: songs per person, and those people are very focused on
• 14:18
  Speaker 1: putting the songs in movies, TV commercials, video games, getting
• 14:23
  Speaker 1: new artists to cover those songs, getting new songwriters to
• 14:27
  Speaker 1: interpolate them, making sure that they're on TikTok, making sure
• 14:30
  Speaker 1: that they're on Peloton, that they're on the right playlists, etcetera.
• 14:34
  Speaker 1: So by the time you add all of those ratchets,
• 14:37
  Speaker 1: you know, what is a fifteen times multiple probably becomes
• 14:40
  Speaker 1: something less than a ten times multiple if you're doing
• 14:43
  Speaker 1: your job properly. Okay, let's just use Neil Young as
• 14:47
  Speaker 1: an example. So a lot of these older artists, Neil, Paul, Simon,
• 14:52
  Speaker 1: Dylan have sold in. The conventional wisdom is they're doing
• 14:56
  Speaker 1: it for tax reasons. In this particular case, you make
• 14:59
  Speaker 1: it deal with all of these very highly well known,
• 15:04
  Speaker 1: respected artists, is part of the negotiation where and how
• 15:09
  Speaker 1: they get paid for tax reasons. Well, certainly they will
• 15:14
  Speaker 1: have all had very very good independent tax planning. So
• 15:19
  Speaker 1: you know, you you you are probably aware that under
• 15:23
  Speaker 1: the Trump administration previously that at the mid terms last
• 15:27
  Speaker 1: time around, Trump tried to get rid of, uh the
• 15:32
  Speaker 1: the capital gains tax treatment for songwriters. Bart Harbison at
• 15:37
  Speaker 1: the n s a I and Nashville stepped in with
• 15:39
  Speaker 1: a very very heavy lobby and they were able to
• 15:43
  Speaker 1: turn that around and keep the capital gains tax in place.
• 15:47
  Speaker 1: We've now got what I think we all believe is
• 15:50
  Speaker 1: a far, far better president and Joe Biden. But Joe
• 15:54
  Speaker 1: Biden is also intent on, uh, you know, putting a
• 15:57
  Speaker 1: tax program in place that will likely get rid of
• 16:00
  Speaker 1: capital gains tax for songwriters. Whether that happens this year,
• 16:04
  Speaker 1: whether it happens next year, it's certainly something on the agenda.
• 16:08
  Speaker 1: I've been part of many, many discussions with the n
• 16:12
  Speaker 1: s a I and various congress people around the country
• 16:16
  Speaker 1: explaining to them number one that songwriters deserve capital gains
• 16:20
  Speaker 1: treatment and number two that even if we just look
• 16:23
  Speaker 1: at hypnosis, hypnosis has probably paid about five dred to
• 16:27
  Speaker 1: six hundred million dollars into the treasury based on songwriters
• 16:32
  Speaker 1: getting capital gains treatment. If that capital gains treatment were
• 16:37
  Speaker 1: to go away, many many songwriters would have to think
• 16:40
  Speaker 1: twice about whether or not they sold their songs. Okay,
• 16:44
  Speaker 1: but specifically that would be the general leandscape. Do you
• 16:48
  Speaker 1: just make a deal and say I'll pay you X
• 16:51
  Speaker 1: for this, let's just use a hundred million dollars is
• 16:53
  Speaker 1: around number? Or do they say we want you know, like,
• 16:57
  Speaker 1: is it like a baseball player where they say, well,
• 17:00
  Speaker 1: I want to be paid in Canada or I want
• 17:02
  Speaker 1: to be paid. Here are those factors that Hypnosis is
• 17:07
  Speaker 1: involved in at all, Where the money is generated, from
• 17:10
  Speaker 1: where it goes. We're not involved in the factors because
• 17:14
  Speaker 1: of course we're not advisors to the artist or the
• 17:17
  Speaker 1: songwriter or the producer. But if the songwriter or the
• 17:21
  Speaker 1: artist or the producer has a legitimate tax plan with
• 17:25
  Speaker 1: their advisors, as long as it's a legitimate tax plan,
• 17:29
  Speaker 1: we will do our very very best to cooperate and
• 17:33
  Speaker 1: make the transaction and the sale of the catalog is
• 17:37
  Speaker 1: smooth and seamless as as as the songwriter needs it
• 17:40
  Speaker 1: to be. Um, and that's something that you know, the
• 17:42
  Speaker 1: music business that you and I came into wasn't such
• 17:46
  Speaker 1: a sophisticated place. I'm happy to say it's becoming more
• 17:49
  Speaker 1: sophisticated on behalf of artists and songwriters and producers every day.
• 17:54
  Speaker 1: So you know, there are many many good business managers
• 17:56
  Speaker 1: and lawyers out there that have looked after clients well,
• 18:00
  Speaker 1: certainly in the hundred and fifty odd transactions that we've
• 18:03
  Speaker 1: made today. Okay, an iconic artist doesn't have that much
• 18:09
  Speaker 1: runway left. Paul Simon talks about not touring anymore. He's
• 18:13
  Speaker 1: either eighty or going to be eighty this year. Now
• 18:16
  Speaker 1: you say, whatever the multiple is, let's just assume it's
• 18:19
  Speaker 1: less than twenty, and you predict that you'll make the
• 18:22
  Speaker 1: money back in ten. What is the pitch to someone
• 18:25
  Speaker 1: who's in their thirties like Andrew Watt. So that's really
• 18:30
  Speaker 1: about de risking that person's future. You know that if
• 18:34
  Speaker 1: you look at Andrew Watt specifically, Andrew Watt is not
• 18:37
  Speaker 1: only an incredible songwriter and perhaps the most important young
• 18:42
  Speaker 1: songwriter in the world today. As I mentioned before, you know,
• 18:45
  Speaker 1: the Grammy Award winning Producer of the Year, you know,
• 18:49
  Speaker 1: killing it with du Olyppa, with Miley Cyrus, with Post Malone,
• 18:53
  Speaker 1: with Ozzy Osborne. Because he's a guy that that that
• 18:56
  Speaker 1: you know, works on music that he loves. He just
• 18:58
  Speaker 1: doesn't just work on on on whatever is the flavor
• 19:01
  Speaker 1: of the moment today. Um. And you know, in Andrew's case,
• 19:05
  Speaker 1: he was a guy that was very very bright, that
• 19:08
  Speaker 1: made an admin deal, didn't take any money for it,
• 19:12
  Speaker 1: and just went to work and relied on himself to
• 19:16
  Speaker 1: uh succeed in order to put money in his pocket
• 19:20
  Speaker 1: and to pay the rent and you know, put food
• 19:22
  Speaker 1: on his table and and and everything else that goes
• 19:24
  Speaker 1: with it. So for someone like Andrew now at the
• 19:27
  Speaker 1: age of thirty, his future is entirely de risked. What
• 19:31
  Speaker 1: he works on tomorrow is his own choice because he's
• 19:34
  Speaker 1: got enough money now to live for the rest of
• 19:36
  Speaker 1: his life. And that's an important, you know, point of
• 19:39
  Speaker 1: freedom for any young creator. Um so you know, it's
• 19:44
  Speaker 1: it's it's you know you is you I think are
• 19:47
  Speaker 1: getting to it. You know, people have different motivations for
• 19:51
  Speaker 1: for for selling, and in his case, it's de risking
• 19:54
  Speaker 1: his future and creating a relationship with a company like Hypnosis,
• 19:58
  Speaker 1: because when we make these transactions, that's the beginning of
• 20:01
  Speaker 1: the relationship. That's not the sum total of the relationship.
• 20:04
  Speaker 1: Every one of the hundred and fifty deals that we've made,
• 20:07
  Speaker 1: these people are now part of the Hypnosis family. They
• 20:10
  Speaker 1: work with the eighty three people that I have around
• 20:12
  Speaker 1: the world, and we're doing great things together. So for
• 20:16
  Speaker 1: someone like Andrew, the prime motivation is that he's now
• 20:20
  Speaker 1: de risked his future. But the second part of his
• 20:23
  Speaker 1: motivation is that he now has a partner to help
• 20:26
  Speaker 1: execute many of the things along with Scooter Braun as
• 20:29
  Speaker 1: his manager, to execute many of the things that that
• 20:32
  Speaker 1: are important to him in his growth as as both
• 20:35
  Speaker 1: an artist and a producer and a songwriter. Okay, you
• 20:40
  Speaker 1: say they're partners. What is the potential upside of an
• 20:44
  Speaker 1: act that makes a deal with you? So every artist,
• 20:49
  Speaker 1: without whether they ask for it or whether they don't,
• 20:52
  Speaker 1: are going to get a minimum of two bonuses in
• 20:55
  Speaker 1: our deals. And the reason why I have those two
• 20:58
  Speaker 1: bonuses at the end of year three and at the
• 21:01
  Speaker 1: end of year four is because I don't ever want
• 21:04
  Speaker 1: anyone to have negative emotion for making a deal with me.
• 21:09
  Speaker 1: So I'm very clear with people from the get go
• 21:11
  Speaker 1: that I'm doing this. On the one part, you know,
• 21:14
  Speaker 1: the motive, the motive of the fund is obviously to
• 21:18
  Speaker 1: make money for our shareholders and for ourselves. The ulterior
• 21:23
  Speaker 1: motive is to change where the songwriter sits in the
• 21:25
  Speaker 1: economic equation. But as we work towards the ulterior motive,
• 21:29
  Speaker 1: you know, the motive is something that is coming together
• 21:32
  Speaker 1: very very quickly. And if I'm right, and streaming grows
• 21:36
  Speaker 1: from four under the fifty million people inside of the
• 21:39
  Speaker 1: next decade to two billion people around the world. If
• 21:42
  Speaker 1: I'm right, in the copyright Board ruling stays in place,
• 21:45
  Speaker 1: and there's a forty four percent increase if I'm right,
• 21:48
  Speaker 1: and we can actively manage our catalogs better than where
• 21:51
  Speaker 1: they came from before, and there's that growth both from
• 21:55
  Speaker 1: a capital perspective and from a revenue perspective. I want
• 21:58
  Speaker 1: the songwriter to participate paid in that, so I build
• 22:01
  Speaker 1: in bonuses at the end of year three and at
• 22:03
  Speaker 1: the end of year four that are as much as
• 22:08
  Speaker 1: of what the purchase price was in the first place. Okay,
• 22:11
  Speaker 1: what happens after year four? After year four, then it
• 22:17
  Speaker 1: depends on what you know. That's a standard practice that
• 22:20
  Speaker 1: I have for every deal that I make. If someone
• 22:24
  Speaker 1: has negotiated something better than that after year four, then
• 22:27
  Speaker 1: that's a different story. Okay, So some people this is
• 22:32
  Speaker 1: a negotiable point. It's a negotiable point because, as I say,
• 22:37
  Speaker 1: I want people to be able to participate in the
• 22:40
  Speaker 1: in the upside um. And uh, I'd never wanted to
• 22:44
  Speaker 1: be any negative emotion in someone, you know, I never
• 22:47
  Speaker 1: want someone to knock on the door and say, dude,
• 22:48
  Speaker 1: you were smarter than I was, Which is why I'm
• 22:51
  Speaker 1: very clear with people from the get go what my
• 22:54
  Speaker 1: thoughts are on where this business is going. Okay, now
• 22:59
  Speaker 1: you're the big Juna, the Primary Wave is buying catalogs,
• 23:03
  Speaker 1: Roundhill is buying catalogs. Now we saw Universal and Sony.
• 23:09
  Speaker 1: Does everyone ultimately pay the same price or is it
• 23:13
  Speaker 1: a bidding war? How does an act ultimately decide? Well,
• 23:19
  Speaker 1: seventy of the of the transactions that we make are
• 23:23
  Speaker 1: off market transactions that never involve you know, Primary Wave
• 23:28
  Speaker 1: or round Hill or or you know any of these
• 23:30
  Speaker 1: other companies that are are are out there. Obviously, Universal
• 23:35
  Speaker 1: and Warner and Sony have made some deals of their own,
• 23:38
  Speaker 1: but they're not particularly active. You can understand why if
• 23:42
  Speaker 1: a Bob Dylan were available on the market, why Universal
• 23:46
  Speaker 1: would do that, whereas for the most part they're not buyers.
• 23:50
  Speaker 1: You can understand why Sony would make a deal like
• 23:53
  Speaker 1: Paul Simon, where for the most part they're not buyers. Uh.
• 23:57
  Speaker 1: You know, Lend Blevotnik has Tempo as a fund within Warners,
• 24:02
  Speaker 1: But in general they seem to be buying only catalogs
• 24:06
  Speaker 1: where they have a first or matching right on having
• 24:10
  Speaker 1: signed an artist early enough to be able to have
• 24:13
  Speaker 1: that built into the contract. But I I don't fear
• 24:18
  Speaker 1: the competition in the same way that many of my
• 24:21
  Speaker 1: competitors feel the competition because I rely on the relationship
• 24:26
  Speaker 1: that I have with artists in the community and songwriters
• 24:29
  Speaker 1: in the community and producers in the community that I
• 24:32
  Speaker 1: believe in and that in turn believe in me, and
• 24:35
  Speaker 1: that puts me in a situation where I don't have
• 24:37
  Speaker 1: to compete, as I say, of the time and the
• 24:40
  Speaker 1: thirty percent of the time where I am competing, if
• 24:43
  Speaker 1: something special comes along. You know, we have people like
• 24:46
  Speaker 1: Richie Samborra from Bon Jovi or the Risive from the
• 24:49
  Speaker 1: Wood Tang Clan that are you know, on public record
• 24:52
  Speaker 1: as having sold to us for less than what they
• 24:55
  Speaker 1: were offered by competitors, because the material difference is not
• 25:01
  Speaker 1: the size of the check, but the quality of the
• 25:03
  Speaker 1: people that you're you know, putting your metaphorical children into
• 25:07
  Speaker 1: the hands of you know, where I'm a I'm a
• 25:10
  Speaker 1: good surrogate parent when it comes to music, because I care.
• 25:14
  Speaker 1: It's not just about the money for me, It's about
• 25:17
  Speaker 1: doing what's right for the music. And what I've certainly
• 25:20
  Speaker 1: discovered in the almost forty years that I've been doing
• 25:23
  Speaker 1: this is doing the right thing. Money comes to you.
• 25:28
  Speaker 1: If you do something based on money, sometimes you'll find
• 25:31
  Speaker 1: it very, very hard to to have that money coming
• 25:34
  Speaker 1: to you. So you know I'm I'm someone that is
• 25:37
  Speaker 1: always making decisions based on what's in the best interest
• 25:40
  Speaker 1: of the music. Um. And then I have the trust
• 25:44
  Speaker 1: in the surrender to the good man above that the
• 25:48
  Speaker 1: money will find us. Okay, in the case of Paul
• 25:51
  Speaker 1: Simon and Bob Dylan, did you make a bid on
• 25:55
  Speaker 1: those catalogs on Paul Simon? No? UM On Bob Dylan,
• 26:01
  Speaker 1: I'm under n d A. So I have to be
• 26:04
  Speaker 1: careful about what I say, but I will say that. UM.
