Latest / Clone Wars: The Spinoff / Private Equity, Music Rights, and the Art of Keeping Control

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Private Equity, Music Rights, and the Art of Keeping Control · Clone Wars: The Spinoff

• 0:00
  I'll say it flat out.
• 0:01
  If private equity shows up with a big check for my brand, I'm taking the liquidity.
• 0:05
  Up front.
• 0:06
  All of it.
• 0:07
  Hold on, hold on.
• 0:08
  We haven't even set the table yet.
• 0:11
  Okay, so, February twenty sixth, 2026.
• 0:16
  Bridgepoint, big mid market investor, announces it's the lead investor in GoldState
• 0:21
  Music's Growth Strategy.
• 0:23
  GoldState is Charles Goldstuck's firm, started in 2022.
• 0:28
  And per Bridgepoint's own release, they committed a significant investment,
• 0:32
  but the financial details weren't disclosed.
• 0:34
  So no number.
• 0:35
  No number.
• 0:36
  And just to be fair, that press release is about backing music businesses.
• 0:40
  Rights management, distribution, music tech.
• 0:44
  It's not about buying into one rapper's brand.
• 0:47
  But it's the same kind of money, and it's getting closer to us.
• 0:50
  And last time we did T.I.
• 0:52
  and Reservoir, right?
• 0:53
  He licenses the publishing, I'm Serious through Kill the King,
• 0:56
  but he keeps his masters.
• 0:58
  That was one artist, one catalog, one smart split.
• 1:02
  Right.
• 1:03
  That's a catalog deal.
• 1:05
  This is institutional money asking, um, what else can we own.
• 1:08
  So Greedy, defend the take.
• 1:10
  Simple.
• 1:10
  Catalog multiples, what I hear thrown around, is twelve to eighteen times your Net
• 1:16
  Publisher's Share.
• 1:18
  Don't hold me to the exact range, check it yourself.
• 1:21
  But that's real money now.
• 1:23
  I'm a hungry, hungry, hungry guy.
• 1:25
  Cash today beats a plaque on the wall tomorrow.
• 1:29
  Nah.
• 1:29
  Cash today is a loan with a personality, bro.
• 1:32
  You hand over brand equity, and now somebody's got a board seat.
• 1:35
  Voting power.
• 1:36
  A veto on the move you wanna make in year three.
• 1:39
  I can read a contract, though.
• 1:41
  You can read it.
• 1:42
  Can you outvote it?
• 1:43
  Because the, the, the cultural veto is what gets you.
• 1:47
  They don't say no to your art.
• 1:49
  They say no to the budget for your art.
• 1:51
  That's what I tell every artist I manage.
• 1:54
  Anybody can start from scratch and win.
• 1:56
  The question is who's holding the steering wheel when you do.
• 1:59
  Okay, okay, fair.
• 2:01
  But somebody explain why I can't just take debt and keep the wheel.
• 2:04
  Calvin, you're the LSU business degree.
• 2:07
  Finally, the degree gets used.
• 2:09
  So, equity is you selling a slice of the whole thing.
• 2:12
  Forever, or until a buyback.
• 2:14
  Mezzanine debt sits in the middle.
• 2:17
  It's a loan, but it ranks below the senior lenders, so it costs more,
• 2:21
  and sometimes it comes with warrants, which is basically a small equity kicker.
• 2:25
  So it's a loan with a lil' equity sprinkled on top.
• 2:29
  Exactly that, and the thing is, the price depends on how predictable your cash is.
• 2:34
  Say you're a pure streaming artist.
• 2:36
  One revenue line, and it moves with the algorithm.
• 2:40
  A lender looks at that and, uh, discounts you hard.
• 2:44
  Streaming's rented land.
• 2:46
  Yeah, rented land.
• 2:47
  Now take an indie act with streaming, plus tickets, plus merch.
• 2:52
  Say the merch runs at sixty percent margin.
• 2:55
  That's my example, not a market stat.
• 2:58
  That act has leverage at the table, because the money doesn't all die when one
• 3:02
  platform changes a rule.
• 3:04
  So diversification is the negotiating chip.
• 3:07
  It's the whole chip.
• 3:08
  Hmm.
• 3:09
  Okay.
• 3:10
  I'll take that.
• 3:10
  I still want the bag, I just want the bag with a better chip.
• 3:14
  Quick housekeeping, y'all.
• 3:16
  Everything here is general educational information.
• 3:18
  It's not legal, tax, or financial advice.
• 3:22
  Know your own risk profile before you let anybody's check into your house.
• 3:26
  Talk to a professional.
• 3:28
  So how do you even sit at that table without getting eaten?
• 3:30
  I run it like Supreme Mathematics.
• 3:33
  Knowledge first.
• 3:34
  Break that down.
• 3:35
  Knowledge is, you know your numbers cold.
• 3:37
  Streaming stats, your PRO registrations, your balance sheet.
• 3:41
  If they know your numbers better than you, you already lost.
• 3:45
  Then Wisdom.
• 3:46
  You don't sign off hype.
• 3:47
  Somebody says, we love the vision, that's not a term sheet.
• 3:50
  I love a vision.
• 3:51
  I also love a wire.
• 3:53
  Understanding is the fine print.
• 3:54
  You gotta actually understand it, not just have a lawyer nod.
• 3:57
  And then Culture and Power.
• 3:59
  Culture is who you are, Power is who decides.
• 4:02
  Corporate capital doesn't get to write your identity.
• 4:05
  That maps pretty clean.
• 4:07
  And practically, you ring fence.
• 4:09
  Song catalog in one box.
• 4:11
  Your name, image, and likeness in another.
• 4:15
  Touring and merch in another.
• 4:17
  Why separate them?
• 4:18
  It's all me.
• 4:19
  Because if you sell the songs, you don't want your face going with them by accident.
• 4:23
  T.I.
• 4:23
  did it.
• 4:24
  Publishing licensed to Reservoir, masters kept.
• 4:27
  He didn't sell the whole house, he rented out a room.
• 4:30
  And GoldState's own site lists what they buy on the rights side.
• 4:33
  Masters, publishing, producer royalties, neighboring rights.
• 4:38
  So those are all separate pieces.
• 4:40
  That's useful, because it tells you the pieces can be sold separately.
• 4:43
  Huh.
• 4:44
  So I can sell a piece and not the whole body.
• 4:46
  Right, now the safeguards.
• 4:48
  Snap back reversion.
• 4:49
  Five to ten years, and the rights come home.
• 4:52
  Negotiate it.
• 4:53
  Audit rights, too.
• 4:54
  Mandatory.
• 4:55
  You get to open the ledger.
• 4:57
  If they say no to that, bro, that's your answer.
• 4:59
  And independent entertainment counsel.
• 5:01
  Not their lawyer, not your cousin who did one real estate closing.
• 5:05
  Yours.
• 5:06
  Fine, fine.
• 5:07
  I'll still say, take the money.
• 5:08
  But I hear you.
• 5:09
  We see