• 26:07
  Speaker 1: You know, Jeff Rosen, who looks after Bob Dylan's publishing,
• 26:12
  Speaker 1: is arguably the most underrated person in our business. He's
• 26:16
  Speaker 1: done an unbelievable job for Bob over the years. Bob
• 26:20
  Speaker 1: obviously has a level of faith and trust in him
• 26:23
  Speaker 1: to allow him to execute that job. Was sometimes many
• 26:27
  Speaker 1: artists find that difficult to do. So I I pursued
• 26:30
  Speaker 1: Jeff and threw him Bob for the better part of
• 26:34
  Speaker 1: eighteen months or two years to make a deal. And
• 26:37
  Speaker 1: and uh I believe that the only discussions that he
• 26:40
  Speaker 1: ultimately had were with Hypnosis and Universal and uh I
• 26:45
  Speaker 1: think that the deal that he was able to make
• 26:47
  Speaker 1: was a deal that only a company that's worth you know,
• 26:50
  Speaker 1: thirty three and a half billion euros to fifty billion
• 26:54
  Speaker 1: dollars could have made. Okay, do you think you helped
• 26:59
  Speaker 1: incentivize Bob to sell or was Bob the kicking the
• 27:03
  Speaker 1: tires on selling when you get in the picture eighteen
• 27:05
  Speaker 1: months ago? Now, you know, I worked very hard to
• 27:10
  Speaker 1: get uh. You know, when I talk about establishing songs
• 27:14
  Speaker 1: as an asset class, inherent in that is that I
• 27:18
  Speaker 1: believe that music has a value on behalf of artists
• 27:22
  Speaker 1: and songwriters and producers, that everyone is known all along,
• 27:26
  Speaker 1: but that the major companies and other people like Primary
• 27:29
  Speaker 1: Waves who've been buying and selling catalogs for a long
• 27:32
  Speaker 1: time didn't want to fully acknowledge. And I was very
• 27:36
  Speaker 1: happy to fully acknowledge what the true value of of
• 27:41
  Speaker 1: of of of these incredible songs are because it's in
• 27:44
  Speaker 1: the context of explosive streaming growth and all of those
• 27:47
  Speaker 1: other levers that I talked about. So, you know, it's
• 27:51
  Speaker 1: very very important on the part of Hypnosis to truly
• 27:55
  Speaker 1: recognize the value of these songs. To make sure, you know,
• 27:59
  Speaker 1: nine point nine percent of our deals out of the
• 28:01
  Speaker 1: hundred and fifty deals that we made A hundred and
• 28:04
  Speaker 1: forty eight of them are directly with the songwriter, the artist,
• 28:07
  Speaker 1: or the producer. There are only two deals that that
• 28:10
  Speaker 1: were you know, a collection of songs that were owned
• 28:14
  Speaker 1: by Cobalt, for example, that we've made separate and apart
• 28:17
  Speaker 1: from that, all of our deals are made directly with
• 28:20
  Speaker 1: the artist and the songwriter and producer because I want
• 28:24
  Speaker 1: them to be acknowledged and I want them to be
• 28:27
  Speaker 1: put in a position where they are their their futures
• 28:30
  Speaker 1: de risked. Whether you're a thirty year old Andrew Watt
• 28:34
  Speaker 1: or whether you're a seventy five year old Neil Young,
• 28:37
  Speaker 1: I want you to be the beneficiary of of of
• 28:41
  Speaker 1: of of the deal, not some corporation. And in doing that,
• 28:46
  Speaker 1: I've truly do you ever talk to somebody and say
• 28:50
  Speaker 1: you ever talk to somebody say I don't think you
• 28:52
  Speaker 1: should sell. I tell people that almost in every instance,
• 28:57
  Speaker 1: that I don't think that they should sell, and I
• 28:59
  Speaker 1: tell them in exactly why I don't think that they
• 29:01
  Speaker 1: should sell. But at the same time, I also tell
• 29:04
  Speaker 1: them why, if they're at that place in their life
• 29:07
  Speaker 1: where they want to sell, why I'm the right person
• 29:10
  Speaker 1: to sell to. So you know, because you know, as
• 29:12
  Speaker 1: you know, you can take a piece of real estate,
• 29:17
  Speaker 1: whether it's you know, anywhere in the world London, Los Angeles,
• 29:21
  Speaker 1: you know, and you know New York, Miami where I
• 29:23
  Speaker 1: am at the moment, and you know, you could say
• 29:26
  Speaker 1: to someone, look, you know, you've got to hold on
• 29:27
  Speaker 1: to that property because twenty years from now that's going
• 29:31
  Speaker 1: to be you know, it's something really really special, even
• 29:34
  Speaker 1: relative to where it is right now. And of course,
• 29:37
  Speaker 1: if if you don't have twenty years, what's the point,
• 29:40
  Speaker 1: right It's it's so if someone's at a point in
• 29:43
  Speaker 1: their life where they're ready to sell, then I'm the
• 29:46
  Speaker 1: right person to sell to. If if if your music
• 29:49
  Speaker 1: is something that I care about, then I'm the right
• 29:51
  Speaker 1: person to sell to. If your if your music is
• 29:53
  Speaker 1: not something that I care about, then there's a lot
• 29:55
  Speaker 1: of other people out there. Okay, you only a hundred
• 30:00
  Speaker 1: percent of the catalogs you buy. Now, there are there
• 30:04
  Speaker 1: are instances where we've bought off interest of the overall catalogs.
• 30:10
  Speaker 1: So you know, we would never go in and pick,
• 30:13
  Speaker 1: you know, fifty songs out of a hundred. It would
• 30:16
  Speaker 1: be buying a half interest in all one hundred songs.
• 30:19
  Speaker 1: As an example. Um, so there are instances, you know,
• 30:23
  Speaker 1: I would say probably out of the hundred and fifty
• 30:25
  Speaker 1: catalogs that we own, a hundred and forty five of
• 30:28
  Speaker 1: them are owned, and there are probably five of them
• 30:34
  Speaker 1: where we own somewhere between fifty and seventy and in
• 30:38
  Speaker 1: those five, and this is a minor part of your portfolio,
• 30:42
  Speaker 1: do you have an option to buy the rest of
• 30:44
  Speaker 1: it or is it left totally open? Correct? No, we
• 30:48
  Speaker 1: have an option to buy the rest of it. And
• 30:50
  Speaker 1: most of the deals that we make, even when we're
• 30:52
  Speaker 1: buying a hundred percent of a songwriter's catalog, if there's
• 30:56
  Speaker 1: someone that that is young and has a future, like
• 31:00
  Speaker 1: Andrew Rott as an example, then we'll have a first
• 31:03
  Speaker 1: and matching right on their next catalog as well. Okay,
• 31:08
  Speaker 1: so let's soon I make a deal. You've established your
• 31:11
  Speaker 1: bona fides. But theoretically, and I certainly hope this doesn't happen,
• 31:16
  Speaker 1: you could die tonight, Okay, and as so could I.
• 31:21
  Speaker 1: Are there chemian clauses or the ability to buy back
• 31:26
  Speaker 1: or can the catalogs be transferred freely after Hypnosis purchases them? No,
• 31:34
  Speaker 1: there are, there are There are no key man clauses
• 31:37
  Speaker 1: and there are no abilities to buy back. But I
• 31:39
  Speaker 1: have probably relative to other you know what, I don't
• 31:43
  Speaker 1: allow us to be called a publishing company, where a
• 31:46
  Speaker 1: song management company, but relative to say, companies that are
• 31:51
  Speaker 1: called publishing companies, we probably have a higher level of
• 31:56
  Speaker 1: people in position marketing these songs and protecting these songs
• 32:02
  Speaker 1: than any other company in the world, including Universal Warner
• 32:06
  Speaker 1: and Sony because the sort of executives that we have,
• 32:09
  Speaker 1: whether it's Amy Thompson who's the chief catalog officer, or
• 32:12
  Speaker 1: Ted Cockle who's the president, you know, these are people
• 32:15
  Speaker 1: that are generally reserved for recorded music roles where the
• 32:20
  Speaker 1: record company is getting the lion's share of the money,
• 32:22
  Speaker 1: where the economics allow them to spend this kind of
• 32:25
  Speaker 1: money on on on executives. In most publishing companies, the
• 32:30
  Speaker 1: money is being spent on A and R executives rather
• 32:33
  Speaker 1: than marketing people. So I've put in an incredible network
• 32:37
  Speaker 1: of eight three plus people now that as I say,
• 32:40
  Speaker 1: include people like Amy Thompson, Ted Cockle, Kenny McPherson, Richard
• 32:45
  Speaker 1: Rowe that are real artist people that understand and love
• 32:50
  Speaker 1: the music as much as I do, and that are
• 32:53
  Speaker 1: there to to ensure that the artists and the songwriter
• 32:56
  Speaker 1: are protected. Um, in the case that I do get
• 33:00
  Speaker 1: hit by that proverbial bus and I'm no longer there tomorrow.
• 33:03
  Speaker 1: And my children, who have grown up with this music
• 33:06
  Speaker 1: and who have grown up with these artists all of
• 33:09
  Speaker 1: their lives, are also a part of the company, and
• 33:12
  Speaker 1: they know what my standards are, UM, and adhere to
• 33:16
  Speaker 1: those as well. So it's it's there's probably if you know,
• 33:20
  Speaker 1: if you'd asked me this question two years ago, UM,
• 33:23
  Speaker 1: that was a real issue, right because obviously I hadn't
• 33:27
  Speaker 1: made the company exciting enough yet at that point to
• 33:30
  Speaker 1: be able to track people like Ted or Amy or
• 33:32
  Speaker 1: Kenny or whoever it might be. Now at this point,
• 33:36
  Speaker 1: you know, we're about to start our fourth year. UM.
• 33:39
  Speaker 1: You know, as you very nicely said, this is the
• 33:43
  Speaker 1: most exciting company and music perhaps today, and therefore there's
• 33:47
  Speaker 1: no shortage of quality people that are prepared to follow
• 33:53
  Speaker 1: in my footsteps and protect the artist if necessary. Okay,
• 33:58
  Speaker 1: now one for you dressed earlier. I want to expand
• 34:02
  Speaker 1: most of the money is in streaming. There's a dollar
• 34:07
  Speaker 1: in streaming dollar of income comes in. Although Spotify is
• 34:10
  Speaker 1: being beaten up, we all know, that's not really what's
• 34:14
  Speaker 1: going on. They have to stay in business. They're taking
• 34:15
  Speaker 1: approximately thirty Most people in the artist community feel of
• 34:21
  Speaker 1: the remaining seventy cents, let's call it that the songwriter
• 34:26
  Speaker 1: got a raw deal. Now we also know that these
• 34:31
  Speaker 1: major at this point only three companies also have a
• 34:34
  Speaker 1: huge footprint in songwriting and therefore, on some level they
• 34:38
  Speaker 1: don't care where the money comes from. Is there any
• 34:42
  Speaker 1: chance that the percentage will grow? You know, you talk
• 34:47
  Speaker 1: about the legal with one for four, but as we
• 34:50
  Speaker 1: go down, what's an appropriate amount of a streaming dollar
• 34:53
  Speaker 1: that should go to the songwriter and how do we
• 34:55
  Speaker 1: get there? Yeah, there's no question that the songwriters share
• 34:59
  Speaker 1: of the income is going to grow. And you know,
• 35:01
  Speaker 1: the business that you and I came into, both as
• 35:05
  Speaker 1: fans and then as professionals was one that you know,
• 35:09
  Speaker 1: I I affectionately referred to as the post Beatles paradigm,
• 35:13
  Speaker 1: right where ninety percent of the artists that we would
• 35:16
  Speaker 1: sign and work on were people that, you know, we're
• 35:20
  Speaker 1: self contained. They you know, had a good idea of
• 35:23
  Speaker 1: who they were, who they might become. They wrote their
• 35:26
  Speaker 1: own songs, they knew what their album covers should look
• 35:29
  Speaker 1: like what their stage show should look like. And the
• 35:32
  Speaker 1: job of someone like you or I was to a
• 35:34
  Speaker 1: believe in them and be to put a plan in
• 35:37
  Speaker 1: place to bring their ideas to fruition and to bring
• 35:40
  Speaker 1: them success make other people believe in them. Today the
• 35:44
  Speaker 1: business is much more like the nineties and the nineteen fifties,
• 35:48
  Speaker 1: where nine of the artists that are being signed are
• 35:51
  Speaker 1: very talented people, but that are absolutely reliant on outside
• 35:55
  Speaker 1: songwriters to deliver their heads. So, you know, I don't
• 35:59
  Speaker 1: know if you know a statistic, but you know, we
• 36:01
  Speaker 1: were talking about Bob Dylan a few minutes ago. It's
• 36:04
  Speaker 1: the second of the last Bob Dylan album in two
• 36:07
  Speaker 1: thousand and fourteen, which I think was tempest Um. That
• 36:12
  Speaker 1: is the last album that became a Billboard Top one
• 36:17
  Speaker 1: album of the year that didn't have an outside songwriter
• 36:21
  Speaker 1: on it um. So the song it has never yea
• 36:24
  Speaker 1: So the songwriter has never been more important in our
• 36:28
  Speaker 1: lifetimes but perhaps ever in history than they are today.
• 36:33
  Speaker 1: And you know, if you're Monty Lippmann or if you're
• 36:35
  Speaker 1: John Janet or Rob Stringer, you know you need to
• 36:38
  Speaker 1: have a relationship with you know, whether it's Andrew Watt
• 36:43
  Speaker 1: or Taylor Parks or Benny Blanco or the monsters and strangers.
• 36:47
  Speaker 1: Those relationships are more important to you today than your
• 36:50
  Speaker 1: than your artist relationships are, because that's where the hits
• 36:53
  Speaker 1: are coming from, is from the songwriter. But I want
• 36:57
  Speaker 1: to to um, take up a point that you made
• 37:01
  Speaker 1: a minute ago, which is, you know, you said they
• 37:03
  Speaker 1: didn't care where the money was coming from. But the
• 37:07
  Speaker 1: truth is is that they absolutely care where the money
• 37:09
  Speaker 1: is coming from. And the reason why the songwriter is
• 37:14
  Speaker 1: the low man or woman on the totem pole in
• 37:16
  Speaker 1: the economic equation today is because the three biggest song
• 37:20
  Speaker 1: companies in the world, being Universal, Warner and Sony don't
• 37:24
  Speaker 1: advocate for songwriters, Um, you know. And it's not because
• 37:29
  Speaker 1: they don't want to, it's because they can't because they're
• 37:32
  Speaker 1: you know, those three biggest publishing companies in the world
• 37:35
  Speaker 1: are owned by the three biggest recorded music companies in
• 37:38
  Speaker 1: the world. And on the recorded music side of the business,
• 37:41
  Speaker 1: they're getting four fifths of the revenue, they're getting an
• 37:44
  Speaker 1: eight gross margin of forty net margin, and in general
• 37:49
  Speaker 1: they own those master recordings in perpetuity, right is you
• 37:52
  Speaker 1: and I know there are very few artists that actually
• 37:55
  Speaker 1: own their own masters. Right. Conversely, on the song side
• 37:59
  Speaker 1: of the busines this on the publishing side of the business,
• 38:02
  Speaker 1: you've got a fifth of the revenue, you've got a
• 38:04
  Speaker 1: fifth of the margin, and quite rightly, whether it's through
• 38:07
  Speaker 1: good management and lawyering in the first place or reversions
• 38:11
  Speaker 1: or renegotiations, the songs end up back in the hands
• 38:15
  Speaker 1: of the people that co created them. So recorded music
• 38:19
  Speaker 1: controlling publishing and stopping publishing for advocating for songwriters is
• 38:25
  Speaker 1: why you have this unbelievable disparity. In the way that
• 38:29
  Speaker 1: you described the dollar being split, You're right, thirty cents
• 38:32
  Speaker 1: goes to Spotify or Apple. Now you can make an
• 38:37
  Speaker 1: argument that that thirty cents will eventually become cents twenty
• 38:41
  Speaker 1: four cents, and I'm quite certain it will, but that's
• 38:44
  Speaker 1: not the material point. The material points what happens to
• 38:47
  Speaker 1: the other seventy cents, And currently the other seventy cents
• 38:51
  Speaker 1: is fifty eight and a half cents going to the
• 38:53
  Speaker 1: record company. Because of their power that they wield mercilessly,
• 39:00
  Speaker 1: they are paying most artists on a sale rather than
• 39:04
  Speaker 1: on a license, when it actually should be a license.
• 39:07
  Speaker 1: If it was a license, they'd be having to split
• 39:09
  Speaker 1: that fifty eight and a half cents with them, but
• 39:11
  Speaker 1: by paying them on a sale, they pay them about
• 39:14
  Speaker 1: nine cents out of every dollar, So they're clearing almost
• 39:17
  Speaker 1: fifty cents out of every dollar in recorded music. And conversely,
• 39:22
  Speaker 1: on the song side of the business, you've got eleven
• 39:24
  Speaker 1: and a half cents that remain. Sometimes you've got four
• 39:27
  Speaker 1: or five six songwriters on a song. They have to
• 39:30
  Speaker 1: split that eleven and a half cents with their publishers
• 39:33
  Speaker 1: in some way, shape or form. So you know, these
• 39:36
  Speaker 1: great songwriters that are delivering the songs that make the
• 39:40
  Speaker 1: world go around are getting fractions of a penny on
• 39:43
  Speaker 1: every dollar. And that you know, as I said at
• 39:46
  Speaker 1: the very beginning, this has been changing. This system has
• 39:50
  Speaker 1: been the ulterior mode of of hypnosis. The reason why
• 39:53
  Speaker 1: I created hypnosis is that in managing people like Diane
• 39:57
  Speaker 1: Warren and the Dream at Justin Tranter, people that we're
• 40:00
  Speaker 1: songwriters at at the very very highest heights of success,
• 40:04
  Speaker 1: and yet they weren't getting what they should be getting
• 40:07
  Speaker 1: because of this system where and people will turn around
• 40:10
  Speaker 1: to me and say, listen, you know why you blame
• 40:12
  Speaker 1: blaming Universal Warner and Sony aren't. Isn't the way that
• 40:16
  Speaker 1: songwriters are paid, you know, dictated by legislation, And the
• 40:21
  Speaker 1: answer to that is absolutely, it's dictated by legislation. But
• 40:24
  Speaker 1: how is legislation affected. It's affected by lobbying, It's affected
• 40:29
  Speaker 1: by advocacy. So if you don't have the three biggest
• 40:31
  Speaker 1: companies in the world advocating for songwriters and fighting for
• 40:35
  Speaker 1: them to get paid more money, how do you expect
• 40:37
  Speaker 1: that to be reflected in the legislation. So we're a
• 40:41
  Speaker 1: catalyst to bring that change. I'm very, very vocal about it.
• 40:45
  Speaker 1: As I say, it's the ulterior motive, and every one
• 40:47
  Speaker 1: of my four ninety odd institutional investors has known from
• 40:53
  Speaker 1: day one that this ulterior motive is the real reason
• 40:57
  Speaker 1: why the fund was created, because I knew that if
• 40:59
  Speaker 1: I talked to Bob Left, it's and I talked this
• 41:02
  Speaker 1: way that you know, Universal Warner and Sony could squash
• 41:05
  Speaker 1: me like a fly if they wanted to. But now
• 41:08
  Speaker 1: they can't because I've a multi billion dollar company behind me,
• 41:12
  Speaker 1: some of the finest song assets in the world, and
• 41:15
  Speaker 1: I have a platform to speak on behalf of the
• 41:17
  Speaker 1: songwriter and the creator um and to try and bring
• 41:21
  Speaker 1: change and of course, the serendipity of it all is
• 41:24
  Speaker 1: that if I can bring that change and I can
• 41:26
  Speaker 1: get the songwriter paid more money, it's also in the
• 41:29
  Speaker 1: best interest of my shareholders because they'll get more money
• 41:32
  Speaker 1: for the songs that we own. And therefore they're prepared
• 41:35
  Speaker 1: to fight and they're prepared to put their money in
• 41:38
  Speaker 1: and you know when you've got uh, you know, investors
• 41:42
  Speaker 1: that range from the Church of England to invest Deck,
• 41:45
  Speaker 1: to invest Go to refer to you know, Acca and
• 41:50
  Speaker 1: Newton and on and on and on. These are all
• 41:52
  Speaker 1: people that that that have a lot of power in
• 41:55
  Speaker 1: their own right. Um, so that was really the motive. Okay,
• 42:00
  Speaker 1: let's just say, let's just say you get more for songwriters.
• 42:03
  Speaker 1: Are you agitate for that or advocate for that? It's
• 42:06
  Speaker 1: got to come out of the recording company's end. I mean,
• 42:08
  Speaker 1: they're gonna really hard, you know what they've what they've done, Bob,
• 42:13
  Speaker 1: which I think is unbelievable. You know, if you and
• 42:16
  Speaker 1: I were having this conversation five years ago, we'd never
• 42:19
  Speaker 1: be able to look each other in the eye and
• 42:21
  Speaker 1: say that the best years of the music industry in
• 42:24
  Speaker 1: front of it, right. We can say, hey, remember back
• 42:26
  Speaker 1: in ninety nine, remember back in the year two thousand,
• 42:29
  Speaker 1: whereas right now, you know, I can look my nineteen
• 42:32
  Speaker 1: year old son in the eye and say you should
• 42:34
  Speaker 1: absolutely devote yourself to music because the best years of
• 42:37
  Speaker 1: the music industry in front of it. So, you know,
• 42:40
  Speaker 1: Universal Warner and Sony And despite the fact that our
• 42:44
  Speaker 1: our business has been saved by Daniel Eck and Spotify,
• 42:49
  Speaker 1: and the way that Apple have followed and Spotify is
• 42:51
  Speaker 1: wake um, you know, creating this very powerful one to
• 42:55
  Speaker 1: punch and obviously lots of great regionals around the world
• 42:59
  Speaker 1: as well. Um, you know we're making them out to
• 43:02
  Speaker 1: be the villain, right we were? You know, we've we've
• 43:04
  Speaker 1: just given evidence for the last four or five months
• 43:09
  Speaker 1: in the UK in the Department of Culture, Music and
• 43:12
  Speaker 1: Sciences hearings in Parliament, right and the if you look
• 43:17
  Speaker 1: at our written evidence UH and also our our personal
• 43:20
  Speaker 1: evidence are in person evidence. The hearings were originally called
• 43:25
  Speaker 1: UH an investigation into the Business Practices of Music Streaming Services,
• 43:31
  Speaker 1: and the first couple of sentences of our written evidence
• 43:36
  Speaker 1: basically say, you know, look, we appreciate that you're doing
• 43:38
  Speaker 1: these hearings into the quote unquote business practices of music
• 43:42
  Speaker 1: streaming services. But we think what you're gonna find very
• 43:46
  Speaker 1: very quickly, and we want to prepare you for this,
• 43:48
  Speaker 1: is that what you're really going to be investigating is
• 43:51
  Speaker 1: the unhealthy relationship that exists between the three major companies
• 43:57
  Speaker 1: recorded music companies in the world, controlling three major publishing
• 44:01
  Speaker 1: companies in the world and stopping them from advocating for songwriters.
• 44:05
  Speaker 1: That's what stopping the songwriter from being paid properly. And
• 44:09
  Speaker 1: the funny thing, and the most ironic thing about all
• 44:11
  Speaker 1: of this is that if you're Big John and you're
• 44:14
  Speaker 1: running Sony, if you're a guy Moot or Carry and
• 44:17
  Speaker 1: you're running Warna Chapel, if you're um, excuse me, Jody
• 44:22
  Speaker 1: and you're running Universal, you're delivering the most exciting people
• 44:26
  Speaker 1: in your entire company's business, and yet you're not being
• 44:30
  Speaker 1: rewarded properly for it. Right. It's it's not I'm not
• 44:34
  Speaker 1: when I am critical of the majors. I'm not critical
• 44:39
  Speaker 1: of the publishing companies. I think the publishing companies are
• 44:42
  Speaker 1: doing great work. I'm not critical of the people that
• 44:45
  Speaker 1: that work in the recorded music companies. What I'm critical
• 44:49
  Speaker 1: of is the paradigm. There are people that work in
• 44:51
  Speaker 1: those companies that are as passionate about music, that care
• 44:55
  Speaker 1: as much as I do and and you do, and
• 44:57
  Speaker 1: that do great work, but they're off parading under a
• 45:00
  Speaker 1: seventy five year old paradigm that doesn't properly recognize the
• 45:05
  Speaker 1: role of the songwriter. And that's why I'm intent on
• 45:07
  Speaker 1: changing it. Let's go to the other side of the equation.
• 45:15
  Speaker 1: You own these songs. There's administration. This is something that's
• 45:20
  Speaker 1: been evolving in the Internet era. Cobalt was the first mover.
• 45:24
  Speaker 1: Universal seems to have updated their systems. Let's leave Sync
• 45:28
  Speaker 1: aside at this point in time. Who administers typnosis? So
• 45:34
  Speaker 1: we have deals with everybody, so we we you know, Cobalts,
• 45:38
  Speaker 1: I would say, are our preferred administrator. We believe that
• 45:42
  Speaker 1: they collect more. We believe that they collected faster, and
• 45:45
  Speaker 1: we believe that they pay it through faster, and we
• 45:48
  Speaker 1: believe that they do it in a completely transparent way.
• 45:52
  Speaker 1: But you're absolutely correct that Universal and Sony and now
• 45:57
  Speaker 1: Warner two are all king hard to try to get
• 46:01
  Speaker 1: to a better place, right But the difference is this
• 46:07
  Speaker 1: is that you know, most of these big companies also
• 46:11
  Speaker 1: operate on a two year money go around right where
• 46:14
  Speaker 1: they collect some money in Spain and it sits there
• 46:16
  Speaker 1: for six months, and then you know, it operates that
• 46:19
  Speaker 1: they send the money to the UK and it sits
• 46:21
  Speaker 1: there for another six months, and then they send it
• 46:24
  Speaker 1: to the US and it sits there for another six months.
• 46:27
  Speaker 1: And because most of them still only have two non
• 46:30
  Speaker 1: transparent reporting periods a year, you know, January one to
• 46:33
  Speaker 1: June thirty and they pay you out at September thirty,
• 46:36
  Speaker 1: July one to December thirty one, and they pay you
• 46:38
  Speaker 1: out at March thirty one. You know, they're basically holding
• 46:41
  Speaker 1: onto your money for the better part of two years.
• 46:44
  Speaker 1: And there's a great book um uh that's out this
• 46:48
  Speaker 1: week um by will the Formumer team Spotify. Will page
• 46:55
  Speaker 1: that you know, will tell you that, you know, if
• 46:57
  Speaker 1: you were to take the cap it all that is
• 47:01
  Speaker 1: being used by Universal, Warner and Sony on a daily basis,
• 47:04
  Speaker 1: from moneys that haven't gone through, to songwriters that haven't
• 47:07
  Speaker 1: gone through to artists, it's a massive part of of
• 47:11
  Speaker 1: you know, it's the capital that they used to keep
• 47:12
  Speaker 1: their businesses going and making new investments. Um And this
• 47:16
  Speaker 1: is artists money and and songwriters money. You know, Willard
• 47:21
  Speaker 1: ardreents at cobalt Um, I think came to the business
• 47:25
  Speaker 1: twenty years ago with a very noble and important idea,
• 47:30
  Speaker 1: which was to have transparency for the songwriter and the
• 47:35
  Speaker 1: artist and to put them in a position where their
• 47:38
  Speaker 1: money was being collected quickly, it was being paid through quickly,
• 47:42
  Speaker 1: and that they understood every step of the way. The
• 47:45
  Speaker 1: fact that that has now forced the major companies to
• 47:49
  Speaker 1: try and and and at least uh go some level
• 47:53
  Speaker 1: of of emulation, or to some degree of emulation, I
• 47:58
  Speaker 1: think is the the artistic community and the songwriting community,
• 48:03
  Speaker 1: Oh Willard a debt that could never ever be repaid.
• 48:07
  Speaker 1: And certainly the spirit of Hypnosis follows very much that
• 48:11
  Speaker 1: of Cobalt. That you know, we're forcing people to make
• 48:14
  Speaker 1: change that they don't want to change, that that they
• 48:16
  Speaker 1: that they don't want to make, whether they don't feel
• 48:18
  Speaker 1: that they can make because of course people fear change
• 48:21
  Speaker 1: right on a on a on a personal level, I
• 48:24
  Speaker 1: like things to be the same way every day in
• 48:26
  Speaker 1: my personal life, but in my professional life. You know,
• 48:30
  Speaker 1: people call me a disruptor. I've never used that word myself,
• 48:33
  Speaker 1: but I'm absolutely wanting to destroy these paradigms that have existed,
• 48:38
  Speaker 1: and that I've put the artists at the bottom of
• 48:40
  Speaker 1: the pile, and I want to put them take them
• 48:43
  Speaker 1: to the top of the pile. Because without the songwriter
• 48:45
  Speaker 1: in the artist, what do we have right if you
• 48:48
  Speaker 1: go and see an artist. Because yeah, we made that
• 48:53
  Speaker 1: point many times. Let's go back to administrator. You can't,
• 48:56
  Speaker 1: but you can't. But you can't make it enough, Bob,
• 48:59
  Speaker 1: you know the remember three rises in the past eighties,
• 49:05
  Speaker 1: six years, Right, There's there's so much and I'll use
• 49:08
  Speaker 1: this word and you can beep it out if you like,
• 49:10
  Speaker 1: but there's so much fuccory in this business that you
• 49:13
  Speaker 1: have to keep repeating the same things over and over
• 49:15
  Speaker 1: and over again. So thank you for indulging. Those are
• 49:18
  Speaker 1: all good points, but I want to be able to
• 49:19
  Speaker 1: address a little bit more. So. You say that a
• 49:23
  Speaker 1: hypnosis uses multiple administration companies, and would hypnosis ever go
• 49:29
  Speaker 1: into the administration business? Um? You know, So we use
• 49:37
  Speaker 1: multiple administration companies that say Cobalt is our preferred administrator.
• 49:41
  Speaker 1: But we do great work with Sony on a daily
• 49:44
  Speaker 1: basis on our artists and songwriters. The same thing with Universal,
• 49:47
  Speaker 1: the same thing with Warner including Concorde as well, and
• 49:51
  Speaker 1: and and and several others. Because of course, when we
• 49:54
  Speaker 1: buy our catalogs, often there is no administration deal in place,
• 49:59
  Speaker 1: so we can take over on day one. But at
• 50:02
  Speaker 1: other times there's a year left on the administration, there's
• 50:04
  Speaker 1: two years left on the administration. We've even bought some
• 50:07
  Speaker 1: catalogs where the administration is is perpetual with a particular company.
• 50:12
  Speaker 1: And I think that you know, you you talked about
• 50:15
  Speaker 1: universal um, you know, kind of stepping up to the
• 50:18
  Speaker 1: plate as far as emulating Cobalt or or or doing
• 50:21
  Speaker 1: something that's forward thinking. But I think that you can
• 50:24
  Speaker 1: give Sony a lot of credit on that front as well. UM.
• 50:28
  Speaker 1: And I think that that that now with Guy Mood
• 50:30
  Speaker 1: at Warner Chapel, I think he's gonna want to do
• 50:32
  Speaker 1: the same thing. So you know, I have high hopes
• 50:35
  Speaker 1: that that all of them will want to do the
• 50:37
  Speaker 1: same thing. I'm I'm in the asset business, so you know,
• 50:40
  Speaker 1: from that point of view, I believe that my investors
• 50:45
  Speaker 1: money should go into buying great songs, um. And that
• 50:51
  Speaker 1: you know, you can rent these services from people. But
• 50:54
  Speaker 1: as we approach you know what is now, you know,
• 50:57
  Speaker 1: two point five billion dollars in did and I expect
• 51:01
  Speaker 1: that by the end of the next two years will
• 51:03
  Speaker 1: be about six billion dollars invested. It might be in
• 51:07
  Speaker 1: the best interest of our shareholders to have an administration
• 51:11
  Speaker 1: company UM and that's something that that will continue to
• 51:15
  Speaker 1: to keep an eye on. But you know that, to
• 51:18
  Speaker 1: me is not the priority. The priority is to to
• 51:21
  Speaker 1: stay very focused on buying these great songs while they're
• 51:25
  Speaker 1: there to buy. Okay, let's talk about you specifically, Mark.
• 51:29
  Speaker 1: Where did you grow up, What did your parents do
• 51:31
  Speaker 1: for a living, how many kids in the family, what
• 51:34
  Speaker 1: was your adolescents like? Um So I was born in
• 51:39
  Speaker 1: a mining town in Quebec that doesn't exist anymore. When
• 51:43
  Speaker 1: the when the mind dried up, the people dried up.
• 51:45
  Speaker 1: To um So, I ended up being raised in Nova Scotia.
• 51:48
  Speaker 1: My parents were Greek immigrants to to Toronto in the
• 51:53
  Speaker 1: nineteen fifties. Before I was born, my father had been
• 51:56
  Speaker 1: a soccer player in Greece for a team called Pouk
• 52:00
  Speaker 1: and he was brought to Canada to play soccer for
• 52:03
  Speaker 1: a team called the Toronto Star, which is the sort
• 52:06
  Speaker 1: of forefather of the Toronto MLS team today. Um and
• 52:11
  Speaker 1: his brother was a topographer for the iron Ore company.
• 52:14
  Speaker 1: Of Canada. So when he retired from soccer, he went
• 52:18
  Speaker 1: to work with his brother. In those days, you know,
• 52:21
  Speaker 1: the brother was was responsible for designing the infrastructure that
• 52:26
  Speaker 1: the miners would would need to live and do their job.
• 52:30
  Speaker 1: And there were opportunities, whether it was building restaurants or
• 52:33
  Speaker 1: schools or or whatever the case might be. When all
• 52:37
  Speaker 1: that dried up, we moved to Nova Scotia, and I
• 52:39
  Speaker 1: had this very idyllic childhood in Nova Scotia. But I
• 52:44
  Speaker 1: was very very lucky. I've got I've got a sister
• 52:47
  Speaker 1: who's still in Toronto today, and and uh, she's lovely
• 52:52
  Speaker 1: and everything. But you know, when we were kids, we
• 52:55
  Speaker 1: didn't see eye to eye on on on just about anything.
• 52:59
  Speaker 1: Right if was black, you know, she loved the Boston Bruins.
• 53:02
  Speaker 1: I loved the Montreal Canadians. She loved which one of
• 53:05
  Speaker 1: you is older. She's one year older than I am.
• 53:09
  Speaker 1: So I had this very serendipitous thing happened to me though,
• 53:12
  Speaker 1: which is that my eldest cousin, my father's brother's eldest son,
• 53:18
  Speaker 1: who was about ten years older than I was. Um,
• 53:21
  Speaker 1: he got in trouble in Greece because Greece was under
• 53:24
  Speaker 1: a military junta. And if you were you know, fourteen
• 53:28
  Speaker 1: or fifteen years old and you were smoking dope and
• 53:30
  Speaker 1: and and you know, listening to music um and wearing
• 53:34
  Speaker 1: peace signs that the Greeks believed were like a broken crucifix,
• 53:38
  Speaker 1: you were you were a target for for the military.
• 53:41
  Speaker 1: So my uncle sent my older cousin, Mike to live
• 53:46
  Speaker 1: with us. And this guy arrived with long hair. He
• 53:50
  Speaker 1: arrived with argust by wishbone Ash. He arrived with the
• 53:54
  Speaker 1: first two Fleetwood Mac records that the Peter Green Ones.
• 53:58
  Speaker 1: He arrived with Paranoid by Black Sabbath, super fled by
• 54:01
  Speaker 1: Curtis Mayfield, t for the Tillerman Uh, just about you know,
• 54:06
  Speaker 1: fourteen or fifteen albums that are still amongst the fourteen
• 54:10
  Speaker 1: or fifteen albums that are the most important in my life.
• 54:13
  Speaker 1: And he knew everything about drugs, and he knew everything
• 54:16
  Speaker 1: about girls, and he was someone to aspire to be
• 54:20
  Speaker 1: because he also knew an awful lot about music. And
• 54:23
  Speaker 1: that really kind of put me on the path that
• 54:26
  Speaker 1: you know, I'm still on today, and I'm still influenced by,
• 54:29
  Speaker 1: as I say, those those fourteen or fifteen records that
• 54:32
  Speaker 1: he had, and we would sit in in the room
• 54:35
  Speaker 1: that my parents had constructed for him, and we had
• 54:37
  Speaker 1: one of those you know, dropped down turntables where you'd
• 54:40
  Speaker 1: stack the records up and they dropped one at a
• 54:43
  Speaker 1: time and play through, and then you turn them all
• 54:45
  Speaker 1: over and play them through. And I fell in love
• 54:48
  Speaker 1: with this idea of twenty minutes of music and then
• 54:54
  Speaker 1: instead of wanting to hear the next twenty minutes of music,
• 54:57
  Speaker 1: you'd want to play that same side over and over
• 55:00
  Speaker 1: and over again because it was so magical. Um. And
• 55:04
  Speaker 1: you know, he arrived, he gave me a present for
• 55:06
  Speaker 1: the first birthday that that I had with him there,
• 55:09
  Speaker 1: which was a copy of Sergeant Pepper's And then that
• 55:13
  Speaker 1: got me into a place of spending every penny that
• 55:17
  Speaker 1: I had on on records. So very soon after I
• 55:20
  Speaker 1: bought my own tea for the Tillerman. Very soon after that,
• 55:23
  Speaker 1: I bought Harvest, uh. And these records, you know, a
• 55:27
  Speaker 1: small town of of of two thousand people, these records
• 55:31
  Speaker 1: really start to teach you that there's something else that's
• 55:35
  Speaker 1: going on in the world, uh, that's not going on
• 55:37
  Speaker 1: in your world. And then concurrently with that, my parents
• 55:42
  Speaker 1: one of the restaurants that they had was a diner,
• 55:44
  Speaker 1: and the diner had a jukebox in it, and that
• 55:47
  Speaker 1: jukebox had everything from Elvis Presley singing mac Davis's song
• 55:52
  Speaker 1: in the Ghetto to you know, looking out by My
• 55:55
  Speaker 1: back Door by CCR. And again, these records had a
• 55:58
  Speaker 1: massive effect on these So you know, I can very
• 56:01
  Speaker 1: distinctly remember In the Ghetto as being the first record
• 56:06
  Speaker 1: that I ever heard that made me sad, and that
• 56:08
  Speaker 1: made me realize that in fact, everyone's world wasn't perfect
• 56:13
  Speaker 1: in the way that my world seemed to be perfect. So,
• 56:15
  Speaker 1: if you like, it was my first kind of real
• 56:19
  Speaker 1: experience of empathy brought up by mac Davis's great words
• 56:23
  Speaker 1: and Elvis is great delivery. And you know, I suddenly
• 56:27
  Speaker 1: realized that I was going to the school of Neil Young,
• 56:29
  Speaker 1: and going to the school of Lou Reid and led
• 56:32
  Speaker 1: Zeppelin and Patti Smith and eventually the Clash, and you know,
• 56:36
  Speaker 1: these these are are the people that kind of educated
• 56:39
  Speaker 1: me and prepared me for a world. I can remember
• 56:42
  Speaker 1: playing needle in the damage done by Neil Young and
• 56:46
  Speaker 1: having nightmares that I was taking heroin and waking up
• 56:49
  Speaker 1: in in the morning and kind of looking at my
• 56:51
  Speaker 1: risks to see whether or not they were really track
• 56:54
  Speaker 1: marks there. Um. So the music had an unbelievably profound
• 56:58
  Speaker 1: effect on me. And you know, you you, I think
• 57:02
  Speaker 1: when you write your best is when you write about Elton,
• 57:06
  Speaker 1: and uh, when you write at your best is when
• 57:09
  Speaker 1: you're writing it Elton about Elton. And and those Alton
• 57:13
  Speaker 1: records had the same effect on me, particularly a little
• 57:16
  Speaker 1: bit later than than the ones that you rave about,
• 57:18
  Speaker 1: but particularly Captain Fantastic and someone saved my life tonight.
• 57:22
  Speaker 1: Those those are you unbelievably important records for me. So
• 57:26
  Speaker 1: they gave me the ability to manifest how the funk
• 57:31
  Speaker 1: to get out of this town with two thousand people
• 57:33
  Speaker 1: in it and go on to manage Elton John was
• 57:37
  Speaker 1: all based on on that obsession with this music and
• 57:41
  Speaker 1: recognizing that that, uh uh, there was something for me
• 57:46
  Speaker 1: to do because you know I talked about Elliott Roberts earlier. Um,
• 57:50
  Speaker 1: I was very clear from the time I was seven
• 57:53
  Speaker 1: or eight years old that I had no musical talent
• 57:56
  Speaker 1: and that I was never gonna be you know, Neil
• 57:58
  Speaker 1: Young or Jimmy Page or Robert Plant. So I started
• 58:02
  Speaker 1: to read about these people in everything from Rolling Stone
• 58:05
  Speaker 1: to Cream to whatever the library had, and I started
• 58:09
  Speaker 1: to learn about people like Elliott, and I started to
• 58:11
  Speaker 1: learn about people like Peter Grant, and suddenly there were
• 58:15
  Speaker 1: you know, kind of role models there for me that
• 58:18
  Speaker 1: you know, I believed that I could emulate. I I
• 58:21
  Speaker 1: got the real message that, uh, you know, people that
• 58:25
  Speaker 1: were making music wanted to make music, and that other
• 58:28
  Speaker 1: people had to come along and protect them and make
• 58:30
  Speaker 1: sure that that, you know, the commerce was maximized with
• 58:34
  Speaker 1: the art not being compromised. Okay, so you graduate from
• 58:39
  Speaker 1: high school, what's your next step? How do you get
• 58:41
  Speaker 1: out of Nova Scotia? Um? I literally ran away, Uh
• 58:47
  Speaker 1: you know, I ended up in in in Uh you know,
• 58:51
  Speaker 1: I've been writing letters to Simon Draper at Virgin Records
• 58:55
  Speaker 1: in the UK. And and for for those that don't know,
• 58:59
  Speaker 1: Simon was Richard's Richard Branson's cousin, and he was the
• 59:03
  Speaker 1: guy that that uh you know, really was the musical
• 59:08
  Speaker 1: brains behind the company. So you know, he had signed
• 59:12
  Speaker 1: Tangerine Dream, he had signed My Goldfield, he had signed
• 59:15
  Speaker 1: Robert Wyatt. But then of course subsequently everyone from the
• 59:19
  Speaker 1: Sex Pistols to XTC two Simple Minds to You Be
• 59:23
  Speaker 1: forty two. Uh you know the Human League, Peter Gabriel,
• 59:27
  Speaker 1: you know, Orchestral Maneuvers in the dock you beforety On
• 59:30
  Speaker 1: and on and on. So this amazing thing happened where
• 59:34
  Speaker 1: I find myself working for Virgin Records, still in my teens,
• 59:38
  Speaker 1: a little bit, a little bit slower. How do you
• 59:42
  Speaker 1: write these letters? How do you literally get a job
• 59:45
  Speaker 1: at Virgin Records? How old are you? And we're and
• 59:48
  Speaker 1: what is the job? So I'm making I go to
• 59:52
  Speaker 1: Toronto and I get a job for six months thanks
• 59:58
  Speaker 1: to a girlfriend that I had, were king for the
• 1:00:01
  Speaker 1: Canadian UH distributor of Motown. And before I got that job,
• 1:00:07
  Speaker 1: I knew that Virgin was opening and they were going
• 1:00:12
  Speaker 1: to open as a standalone label, and I went and
• 1:00:15
  Speaker 1: met with the guy that was going to run it,
• 1:00:17
  Speaker 1: and he offered me the job to be the marketing person,
• 1:00:21
  Speaker 1: the one and only marketing person at Verga Records at
• 1:00:24
  Speaker 1: that point. And but the company was gonna open for
• 1:00:28
  Speaker 1: six months. So for that six month period, I got
• 1:00:32
  Speaker 1: this job working for the Canadian distributor of Motown and
• 1:00:37
  Speaker 1: which was a company called Quality Records and run by
• 1:00:40
  Speaker 1: this magical guy called George Street and UH, a guy
• 1:00:44
  Speaker 1: called UH Larry McCrae and Cameron Carpenter, who I know
• 1:00:49
  Speaker 1: you you know quite well, and of course in Canada,
• 1:00:52
  Speaker 1: and that that kind of became my little gang for
• 1:00:55
  Speaker 1: this six month period. And the funny thing about this
• 1:01:00
  Speaker 1: that within days of me starting the company took on
• 1:01:04
  Speaker 1: a distribution deal with Clive Calder's then brand new Jive Records.
• 1:01:10
  Speaker 1: And Uh, the guy that UH was the Jive person,
• 1:01:15
  Speaker 1: the young Jive person in the same way that I
• 1:01:19
  Speaker 1: was the young Quality Records person, was Barry Weiss. So
• 1:01:23
  Speaker 1: the first phone call that we ever had, the first
• 1:01:25
  Speaker 1: phone call I ever made, was to Barry Weiss. The
• 1:01:28
  Speaker 1: first phone called Barry Weiss ever made, you know, in
• 1:01:31
  Speaker 1: terms of being in the music business, was to me
• 1:01:33
  Speaker 1: to talk about a band called the Compsat Angels that
• 1:01:36
  Speaker 1: we both loved, that had been on poly Door and
• 1:01:39
  Speaker 1: had a rough time and had now signed to Jive
• 1:01:43
  Speaker 1: and were affectionately known as the cs Angels because the
• 1:01:46
  Speaker 1: Compsat Satellite Company was taking action against them not to
• 1:01:50
  Speaker 1: use the name. Um. So I was there for six
• 1:01:53
  Speaker 1: months and then I went immediately to Virgin Records and
• 1:01:56
  Speaker 1: started to work for Virgin Records, and I developed my
• 1:01:59
  Speaker 1: relationship with Simple Minds, and I developed my relationship with
• 1:02:02
  Speaker 1: Orchestral Maneuvers in the Dark and with the Human League,
• 1:02:05
  Speaker 1: and you know, with all these wonderful artists. Because Virgin
• 1:02:08
  Speaker 1: had this serendipitous situation where even though they were making
• 1:02:13
  Speaker 1: left of center you know, what was known as alternative music,
• 1:02:17
  Speaker 1: it was succeeding commercially in wild ways, you know, culture Club.
• 1:02:22
  Speaker 1: We're becoming the biggest band in the world. Simple Minds
• 1:02:25
  Speaker 1: were soon to follow suit. Um, and that was my
• 1:02:27
  Speaker 1: big passion project and remains one of my great passions
• 1:02:31
  Speaker 1: to today. Um. Same thing with O. M. D. And
• 1:02:34
  Speaker 1: same thing with you Be forty, who had massive success
• 1:02:36
  Speaker 1: with Red Red Wine. And I was young and unsophisticated,
• 1:02:42
  Speaker 1: and I didn't realize that, uh, I wasn't working for
• 1:02:47
  Speaker 1: the artist, right I because Virgin was the most artist
• 1:02:52
  Speaker 1: friendly record company. I honestly thought that I was working
• 1:02:56
  Speaker 1: for the artist, not for the for someone else. And um,
• 1:03:00
  Speaker 1: what happened was that they rewarded my success at the
• 1:03:04
  Speaker 1: label by allowing me to be a part of signing
• 1:03:08
  Speaker 1: one of the most wonderful Canadian artists of all time,
• 1:03:11
  Speaker 1: someone that I would still rank even though she's never
• 1:03:14
  Speaker 1: had the career that she deserved, alongside Neil Young and
• 1:03:18
  Speaker 1: Joni Mitchell and Robbie Robertson and Leonard cone Is you
• 1:03:22
  Speaker 1: know in the Weekend and Drake is Canada's greatest products. Um.
• 1:03:27
  Speaker 1: It was a girl called Mary Margaret O'Hara, and she
• 1:03:31
  Speaker 1: was Catherine O'Hara's little sister, and she was unbelievably special.
• 1:03:36
  Speaker 1: And uh, you know, we got Andy Partridge from XTC
• 1:03:41
  Speaker 1: to agree to make her record. And even though Andy
• 1:03:46
  Speaker 1: was a wonderful artist in the form of XTC, he
• 1:03:50
  Speaker 1: wasn't a wonderful producer, and he wasn't someone that was
• 1:03:54
  Speaker 1: prepared to recognize that in the producer's role, that his
• 1:03:58
  Speaker 1: job was to be there to serve Mary Margaret and
• 1:04:02
  Speaker 1: to help her make the best record that she wanted
• 1:04:04
  Speaker 1: to make possible. So there were all kinds of problems
• 1:04:09
  Speaker 1: from the get go in the making of that record.
• 1:04:11
  Speaker 1: And even though the record eventually came out three or
• 1:04:14
  Speaker 1: four years later as a record called Miss America and
• 1:04:16
  Speaker 1: won a lot of awards and was the album of
• 1:04:19
  Speaker 1: the Year, the actual making of the record was a
• 1:04:22
  Speaker 1: very very painful experience. And I recognized at that point
• 1:04:27
  Speaker 1: that for the first time, suddenly the light bulb went off,
• 1:04:30
  Speaker 1: and I found myself in a position where I wanted
• 1:04:34
  Speaker 1: to be on Mary's side rather than on the record
• 1:04:36
  Speaker 1: company's side. And at that point I became a manager,
• 1:04:41
  Speaker 1: and uh, they were probably gonna fire me anyways, because
• 1:04:46
  Speaker 1: it was very clear that I was on on on
• 1:04:48
  Speaker 1: on Mary's side and the company had new leadership, and
• 1:04:52
  Speaker 1: and uh, you know, probably wasn't gonna work out. But
• 1:04:56
  Speaker 1: I basically went to two guys in and that I
• 1:05:01
  Speaker 1: had a relationship with a guy called Rod Smallwood who
• 1:05:03
  Speaker 1: you know, and a guy called Andy Taylor, who you know.
• 1:05:06
  Speaker 1: And I said, listen, I've had this epiphany. I'm not
• 1:05:08
  Speaker 1: supposed to work for a record company. I'm supposed to
• 1:05:11
  Speaker 1: work for the artist. I'm supposed to be a manager.
• 1:05:13
  Speaker 1: And Rod and Andy said, you're right, and you know,
• 1:05:16
  Speaker 1: you should come in with us. They were both fifteen
• 1:05:19
  Speaker 1: years older than I was, and they were looking. Yeah,
• 1:05:23
  Speaker 1: I worked at Sanctuary of course in the eighties, very
• 1:05:26
  Speaker 1: different the one you worked for. But how did you
• 1:05:30
  Speaker 1: know Rodd Andy Andy to throw in with them? Because
• 1:05:34
  Speaker 1: I was a fan of Iron Maidens, and I was
• 1:05:37
  Speaker 1: particularly a fan of the way that Rod acted on
• 1:05:42
  Speaker 1: behalf of Iron Maiden and protected the band. And I
• 1:05:46
  Speaker 1: knew that, you know that that he was one a
• 1:05:50
  Speaker 1: role model that uh, you know, you could certainly do
• 1:05:55
  Speaker 1: a lot worse than too. And you know the great
• 1:05:58
  Speaker 1: thing about these two guys, you know, I'm you already
• 1:06:01
  Speaker 1: know this, but I'll tell it for everyone else that
• 1:06:05
  Speaker 1: doesn't is that you know, they were best friends. But
• 1:06:08
  Speaker 1: they couldn't be more different from each other. Right, one
• 1:06:11
  Speaker 1: of them was completely business the other was completely creative.
• 1:06:15
  Speaker 1: One of them hated sports, the other one loved sports.
• 1:06:19
  Speaker 1: The only thing that they had in common was that
• 1:06:20
  Speaker 1: they loved drinking, right, and they loved Iron Maiden, and uh,
• 1:06:25
  Speaker 1: I became the bastard offspring of the two of them. I.
• 1:06:28
  Speaker 1: I took what Andy knew about business and I absorbed
• 1:06:31
  Speaker 1: it all. I took what Rod knew about integrity and
• 1:06:36
  Speaker 1: about creativity and you know, protecting people in fairness, and
• 1:06:42
  Speaker 1: I absorbed all of that as well. And I became,
• 1:06:44
  Speaker 1: as I said, I'm very proud to be the bastard
• 1:06:48
  Speaker 1: offspring of of of the two of them. And I've
• 1:06:51
  Speaker 1: certainly built a career on the back of lessons that
• 1:06:56
  Speaker 1: they taught me. And there was another guy that was very,
• 1:06:59
  Speaker 1: very important in this even before Rod Nandy, and that
• 1:07:03
  Speaker 1: was a guy called Bruce Finley from Edinburgh in Scotland
• 1:07:07
  Speaker 1: who managed Simple Minds. And this guy very very similarly
• 1:07:12
  Speaker 1: to Rod Smallwood. He understood that your job was to
• 1:07:16
  Speaker 1: go out and create as much enthusiasm for your artists
• 1:07:19
  Speaker 1: music as possible and get the troops on your side
• 1:07:23
  Speaker 1: and get them working, and get them in love with
• 1:07:26
  Speaker 1: the band your band as much as you're in love
• 1:07:28
  Speaker 1: with your band. And he taught me a tremendous amount
• 1:07:31
  Speaker 1: as well. And those those three guys, along with Elliott Roberts,
• 1:07:35
  Speaker 1: are are you know, the people that I consider to
• 1:07:38
  Speaker 1: be my mentors. Okay, a couple of questions here, Hey,
• 1:07:43
  Speaker 1: what year did you start working for Sanctuary be the
• 1:07:47
  Speaker 1: company ultimately goes public, can you tell us the insight
• 1:07:49
  Speaker 1: and how that happened and see how did you essentially
• 1:07:52
  Speaker 1: end up running it? Sure? So, so the the uh,
• 1:07:58
  Speaker 1: this is probably eighty six and probably the better part
• 1:08:04
  Speaker 1: of of UM five or six years later, you know,
• 1:08:10
  Speaker 1: were iron Maidens Management Company right when the when the
• 1:08:13
  Speaker 1: company ends in two thousand and six or so, we're
• 1:08:18
  Speaker 1: still iron Maidens Management Company, but we go from being
• 1:08:22
  Speaker 1: iron Maidens Management Company to eventually being out John's management
• 1:08:26
  Speaker 1: company and Guns and Roses management company, Beyonce's management company,
• 1:08:31
  Speaker 1: with me driving all of those artists. UM. And the
• 1:08:35
  Speaker 1: way that it happened was that we recognized in the
• 1:08:39
  Speaker 1: early nineties, UM, when Uh Polli Graham became a company
• 1:08:45
  Speaker 1: called p l G. That was the first real consolidation
• 1:08:51
  Speaker 1: of a major record company where they went from effectively
• 1:08:55
  Speaker 1: having four companies to basically having four A and R
• 1:08:59
  Speaker 1: sent ters with a common marketing department and a common
• 1:09:03
  Speaker 1: promotion department. That this was going to disenfranchise many artists
• 1:09:08
  Speaker 1: because you know, if you were one of the artists
• 1:09:11
  Speaker 1: that was selling ten million records around the world, you
• 1:09:14
  Speaker 1: were going to get a lot of attention because of that.
• 1:09:17
  Speaker 1: But if you were an artist that was going to
• 1:09:19
  Speaker 1: sell a million records around the world, that was no
• 1:09:21
  Speaker 1: longer interesting, believe it or not, you know, knowing what
• 1:09:26
  Speaker 1: we know about what happened between two thousand and one
• 1:09:28
  Speaker 1: and two thousand and sixteen, there's a point in the
• 1:09:31
  Speaker 1: nineties where being able to sell a million copies around
• 1:09:33
  Speaker 1: the world is not interesting to the major record companies.
• 1:09:37
  Speaker 1: And we knew that this was going to disenfranchise a
• 1:09:39
  Speaker 1: lot of artists, and it would particularly disenfranchise a lot
• 1:09:43
  Speaker 1: of artists in the hard rock world. That that that
• 1:09:45
  Speaker 1: we had a lot of expertise in, whether that was
• 1:09:48
  Speaker 1: a Mega Death or a Slayer or whoever it might be.
• 1:09:51
  Speaker 1: And we wanted to be prepared to be able to
• 1:09:54
  Speaker 1: service those artists better than the big companies. So, you know,
• 1:09:58
  Speaker 1: we created an independ the record company that became the
• 1:10:02
  Speaker 1: biggest independent record company in the world and that worked
• 1:10:05
  Speaker 1: with everyone from you know Morrissey to Megadeth to you
• 1:10:10
  Speaker 1: know Ossy and and and Osborne and Kelly Osborne and
• 1:10:15
  Speaker 1: many many others um and became very much best in
• 1:10:18
  Speaker 1: class for its period. We had the biggest booking agency
• 1:10:21
  Speaker 1: outside of North America that was Helter Skelter that booked
• 1:10:26
  Speaker 1: everyone from from Metallica through to a C d C
• 1:10:30
  Speaker 1: as well as Iron Maiden. And the idea was we
• 1:10:33
  Speaker 1: built a real three sixty company, Bravado Merchandizing that you know,
• 1:10:39
  Speaker 1: merchandised everyone from the Spice Girls to the Red Hot
• 1:10:43
  Speaker 1: Chili Peppers to Iron Maiden. Um. You know, we built
• 1:10:47
  Speaker 1: a company that could provide services to all of these
• 1:10:51
  Speaker 1: wonderful artists on a three hundred and sixty degree basis.
• 1:10:55
  Speaker 1: But my vision of three sixty was very, very different
• 1:10:59
  Speaker 1: from the modern record companies version of three sixty. My
• 1:11:03
  Speaker 1: version of three sixty was, look, we're going to make
• 1:11:05
  Speaker 1: a capital investment in this artist. In order to get
• 1:11:09
  Speaker 1: that capital investment back, we need to have as many
• 1:11:12
  Speaker 1: income streams as possible. But within each of those income streams,
• 1:11:16
  Speaker 1: we're going to give the artist the best deal possible
• 1:11:20
  Speaker 1: and will be based on what the market is being
• 1:11:23
  Speaker 1: is prepared to pay for that artist. And the company,
• 1:11:26
  Speaker 1: as you know, was wildly successful for a long period
• 1:11:28
  Speaker 1: of time. It went public and then you know what
• 1:11:32
  Speaker 1: happened was that as you get from two thousand and
• 1:11:36
  Speaker 1: five into two thousand and six, the company was the
• 1:11:40
  Speaker 1: first major company to feel the effect of the bottom
• 1:11:45
  Speaker 1: falling out of the record business because people were now
• 1:11:49
  Speaker 1: able to download their music for free illegally rather than
• 1:11:53
  Speaker 1: to pay for it. And we were too big, um,
• 1:11:58
  Speaker 1: you know, we were in that period of time where
• 1:12:01
  Speaker 1: we weren't small enough to be able to make changes quickly,
• 1:12:05
  Speaker 1: and the effect on the company was disastrous. And also
• 1:12:09
  Speaker 1: the company didn't have the level of sophistication that it
• 1:12:13
  Speaker 1: should have with the stock market and its dealings. With
• 1:12:16
  Speaker 1: the stock market, and effectively what happened was that, you know,
• 1:12:20
  Speaker 1: after seven years of year on year growth, instead of
• 1:12:25
  Speaker 1: the company going to the stock market and saying, look,
• 1:12:28
  Speaker 1: that type of growth isn't possible right now, illegal downloading
• 1:12:31
  Speaker 1: is killing the music business. But we've got these amazing
• 1:12:34
  Speaker 1: artists like Elton John and Beyonce and Guns and Roses
• 1:12:37
  Speaker 1: and Morrissey and many many others, UM, and what you
• 1:12:41
  Speaker 1: need to do is you need to let us batten
• 1:12:42
  Speaker 1: down the hatches and get to a point where we
• 1:12:45
  Speaker 1: ride this out and then we'll be back for you.
• 1:12:48
  Speaker 1: And instead, more growth was promised and the company wasn't
• 1:12:52
  Speaker 1: able to sustain itself, so it was sold to Universal.
• 1:12:55
  Speaker 1: That becomes a very very important UH lesson learned in
• 1:13:02
  Speaker 1: the UH way that then Hypnosis gets launched. Because when
• 1:13:07
  Speaker 1: I launched Hypnosis, I ensured that I had a level
• 1:13:12
  Speaker 1: of sophistication and a level of advice at the very
• 1:13:15
  Speaker 1: very highest level UM from the financial community. UM that
• 1:13:20
  Speaker 1: would ensure that I would never ever be in a
• 1:13:23
  Speaker 1: position where shareholders were let down again. So it's something
• 1:13:28
  Speaker 1: that I had to be very very honest about in
• 1:13:31
  Speaker 1: the sense that that UM I was never gonna try
• 1:13:34
  Speaker 1: and hide the fact that Sanctuary didn't succeed, even though
• 1:13:38
  Speaker 1: the idea was wonderful. UM. But I also had to
• 1:13:41
  Speaker 1: make sure that I had the right people around me, um,
• 1:13:44
  Speaker 1: in order to gain the trust of the financial community. Okay,
• 1:13:49
  Speaker 1: so what do you do from two thousand six to hypnosis? UM?
• 1:13:54
  Speaker 1: I pretend that everything is perfect, but really I'm terribly depressed.
• 1:14:00
  Speaker 1: And while I continue to manage lots of wonderful artists
• 1:14:03
  Speaker 1: like Morrissey and John Stone and Diane Warren and Justin
• 1:14:06
  Speaker 1: Tranter and The Dream and and and you know, lots
• 1:14:09
  Speaker 1: of incredible people, Macy Gray, I'm probably you know, clinically depressed,
• 1:14:15
  Speaker 1: and I'm trying to keep my chin up and trying to, uh,
• 1:14:19
  Speaker 1: you know, find myself again, because you know, Sanctuary was
• 1:14:24
  Speaker 1: a twenty one one year experience that uh was really about,
• 1:14:30
  Speaker 1: you know, I think doing something important, um, and then
• 1:14:33
  Speaker 1: it didn't work. And when that happens, of course, UM,
• 1:14:37
  Speaker 1: you know, not only do you feel like a failure,
• 1:14:40
  Speaker 1: but probably wrongly, you also assume that the rest of
• 1:14:44
  Speaker 1: the world sees you as a failure as well. And
• 1:14:47
  Speaker 1: I found myself talking to people all the time, and
• 1:14:50
  Speaker 1: people would would you know, say nice things and do
• 1:14:53
  Speaker 1: nice things. But it didn't feel that way to me.
• 1:14:56
  Speaker 1: To me, it felt like it was a massive failure. UM.
• 1:15:00
  Speaker 1: So it took me a long time to come out
• 1:15:02
  Speaker 1: of that. And even though I think that you know,
• 1:15:05
  Speaker 1: my friends and my family and my contemporaries didn't ever
• 1:15:09
  Speaker 1: really see it, my artists never really saw it. I
• 1:15:12
  Speaker 1: knew it. I knew that I was fighting, um, you know,
• 1:15:16
  Speaker 1: this this feeling inside of me on a daily basis.
• 1:15:20
  Speaker 1: And it just took me, you know, the minute that
• 1:15:23
  Speaker 1: that I hatched the plan for hypnosis and I knew
• 1:15:27
  Speaker 1: exactly what it was. Um, I came out of that
• 1:15:31
  Speaker 1: because then I had clarity on what I could do
• 1:15:35
  Speaker 1: to take this previous failure and turn it into not
• 1:15:40
  Speaker 1: a victory for myself, but a victory for the songwriting community.
• 1:15:45
  Speaker 1: Because that's the you know, the idea of hypnosis was
• 1:15:48
  Speaker 1: born out of managing Diane Warren, managing Justin Tranter, managing
• 1:15:52
  Speaker 1: the Dream and realizing that these people were delivering massive
• 1:15:55
  Speaker 1: hit songs for artists and not getting paid properly. And
• 1:16:00
  Speaker 1: what I saw was that UM streaming was and you know,
• 1:16:06
  Speaker 1: Daniel Eck and Martin Lawrence and at Spotify can attest
• 1:16:10
  Speaker 1: to this. It was very clear to me the first
• 1:16:13
  Speaker 1: time I ever saw Spotify that not only was it
• 1:16:16
  Speaker 1: going to be wildly successful, but the effect that it
• 1:16:19
  Speaker 1: was going to have was to take music from being
• 1:16:22
  Speaker 1: a discretionary or luxury purchase and turn it into a utility.
• 1:16:27
  Speaker 1: Because that ten dollar price point, that ability to have
• 1:16:30
  Speaker 1: access to at that point almost everything to today pretty
• 1:16:35
  Speaker 1: much everything, um, you know, was going to be appealing
• 1:16:38
  Speaker 1: enough to the passive consumer to make them want to
• 1:16:42
  Speaker 1: pay for music. So, you know, if you look at
• 1:16:44
  Speaker 1: where we are today, you know, the benchmark for extraordinary
• 1:16:49
  Speaker 1: success in our business used to be the platinum record,
• 1:16:53
  Speaker 1: you know, million copies in a country like the United
• 1:16:57
  Speaker 1: States that has three sixty million people in it. Today,
• 1:17:01
  Speaker 1: you know that one in three sixty you know, tells
• 1:17:03
  Speaker 1: you that the average person might love music, but they
• 1:17:05
  Speaker 1: didn't love music enough to put their hand in their
• 1:17:07
  Speaker 1: pocket and pull out money to pay for it. Today,
• 1:17:11
  Speaker 1: we have a hundred million homes in the United States
• 1:17:14
  Speaker 1: that are paying for a paid music streaming subscription. Right
• 1:17:18
  Speaker 1: so we've gone from one in three hundred and sixty
• 1:17:21
  Speaker 1: people paying for music to one in three point six
• 1:17:24
  Speaker 1: people paying for music. That's why you're seeing the sort
• 1:17:28
  Speaker 1: of money flooding into this business that you're seeing is
• 1:17:31
  Speaker 1: because music has gone from being this luxury purchase to
• 1:17:35
  Speaker 1: now very much being a utility purchase. That was very
• 1:17:38
  Speaker 1: clear to me. Alongside that, I knew that these great
• 1:17:43
  Speaker 1: songs that these songwriters wrote that when they hit they
• 1:17:47
  Speaker 1: became a part of the fabric of society. And when
• 1:17:49
  Speaker 1: they become a part of the fabric of society, they
• 1:17:52
  Speaker 1: start to have predictable, reliable income, and that that would
• 1:17:56
  Speaker 1: make them investible because those are the same reasons why
• 1:17:59
  Speaker 1: we look at gold and oil is that predictability and reliability. Okay,
• 1:18:09
  Speaker 1: so you said that you had a hundred and seventy
• 1:18:11
  Speaker 1: seven meetings. What transpired to build hypnosis? So out of
• 1:18:18
  Speaker 1: those hundred and seventy seven meetings, which were really about
• 1:18:22
  Speaker 1: educating the investment community, as I say, about this predictability
• 1:18:26
  Speaker 1: and reliability of these income streams, and also the fact
• 1:18:29
  Speaker 1: that the income streams were uncorrelated. Right if you know,
• 1:18:32
  Speaker 1: I compare them to golden oil, and you know, if
• 1:18:36
  Speaker 1: if the if political upheaval, if there's some sort of
• 1:18:39
  Speaker 1: political upheaval tomorrow, the price of golden oil will be affected,
• 1:18:43
  Speaker 1: but the price of songs and the revenues associated with
• 1:18:46
  Speaker 1: songs aren't affected because if people are living their best lives,
• 1:18:50
  Speaker 1: they're doing it to a soundtrack of music. Equally well,
• 1:18:53
  Speaker 1: if they're experiencing the sort of challenges that we've experienced
• 1:18:56
  Speaker 1: over the last fourteen or fifteen months, you're taking comfort
• 1:18:59
  Speaker 1: and escaping with music. So this uncorrelated aspect of the
• 1:19:04
  Speaker 1: revenues is something that investors have a real appetite for
• 1:19:09
  Speaker 1: because they understand that in a world of Donald Trump's
• 1:19:12
  Speaker 1: and you know, all the craziness that that's happening all
• 1:19:15
  Speaker 1: over the world, that having uncorrelated assets, at least in
• 1:19:19
  Speaker 1: part of their portfolio is very important. So it took
• 1:19:21
  Speaker 1: about a year and a half to do these hundred
• 1:19:24
  Speaker 1: and seventy seven meetings, and eight of them said to me, Um,
• 1:19:30
  Speaker 1: don't ever darken our doorstep again. It doesn't matter how
• 1:19:33
  Speaker 1: successful you make this idea. Our investors will never be
• 1:19:37
  Speaker 1: you know, the people that give us money will never
• 1:19:39
  Speaker 1: be comfortable with this. Um. Thirty eight of them said,
• 1:19:44
  Speaker 1: you know, we're in. We want to do this, and
• 1:19:47
  Speaker 1: they backed me with two hundred million pounds and the
• 1:19:51
  Speaker 1: other remaining hundred and thirty odd all said listen, you know,
• 1:19:55
  Speaker 1: we think what you're doing is fascinating and uh, we
• 1:19:58
  Speaker 1: love it, but we can't be your guinea pigs. So
• 1:20:01
  Speaker 1: you go away and make this successful and then you
• 1:20:04
  Speaker 1: come back and see us. Which is how we've gone
• 1:20:06
  Speaker 1: from being a two hundred million pound company to being,
• 1:20:09
  Speaker 1: as you say, at two point to two point three
• 1:20:11
  Speaker 1: billion dollar company. Um, because we went back to every
• 1:20:15
  Speaker 1: one of those hundred thirty one investors that said we
• 1:20:19
  Speaker 1: don't want to be your guinea pig, and we've also
• 1:20:21
  Speaker 1: now gone to know another three d or so on
• 1:20:24
  Speaker 1: top of that. So are about four hundred nine or
• 1:20:26
  Speaker 1: odd investors that make up the two point two billion
• 1:20:30
  Speaker 1: dollars that's in hypnosis, and that's allowed us to buy
• 1:20:33
  Speaker 1: sixty three thousand of the most wonderful songs in the world. Okay,
• 1:20:38
  Speaker 1: why is the company based in Guernsey. It's based in
• 1:20:41
  Speaker 1: Guernsey for tax reasons, um. And that's not you know,
• 1:20:45
  Speaker 1: Guernsey is a British Channel island, so it's not tax avoidance.
• 1:20:49
  Speaker 1: But you know, for example, we get the vast majority
• 1:20:53
  Speaker 1: of our money, our earnings comes from the United States.
• 1:20:57
  Speaker 1: Right if we were based on the mainland in UK
• 1:21:01
  Speaker 1: that those US earnings would be subject to withholding tax.
• 1:21:06
  Speaker 1: By being based in Guernsey, they are not subject to
• 1:21:10
  Speaker 1: withholding tax. Does that mean there are people actually in Guernsey.
• 1:21:16
  Speaker 1: Our administrators and our administrator and administrator in this instance
• 1:21:22
  Speaker 1: is very different to our publishing administrator. Our administrator and
• 1:21:26
  Speaker 1: this instances are the people that deal with the money
• 1:21:29
  Speaker 1: on Hypnosis is part. So I I never touch Hypnosis money.
• 1:21:33
  Speaker 1: Hypnosis money is only ever touched by our administrators. They
• 1:21:38
  Speaker 1: make all the payments on our behalf, They collect all
• 1:21:40
  Speaker 1: the moneys on our behalf. You know, everything gets paid
• 1:21:43
  Speaker 1: through into two our Guernsey bank accounts. So yeah, we
• 1:21:48
  Speaker 1: have a small team of people in Guernsey, but the
• 1:21:51
  Speaker 1: majority of our people are in London and we have
• 1:21:54
  Speaker 1: eighty three people between London and Los Angeles. Okay, you
• 1:21:59
  Speaker 1: have a unique structure and I'll let you explain it
• 1:22:03
  Speaker 1: because I don't want to make a mistake. Where there
• 1:22:05
  Speaker 1: is the company Hypnosis that owns the asset, yet you
• 1:22:09
  Speaker 1: work for a different company that provide management services, Why
• 1:22:16
  Speaker 1: and how does that work? So this so, this is
• 1:22:20
  Speaker 1: what's known as an investment trust and it's a classic
• 1:22:23
  Speaker 1: construct on the London stock market. Right. So so there
• 1:22:28
  Speaker 1: are many many investment trusts. The vast majority of the
• 1:22:31
  Speaker 1: companies in in in the foot see to fifty our
• 1:22:35
  Speaker 1: investment trusts. And this construct of having a vehicle that
• 1:22:41
  Speaker 1: owns the assets and that has no liabilities beyond the
• 1:22:45
  Speaker 1: ownership of those assets is a very very allows for
• 1:22:49
  Speaker 1: a very very clean company. And then you have an
• 1:22:52
  Speaker 1: investment advisor that then manages those assets. So I'm the
• 1:22:58
  Speaker 1: founder of both companies. I'm founder of the parent company
• 1:23:02
  Speaker 1: if you like, or the main company, which is the
• 1:23:05
  Speaker 1: asset holder, Hypnosis Songs Fundlimited. I'm also the founder of
• 1:23:10
  Speaker 1: the Family Music which is the company that manages those
• 1:23:14
  Speaker 1: assets and that buys those assets on the behalf of
• 1:23:18
  Speaker 1: of of of the fund. And as I say, this
• 1:23:20
  Speaker 1: is a classic English stock market construct. Um. And we've gone,
• 1:23:26
  Speaker 1: you know, the three years plus that we've been doing this,
• 1:23:30
  Speaker 1: we've gone from being a normal listing on the London
• 1:23:34
  Speaker 1: stock market to a year later, on the back of success,
• 1:23:37
  Speaker 1: being a premier listing, and then fourteen months ago, fifteen
• 1:23:41
  Speaker 1: months ago we became a foot see two fifty company.
• 1:23:43
  Speaker 1: We're one of the biggest companies on the London stock
• 1:23:46
  Speaker 1: market and we're the number twenty three biggest yielder on
• 1:23:50
  Speaker 1: the London stock Market, meaning that they're only twenty two
• 1:23:53
  Speaker 1: companies that are paying a bigger dividend to their investors
• 1:23:57
  Speaker 1: than we are. Okay, there was some scuttle but about
• 1:24:01
  Speaker 1: this recently. Can you explain how the management company, the
• 1:24:06
  Speaker 1: family operation gets paid and how you get paid as
• 1:24:10
  Speaker 1: opposed to the investor, because there were some analysts and
• 1:24:13
  Speaker 1: investors were kicking around raising questions about this. Yeah, there's
• 1:24:19
  Speaker 1: there were there were some newspaper reports that, um, you know,
• 1:24:24
  Speaker 1: we're basically making the point that the more I invest
• 1:24:30
  Speaker 1: and the more money I raise, the more the family
• 1:24:33
  Speaker 1: music gets paid. Right. But of course, and and that's
• 1:24:36
  Speaker 1: a fair statement to make. It's a it's an accurate
• 1:24:39
  Speaker 1: statement to make. We get paid on the back of
• 1:24:42
  Speaker 1: the money that we raise and the money that we invest.
• 1:24:45
  Speaker 1: So we you know, on the first five sorry, first
• 1:24:50
  Speaker 1: two fifty million pounds that we raised we got, we
• 1:24:53
  Speaker 1: get paid one percent of that as a management fee.
• 1:24:56
  Speaker 1: On the next two d fifty million pounds we get
• 1:24:58
  Speaker 1: paid point nine percent. This is all a matter of
• 1:25:01
  Speaker 1: public records, so I don't mind mind disclosing this. And
• 1:25:04
  Speaker 1: then on on everything beyond that first five million pounds
• 1:25:07
  Speaker 1: we then get paid point eight percent. So the more
• 1:25:10
  Speaker 1: money we raise and the more money we invest, the
• 1:25:13
  Speaker 1: more we get paid. So there are are we're a
• 1:25:17
  Speaker 1: couple of newspaper reports that we're making that point and
• 1:25:20
  Speaker 1: that we're making that point as as perhaps being the
• 1:25:24
  Speaker 1: motive of why we raise so much money and why
• 1:25:28
  Speaker 1: we invest so much money. And what they were missing,
• 1:25:32
  Speaker 1: of course, was that every one of our investors has
• 1:25:35
  Speaker 1: backed us with that money for the last three years,
• 1:25:39
  Speaker 1: as to say, growing it from the initial two million
• 1:25:42
  Speaker 1: pounds to now what is you know, one point seven
• 1:25:44
  Speaker 1: one point eight billion pounds two point to two point
• 1:25:47
  Speaker 1: three billion dollars um. And the reason why they've backed
• 1:25:51
  Speaker 1: us is because part of the thesis from the get
• 1:25:54
  Speaker 1: go was that there was a limited opportunity here to
• 1:25:59
  Speaker 1: buy these assets. It's these great songs at attractive prices.
• 1:26:03
  Speaker 1: I think that two years from now, three years from now,
• 1:26:06
  Speaker 1: it won't be you know, you'll be buying these songs
• 1:26:09
  Speaker 1: for um income, but you won't have the same exponential
• 1:26:14
  Speaker 1: net asset value growth that you'll have based on what
• 1:26:17
  Speaker 1: we've bought over the last two years and what will
• 1:26:20
  Speaker 1: buy over the next two years um and there and
• 1:26:23
  Speaker 1: all of our shareholders have understood that from the get go.
• 1:26:27
  Speaker 1: It's been a part of those discussions from the get go,
• 1:26:31
  Speaker 1: and it's why they continue to back us with with
• 1:26:33
  Speaker 1: with each fundraise and allow us to continue to um
• 1:26:37
  Speaker 1: uh invest in these great songs. Okay, So let's just
• 1:26:41
  Speaker 1: understand there is him, there is hypnosis. It owns the songs.
• 1:26:45
  Speaker 1: Who owns family? And how does family get paid? Yes,
• 1:26:50
  Speaker 1: and let's just use round numbers. You raise a hundred million,
• 1:26:54
  Speaker 1: you get one percent. That's a million dollars that goes
• 1:26:57
  Speaker 1: to family. Is that distributed it? How do we who
• 1:27:01
  Speaker 1: owns family? How you know? House family run? So I
• 1:27:07
  Speaker 1: owned the family. I have some minor shareholders in it
• 1:27:09
  Speaker 1: as well. And the family employs, as I say, the
• 1:27:13
  Speaker 1: better part of eighty three people around the world with
• 1:27:16
  Speaker 1: those fees. Right, So the fund has no expenses other
• 1:27:20
  Speaker 1: than its legal fees and other than its brokers and
• 1:27:24
  Speaker 1: professional advisors, one of which is the family. But the
• 1:27:28
  Speaker 1: people those eighty three people that manage the fund around
• 1:27:33
  Speaker 1: the manage the assets on behalf of the fund are
• 1:27:36
  Speaker 1: paid for by the family. Okay, So now you raise
• 1:27:40
  Speaker 1: on a million, you get a percentage that goes into
• 1:27:42
  Speaker 1: the family. How much does the family make? What's the
• 1:27:47
  Speaker 1: return to the family on regular income. Well, that's not
• 1:27:52
  Speaker 1: a that isn't a matter of of of of of
• 1:27:55
  Speaker 1: public income. But as as I say, you can do
• 1:27:57
  Speaker 1: the sums. You know, we the family makes aximately ten
• 1:28:00
  Speaker 1: million pounds a year, and out of that ten million
• 1:28:03
  Speaker 1: pounds a year, it pays for offices, It pays for
• 1:28:05
  Speaker 1: eighty three employees, It pays for the expenses of operating
• 1:28:09
  Speaker 1: and managing these songs to the best of its ability.
• 1:28:14
  Speaker 1: I guess what I'm asking. Let's assume I'm an investor. Okay,
• 1:28:18
  Speaker 1: I know I'm paying you approximately one per cent on
• 1:28:21
  Speaker 1: every hundred million. But since family is doing the work,
• 1:28:28
  Speaker 1: so to speak, isn't there a raw percentage that I
• 1:28:32
  Speaker 1: know that I will have to pay family every year?
• 1:28:35
  Speaker 1: How does that work? Because an investor is gonna want
• 1:28:38
  Speaker 1: to know. But all of that is spelled out, and
• 1:28:41
  Speaker 1: we have a you know, one of the things about
• 1:28:44
  Speaker 1: being a public company is that you have to have
• 1:28:46
  Speaker 1: a prospectus. And the prospectus is a document that is
• 1:28:49
  Speaker 1: a couple of hundred pages long, that is a legal
• 1:28:52
  Speaker 1: document that literally spells out everything that there is to
• 1:28:56
  Speaker 1: know from costs to you know, what the upside is,
• 1:28:59
  Speaker 1: what the potential downside is, what the investment policy of
• 1:29:03
  Speaker 1: the company is, what the borrowing policy of the company is.
• 1:29:07
  Speaker 1: Literally every aspect of how we do business is spelled
• 1:29:12
  Speaker 1: out in that two perspectives. And the perspectus is something
• 1:29:17
  Speaker 1: that's updated on a yearly basis, and whatever changes are are,
• 1:29:22
  Speaker 1: you know, to any of those policies goes into that document.
• 1:29:26
  Speaker 1: So all of our shareholders are very very clear and
• 1:29:29
  Speaker 1: very aware on a daily basis of exactly how we operate. Okay,
• 1:29:35
  Speaker 1: so let me ask a different question. What is the
• 1:29:38
  Speaker 1: present percentage? And who negotiates the change in the percentage?
• 1:29:44
  Speaker 1: This is a better public record. Yeah, So the present
• 1:29:48
  Speaker 1: percentages point eight percent of every penny raised, right, so
• 1:29:53
  Speaker 1: you know, uh point zero eight percent, no point eight
• 1:29:58
  Speaker 1: point eight of a per end of right, Um, so
• 1:30:03
  Speaker 1: that is that's the current rate. Then we also have
• 1:30:06
  Speaker 1: a performance fee. When that performance fee is ten percent
• 1:30:10
  Speaker 1: over a ten percent hurdle, So that's something that you'd
• 1:30:14
  Speaker 1: have to get your calculator out and and try and
• 1:30:17
  Speaker 1: figure out what I think I think we underten it.
• 1:30:20
  Speaker 1: But what you're saying is the performance fee is what
• 1:30:23
  Speaker 1: family gets paid, the management fee, and potentially a manage
• 1:30:28
  Speaker 1: the management fee is guaranteed, right, which is that how
• 1:30:32
  Speaker 1: much is the percent? And that's the point eight percent.
• 1:30:35
  Speaker 1: So you get paid not only when you not only
• 1:30:38
  Speaker 1: when you raise it. You're getting paid point eight percent
• 1:30:42
  Speaker 1: of the total fund every year. Correct. Okay, so you
• 1:30:49
  Speaker 1: get the point eight then ten beyond ten percent of
• 1:30:54
  Speaker 1: net also goes to family, correct. And that's so and
• 1:31:00
  Speaker 1: and and on that. There's no guarantee because that's based
• 1:31:04
  Speaker 1: on where the share prices for the entire month of March,
• 1:31:08
  Speaker 1: which is the last month of of of our fiscal year.
• 1:31:13
  Speaker 1: So depending on what the average weighted share prices during
• 1:31:16
  Speaker 1: that entire month, we might make a performance fee. We
• 1:31:19
  Speaker 1: might not. If we've raised money, we won't make a
• 1:31:22
  Speaker 1: performance fee because when you raise money, the share price
• 1:31:24
  Speaker 1: goes down because there are shares that are being offered
• 1:31:27
  Speaker 1: at at at at a discount for people to come
• 1:31:31
  Speaker 1: in and and and and invest more money. So, because
• 1:31:35
  Speaker 1: of the fact that we've been so acquisitive um and
• 1:31:38
  Speaker 1: because that's been the focus, the performance fee is is
• 1:31:42
  Speaker 1: something that's been a very minor part of our world
• 1:31:44
  Speaker 1: so far. Okay, So let's just go back for those
• 1:31:48
  Speaker 1: you know and make it very basic. Let's assume, for
• 1:31:50
  Speaker 1: the sake of round numbers, hypnosis generates a hundred million
• 1:31:55
  Speaker 1: dollars in a year. That is not how family gets paid.
• 1:32:01
  Speaker 1: Family gets paid the point eight family gets paid the
• 1:32:04
  Speaker 1: point eight percent, and if you're doing well, the stock
• 1:32:10
  Speaker 1: price will go up and then you'll get the ten
• 1:32:13
  Speaker 1: percent beyond the ten percent. Correct. That is roughly accurate
• 1:32:20
  Speaker 1: and simple terms. Okay, So if the stock price does
• 1:32:24
  Speaker 1: not go up, family does not get paid beyond the
• 1:32:29
  Speaker 1: point eight percent of total funds raised. Correct in order
• 1:32:35
  Speaker 1: for us, in order for us to get paid a
• 1:32:36
  Speaker 1: performance fee, we need to have the stock price out. Okay.
• 1:32:42
  Speaker 1: So let's assume I you want to raise money. Are
• 1:32:47
  Speaker 1: you raising you know, there's different ways. Is it all
• 1:32:50
  Speaker 1: part of the same company. Is it a separate fund?
• 1:32:53
  Speaker 1: How does that go when you raise additional funds? It's
• 1:32:57
  Speaker 1: all part of the same company. There is no there
• 1:33:00
  Speaker 1: is no fund one, fund two, fund three. It's all
• 1:33:03
  Speaker 1: a public company. It's all all trades under the ticker
• 1:33:06
  Speaker 1: of song S O n G, and it's all one company. Now,
• 1:33:11
  Speaker 1: there are instances where you may without getting complicated, where
• 1:33:15
  Speaker 1: you may raise money as a C share rather than
• 1:33:19
  Speaker 1: an ordinary share, and then that C share, once it's
• 1:33:23
  Speaker 1: fully invested, would then be merged into the ordinary shares.
• 1:33:28
  Speaker 1: So that can happen at different times depending on on
• 1:33:32
  Speaker 1: what the circumstances of the fundraise are. But in general,
• 1:33:36
  Speaker 1: the way to the correct way to look at it
• 1:33:38
  Speaker 1: is it's all one company. So let's assume, for the
• 1:33:41
  Speaker 1: sake of discussion, you want to raise a hundred million.
• 1:33:44
  Speaker 1: He who makes that decision, and b do the shareholders
• 1:33:48
  Speaker 1: have to approve it? I make that decision, and then
• 1:33:52
  Speaker 1: that in in a conjunction with my advisers, which are
• 1:33:57
  Speaker 1: in general my brokers. And my brokers are JP Oregon,
• 1:34:00
  Speaker 1: the Royal Bank of Canada, and an English company called
• 1:34:04
  Speaker 1: N plus one Singer, which is the company that brought
• 1:34:06
  Speaker 1: us to the stock market. And then I go out
• 1:34:10
  Speaker 1: and I speak to all of our investors and they
• 1:34:13
  Speaker 1: have a choice of how much they want to put in.
• 1:34:15
  Speaker 1: So the the investors can't stop us from raising money.
• 1:34:20
  Speaker 1: But if they but they certainly can choose not to
• 1:34:22
  Speaker 1: put money in in that latest fundraise. Okay, but theoretically
• 1:34:29
  Speaker 1: they could be they could see it as being somewhat
• 1:34:31
  Speaker 1: diluted relative to the stock market. If you raise more
• 1:34:35
  Speaker 1: money when you go out and you do that raise,
• 1:34:39
  Speaker 1: you're you're right that people come in at a strike rate, right,
• 1:34:44
  Speaker 1: and that strike rate is based on what the NAV
• 1:34:47
  Speaker 1: is of the company net asset value is of the
• 1:34:51
  Speaker 1: company at that moment in time. So the current um
• 1:34:56
  Speaker 1: uh NAV of the company is teen pence and change.
• 1:35:03
  Speaker 1: The current share price of the company is about a
• 1:35:06
  Speaker 1: hundred and twenty three pence, so we're trading at a
• 1:35:08
  Speaker 1: premium of about four or five percent. And if we
• 1:35:13
  Speaker 1: were to issue new shares tomorrow and we issued some
• 1:35:17
  Speaker 1: new shares a small amount of new shares last week
• 1:35:19
  Speaker 1: as an example, then those shares were issued at one
• 1:35:22
  Speaker 1: pound eighteen and people came in. And because of the
• 1:35:26
  Speaker 1: fact that we're taking this money and investing it in
• 1:35:30
  Speaker 1: more assets, no one is diluted because the capt market
• 1:35:34
  Speaker 1: cap of the company grows at the same time with
• 1:35:38
  Speaker 1: the investment. So it's not like you're taking a hundred
• 1:35:40
  Speaker 1: million dollars or a hundred million pounds and you're spending
• 1:35:44
  Speaker 1: it on overheads that don't increase the value of the company.
• 1:35:48
  Speaker 1: You're spending it on assets that do increase the value
• 1:35:51
  Speaker 1: of the company, so there is no dilution. So, as
• 1:35:55
  Speaker 1: you mentioned earlier, one of the good things about publishing,
• 1:35:58
  Speaker 1: especially with some of these like Onic Acts of the
• 1:36:00
  Speaker 1: seventies thereafter, they actually own the publishing. So you've got
• 1:36:06
  Speaker 1: great acts, you've got a hundred and fifty acts, but
• 1:36:10
  Speaker 1: there's a huge number of people out there who still
• 1:36:13
  Speaker 1: own their publishing. How does Hypnosis Hypnosis by what's available
• 1:36:20
  Speaker 1: or does at some point does Hypnosis close its fund
• 1:36:22
  Speaker 1: and say close its organization and we're only managing X number. Well,
• 1:36:28
  Speaker 1: there's certainly a ceiling to our growth, but that ceiling
• 1:36:32
  Speaker 1: is driven by what I referred to as the third
• 1:36:38
  Speaker 1: key factor in what I wanted to achieve with Hypnosis,
• 1:36:41
  Speaker 1: which is that I wanted to take that traditional publishing
• 1:36:45
  Speaker 1: and replace it with song management. Right now, in order
• 1:36:49
  Speaker 1: to be an effective song management er, there's obviously a
• 1:36:53
  Speaker 1: ceiling on on what you can do. So we currently
• 1:36:56
  Speaker 1: own sixty thousand songs. Over five thousand of those songs
• 1:37:01
  Speaker 1: are number one songs, Over fifteen thousand of them are
• 1:37:04
  Speaker 1: Top ten songs, over forty thousand them are top forty songs,
• 1:37:08
  Speaker 1: and the rest are the ones that that that that
• 1:37:10
  Speaker 1: came with them in in word two point two, as
• 1:37:14
  Speaker 1: I say billion or so dollars invested in the next
• 1:37:18
  Speaker 1: two years, I expect to be somewhere around the five
• 1:37:21
  Speaker 1: or six billion dollar mark invested, and I expect to
• 1:37:25
  Speaker 1: grow the fund from the hundred sixty three thousand songs
• 1:37:29
  Speaker 1: that it is today to about a hundred and twenty
• 1:37:32
  Speaker 1: five thousand to a hundred and fifty thousand songs. At
• 1:37:35
  Speaker 1: that point, I will also have grown the active management
• 1:37:39
  Speaker 1: team to about two hundred people, so that we stay
• 1:37:42
  Speaker 1: on that less than a thousand songs per person um.
• 1:37:46
  Speaker 1: And at that point you know whether it's two two
• 1:37:49
  Speaker 1: hundred and fifty people, whether it's a hundred hundred and
• 1:37:52
  Speaker 1: fifty thousand songs. I think that that is the real
• 1:37:56
  Speaker 1: ceiling on being a song management company, because I don't
• 1:38:00
  Speaker 1: think you can manage more than two fifty people. I
• 1:38:03
  Speaker 1: don't think that you can manage more than fifty thousand
• 1:38:06
  Speaker 1: songs with the sort of responsibility that I want to
• 1:38:09
  Speaker 1: manage songs equally well. Coinciding with that same two and
• 1:38:14
  Speaker 1: a half two to two and a half year period,
• 1:38:17
  Speaker 1: I think that the true value of streaming will be
• 1:38:20
  Speaker 1: reflected in the song that the data that you buy
• 1:38:24
  Speaker 1: these songs on and I think at that point, you know,
• 1:38:28
  Speaker 1: there'll be a lot of people that want access into
• 1:38:32
  Speaker 1: this space. I don't think that there'll be a lot
• 1:38:34
  Speaker 1: of access left. I think that there's a lot of
• 1:38:37
  Speaker 1: pipeline out there today, whether it's for me, whether it's
• 1:38:40
  Speaker 1: for Primary Wave, whether it's for Around Hill, whether it's
• 1:38:44
  Speaker 1: for all of you know, KK are these other companies
• 1:38:47
  Speaker 1: BMG that are are are looking to buy as well.
• 1:38:50
  Speaker 1: I think there's more than enough pipeline to go around
• 1:38:52
  Speaker 1: for everybody. Everyone has their own relationships. But I think
• 1:38:56
  Speaker 1: that at a certain point there will be a lot
• 1:38:58
  Speaker 1: of other people wanting to enter space. There won't be
• 1:39:01
  Speaker 1: a lot of of of action left in the space,
• 1:39:04
  Speaker 1: and the multiples will really explode because people will want
• 1:39:08
  Speaker 1: to pay very very high prices to get their hands
• 1:39:11
  Speaker 1: on these assets. And I'm just to be clear, I'm
• 1:39:14
  Speaker 1: never a seller. You know, people like Larry Mistell, they buy,
• 1:39:18
  Speaker 1: they sell, that's the business that that that they're in.
• 1:39:21
  Speaker 1: We don't sell. We're and and we've been very very
• 1:39:24
  Speaker 1: clear with our investors from the get go, and it's
• 1:39:27
  Speaker 1: the reason why I did this as a public vehicle,
• 1:39:30
  Speaker 1: because I never want to turn around. I don't know
• 1:39:33
  Speaker 1: how Larry rationalizes it when he talks to someone like
• 1:39:36
  Speaker 1: Stevie Nicks that you know, he might be selling her
• 1:39:39
  Speaker 1: catalog in two years time. But I never want to
• 1:39:41
  Speaker 1: be in a position where I'm looking someone like Neil
• 1:39:43
  Speaker 1: Young in the I and say that, you know, guess what,
• 1:39:46
  Speaker 1: We've just sold your catalog. So the reason to do
• 1:39:48
  Speaker 1: this is a public company is because effectively the capital
• 1:39:51
  Speaker 1: is permanent, whereas private equity money has five year terms,
• 1:39:56
  Speaker 1: ten year terms, you know, and and at that point
• 1:39:59
  Speaker 1: you have to to to sell and and you know,
• 1:40:03
  Speaker 1: I never want to be in that position. And I've
• 1:40:06
  Speaker 1: even gone to the extent in terms of protecting my
• 1:40:09
  Speaker 1: integrity with the songwriter where if for any reason, our
• 1:40:14
  Speaker 1: shareholders should ever want to sell, or if our shareholders
• 1:40:17
  Speaker 1: should ever want to get rid of me, they have
• 1:40:20
  Speaker 1: to sell the catalog to me, because my relationship is
• 1:40:23
  Speaker 1: with the artists and the songwriters and the producers that
• 1:40:26
  Speaker 1: have allowed me to become the custodian of of of
• 1:40:30
  Speaker 1: of these great works. Um, and that's an important part
• 1:40:33
  Speaker 1: of what we do. Okay, So you know you really
• 1:40:36
  Speaker 1: went to my next question. So getting to some stock
• 1:40:39
  Speaker 1: market issues, I would assume A the company has no debt.
• 1:40:44
  Speaker 1: B it's traded on the stock exchange. See could they
• 1:40:49
  Speaker 1: get rid of you in family D. Could someone come
• 1:40:54
  Speaker 1: in and buy all the stock and essentially own the
• 1:40:56
  Speaker 1: company and run it their way. So in terms of
• 1:41:00
  Speaker 1: of A yes, we're a public company on the stock
• 1:41:03
  Speaker 1: market as are saying, we're a foot see two fifty company,
• 1:41:06
  Speaker 1: one of the highest yielders on the index. And of
• 1:41:09
  Speaker 1: course with that success having given our shareholders of total
• 1:41:14
  Speaker 1: return over the last three years, return over the last year. UM,
• 1:41:20
  Speaker 1: you know, we're looked upon very very kindly, particularly in
• 1:41:24
  Speaker 1: a pandemic environment. UM. We do have debt because our
• 1:41:29
  Speaker 1: prospectives allows us to lever our assets bytent um. And
• 1:41:35
  Speaker 1: that's because our investors want to get paid their dividends UH,
• 1:41:39
  Speaker 1: and they want to to basically by using leverage, get
• 1:41:44
  Speaker 1: even higher dividends and even higher total returns. So the
• 1:41:47
  Speaker 1: leverage is something that is agreed at thirty percent and
• 1:41:51
  Speaker 1: we have a great UH consortium of of of lenders
• 1:41:56
  Speaker 1: led by JP Morgan and City National Bank that do
• 1:41:59
  Speaker 1: that BOB for us UM. And then in terms of
• 1:42:03
  Speaker 1: of of the family I have a ten year agreement
• 1:42:06
  Speaker 1: as the founder of of of both sides. I have
• 1:42:09
  Speaker 1: a ten year agreement with the fund. That agreement rolls
• 1:42:13
  Speaker 1: over UM and I can only you know, we can
• 1:42:17
  Speaker 1: never only ever be removed for cause UM. As I
• 1:42:20
  Speaker 1: mentioned before, we have an administrator that handles all the
• 1:42:24
  Speaker 1: money for the fund that is an independent administrator. We
• 1:42:28
  Speaker 1: never touch or see any of the fund's money. UM.
• 1:42:31
  Speaker 1: We just manage the the assets and the buying of
• 1:42:35
  Speaker 1: of of the assets. I have a board of directors
• 1:42:38
  Speaker 1: that is five people strong, that is led by a
• 1:42:42
  Speaker 1: guy called Andrew Such that a corporate governance specialist, but
• 1:42:48
  Speaker 1: that includes people like Paul Berger who's the former head
• 1:42:51
  Speaker 1: of Sony UK and Sony Europe, was also the head
• 1:42:55
  Speaker 1: at one time of Sony Canada, Sylvia Coleman who was
• 1:42:59
  Speaker 1: his deputy at Sony UK and Sony Europe. Andrew Wilkinson
• 1:43:03
  Speaker 1: who was the business manager along with Prince Rupert Lowenstein
• 1:43:06
  Speaker 1: of the Rolling Stones and Pink Floyd Um and then
• 1:43:11
  Speaker 1: another guy who's a private equity government specialist called Simon Holden.
• 1:43:17
  Speaker 1: And those people obviously are there to hold my feet
• 1:43:21
  Speaker 1: to the fire and make sure that all of the
• 1:43:23
  Speaker 1: boxes are ticked properly and that both corporate governance and
• 1:43:28
  Speaker 1: compliance is adhered to at all times. I'm also surrounded
• 1:43:33
  Speaker 1: by my brokers at JP Morgan and plus one singer
• 1:43:36
  Speaker 1: in the Royal Bank of Canada that are also there
• 1:43:38
  Speaker 1: to protect shareholders as well as to guide me in
• 1:43:42
  Speaker 1: my dealings with shareholders. Um so it's a very very
• 1:43:45
  Speaker 1: robust situation. And then as I say, you know what
• 1:43:49
  Speaker 1: what you know? One of the things that the the
• 1:43:52
  Speaker 1: financial community understands is that whatever the asset is, whether
• 1:43:58
  Speaker 1: it's in the case of hypno us as songs and
• 1:44:01
  Speaker 1: music that's created by artists and songwriters and producers, or
• 1:44:05
  Speaker 1: whether it's something else, the key component is do you
• 1:44:09
  Speaker 1: or don't you have access right and they understand that
• 1:44:13
  Speaker 1: that access is quite often based on integrity and the
• 1:44:18
  Speaker 1: relationships that someone has built over a long period of time.
• 1:44:22
  Speaker 1: So it was very easy for me to be able
• 1:44:25
  Speaker 1: to prevail upon those investors and uh, you know, create
• 1:44:30
  Speaker 1: a deal whereby should our you know, investors ever want
• 1:44:35
  Speaker 1: to get out of the fund? You know, it's very
• 1:44:37
  Speaker 1: easy for them in a in an investment trust because
• 1:44:40
  Speaker 1: they can get out the shares are very liquid and
• 1:44:44
  Speaker 1: someone else will replace them the next day. But if
• 1:44:47
  Speaker 1: for whatever reason. If we decide that the company should
• 1:44:49
  Speaker 1: not be a public company anymore, then the only person
• 1:44:54
  Speaker 1: that these assets can be sold to Army UM unless again,
• 1:44:59
  Speaker 1: unless I'm fired for for cause, and I'm never going
• 1:45:03
  Speaker 1: to put myself in a position having built all this
• 1:45:05
  Speaker 1: just just I understand you talk about the tenure rollover.
• 1:45:10
  Speaker 1: Are you talking about you, Merk or Family? And just
• 1:45:15
  Speaker 1: the other question being theoretically, I'm not saying it's going
• 1:45:18
  Speaker 1: to happen. Could someone come along and buy up all
• 1:45:21
  Speaker 1: the assets so effectively they have control or is there
• 1:45:25
  Speaker 1: some kind of voting structure or something that makes it
• 1:45:28
  Speaker 1: that that can't happen. So when I talk about the
• 1:45:32
  Speaker 1: Family and Mark were effectively one and the same, because
• 1:45:35
  Speaker 1: the company is my company with the exception of a
• 1:45:37
  Speaker 1: few minor shareholders, and therefore the contract that I have
• 1:45:43
  Speaker 1: with the fund is through the Family Music Limited as
• 1:45:46
  Speaker 1: my operating company. UM. In terms of of you know,
• 1:45:51
  Speaker 1: any company that's on the stock market could be the
• 1:45:53
  Speaker 1: subject of a hostile takeover this, you know that, and
• 1:45:57
  Speaker 1: that's something that of course shareholders would have to vote on,
• 1:46:00
  Speaker 1: and uh, you know, there's there's always the chance when
• 1:46:04
  Speaker 1: you're on the on the public market that even though
• 1:46:07
  Speaker 1: something like that is remote, there's always a possibility that
• 1:46:10
  Speaker 1: it could happen. Okay, Now, just telling about the landscape
• 1:46:14
  Speaker 1: in general. What are the new opportunities in sync and
• 1:46:20
  Speaker 1: what are the new opportunities relative to collection in general,
• 1:46:26
  Speaker 1: and where is the focus of your managers? So the
• 1:46:29
  Speaker 1: focus is very much on getting more out of these
• 1:46:33
  Speaker 1: great songs, and getting more out of them in many,
• 1:46:36
  Speaker 1: many different ways. So you know, we own the great
• 1:46:39
  Speaker 1: Al Jackson's catalog, and when we bought Al Jackson's catalog,
• 1:46:44
  Speaker 1: it was making predictable, reliable income of four grand a year.
• 1:46:49
  Speaker 1: But you know, of that income was concentrated on one song,
• 1:46:55
  Speaker 1: Al Green's Let's Stay Together and as there probably no
• 1:46:59
  Speaker 1: Al jack and as the drummer and Booker T and
• 1:47:01
  Speaker 1: the MG's had an incredible career between nineteen sixty two
• 1:47:05
  Speaker 1: and when he died in nineteen seventy five, where he
• 1:47:08
  Speaker 1: wrote you know thirteen or fourteen of the most important
• 1:47:12
  Speaker 1: soul pop classics, not only Let's Stay Together, but still
• 1:47:16
  Speaker 1: in Love with You and call Me for Al Green
• 1:47:19
  Speaker 1: plus seven or eight of his other biggest songs he wrote, uh,
• 1:47:24
  Speaker 1: you know Booker Team, the MGS, Green Onions plus most
• 1:47:26
  Speaker 1: of their big records, plus getting royalties on big records
• 1:47:32
  Speaker 1: by Bill Withers and Otis Redding and many many others.
• 1:47:37
  Speaker 1: So of the concentration of this four grand is on
• 1:47:43
  Speaker 1: one song, Let's Stay Together, which just tells you what
• 1:47:47
  Speaker 1: I was, you know, a great example of what I
• 1:47:49
  Speaker 1: was saying before about these uh you know, big companies
• 1:47:53
  Speaker 1: that have twenty thousand songs per person, they don't have
• 1:47:56
  Speaker 1: the ability to actively manage. They're just taking incoming requests.
• 1:48:00
  Speaker 1: So in the year and a half that we've owned
• 1:48:03
  Speaker 1: the catalog, we've gone from four hundred grand a year
• 1:48:06
  Speaker 1: to six hundred grand a year, so we've grown the
• 1:48:08
  Speaker 1: earnings by a third. But crucially in doing that, we've
• 1:48:11
  Speaker 1: taken the earnings of Let's Stay Together from of the
• 1:48:15
  Speaker 1: overall number to less than fifty percent of the overall number.
• 1:48:19
  Speaker 1: And the remaining is now having put green onions in
• 1:48:23
  Speaker 1: about ten different movies, it's putting Call Me in a
• 1:48:27
  Speaker 1: TV commercial, it's putting Still in Love with You in
• 1:48:30
  Speaker 1: a movie, a TV commercial, and also having John Legend
• 1:48:34
  Speaker 1: interpolated in a new song on his last album that
• 1:48:38
  Speaker 1: was top ten all over the world that we owned
• 1:48:41
  Speaker 1: of the new song because of the interpolation, so everyone
• 1:48:46
  Speaker 1: is focused on on on you know, how to you know,
• 1:48:49
  Speaker 1: we basically operate every song on its own p anal
• 1:48:53
  Speaker 1: as if it was its own business, not to institutionalize it,
• 1:48:57
  Speaker 1: but basically to give a starting point to a conversation
• 1:49:02
  Speaker 1: about whether or not we think the song is performing optimally,
• 1:49:05
  Speaker 1: and in most cases really to guilt people into going
• 1:49:10
  Speaker 1: hold on a set. That song is way better than that.
• 1:49:13
  Speaker 1: We should be doing way better than that with that song,
• 1:49:15
  Speaker 1: and it gives that kind of impetus for people to
• 1:49:18
  Speaker 1: go out and do something with it. So, you know,
• 1:49:20
  Speaker 1: when we look at the Blondie catalog that we acquired
• 1:49:24
  Speaker 1: a little more than a year ago, you know when
• 1:49:26
  Speaker 1: Blondie started, and you've written two really important pieces over
• 1:49:31
  Speaker 1: the last ten days or so on TikTok that everyone
• 1:49:36
  Speaker 1: in the music business should read. Because these new opportunities,
• 1:49:41
  Speaker 1: whether it's TikTok, whether it's Peloton, whether it's Thriller, you know,
• 1:49:45
  Speaker 1: these are are are big opportunities. One because there's massive
• 1:49:49
  Speaker 1: consumption taking place, and too because it's new income. These
• 1:49:53
  Speaker 1: are not income streams that are in the data on
• 1:49:57
  Speaker 1: which you're buying these catalogs. So it's real value add
• 1:50:01
  Speaker 1: from the get go. So when when when we uh
• 1:50:04
  Speaker 1: signed Blondie, they didn't have a TikTok page. Amy Thompson,
• 1:50:08
  Speaker 1: who's the chief catalog officer, got very very excited obviously
• 1:50:12
  Speaker 1: about Debbie Harry being the icon that she is and
• 1:50:15
  Speaker 1: Christine and Debbie being the incredible songwriters that they are.
• 1:50:19
  Speaker 1: They started a campaign to create Blondie's TikTok page. They
• 1:50:24
  Speaker 1: put Heart of Glass up there, and you know, very
• 1:50:28
  Speaker 1: soon after that, Miley Cyrus covered Heart of Glass. That
• 1:50:33
  Speaker 1: gave us an opportunity to bring Debbie and Miley together
• 1:50:37
  Speaker 1: and create some you know photos that looked like Debbie
• 1:50:41
  Speaker 1: and Miley, you know, Miley of and Debbie of nine
• 1:50:48
  Speaker 1: together having a good time in a club that you know,
• 1:50:51
  Speaker 1: quote unquote went viral. And you know, from last October
• 1:50:56
  Speaker 1: until the very moment, Heart of Glass hasn't been out
• 1:51:00
  Speaker 1: of Spotify's viral charts, right and and and you know,
• 1:51:04
  Speaker 1: I think some at last count, you know, Blonde you've
• 1:51:07
  Speaker 1: had over a million participants on their TikTok channel. Um,
• 1:51:11
  Speaker 1: the same thing is happening with Nile Rodgers. We went
• 1:51:13
  Speaker 1: out and took everybody dance the Great chic song, UM,
• 1:51:17
  Speaker 1: and we made a new version of it with uh
• 1:51:21
  Speaker 1: DJ Cedric Gervais and the Sound of Franklin with Nile featured,
• 1:51:25
  Speaker 1: uh you know, playing his guitar part, and that's becoming
• 1:51:29
  Speaker 1: a hit all over again. And you know, literally came
• 1:51:32
  Speaker 1: out in last I think October, and every week the
• 1:51:36
  Speaker 1: streams are bigger on it, and the TikTok numbers are
• 1:51:40
  Speaker 1: bigger on it. So it's just really about, you know,
• 1:51:44
  Speaker 1: what makes us different. I don't know if you know
• 1:51:45
  Speaker 1: the statistic, but the Royal Bank of Canada, who as
• 1:51:50
  Speaker 1: I mentioned, is one of our brokers, UM, they put
• 1:51:52
  Speaker 1: out a comparison chart last year in July when we
• 1:51:57
  Speaker 1: released our fiscal numbers for Mark thirty, the same day
• 1:52:02
  Speaker 1: that Warner I p oed, and they did a comparison
• 1:52:06
  Speaker 1: between the two companies. And at that point, Warner Chapel
• 1:52:10
  Speaker 1: had done six hundred forty million dollars in their fiscal year.
• 1:52:15
  Speaker 1: We had done ninety million dollars in our fiscal year,
• 1:52:18
  Speaker 1: so we did approximately twelve percent of Warner's numbers. They
• 1:52:22
  Speaker 1: did it on one point four million songs. We did
• 1:52:25
  Speaker 1: it at the time on thirteen thousand songs, so we
• 1:52:28
  Speaker 1: did twelve percent of the revenue on less than one
• 1:52:31
  Speaker 1: percent of the songs. Their songs were putting out. Our
• 1:52:34
  Speaker 1: songs were putting out six thousand, two hundred and eighty
• 1:52:36
  Speaker 1: dollars per song. Their songs were putting out a hundred
• 1:52:39
  Speaker 1: and seventy five dollars per song. And that's not because
• 1:52:42
  Speaker 1: we're better than they are or we're smarter than they are,
• 1:52:46
  Speaker 1: quite the opposite. As I said before, there's great people
• 1:52:48
  Speaker 1: working in those companies. It's purely because we're structured to
• 1:52:53
  Speaker 1: be able to have the bandwidth, to be able to
• 1:52:55
  Speaker 1: actively manage these songs, to do song management rather than
• 1:52:59
  Speaker 1: just collect passive requests. Mark, you're a force of nature
• 1:53:03
  Speaker 1: and I'm very impressed. You certainly know your business and
• 1:53:06
  Speaker 1: the business at larger You can pull these names statistics
• 1:53:10
  Speaker 1: right out of your butt very easily. So I want
• 1:53:13
  Speaker 1: to thank you so much for taking this time to
• 1:53:15
  Speaker 1: illuminate about your history and hypnosis. I think people have
• 1:53:21
  Speaker 1: a much better understanding of what's going on. Thanks again,
• 1:53:24
  Speaker 1: it's my pleasure, Bob. Thank you, and please keep writing
• 1:53:28
  Speaker 1: about the music that you love, because when you do,
• 1:53:30
  Speaker 1: I think you're the best there is. Well, thank you
• 1:53:32
  Speaker 1: so much. Until next time, this is Bob left sex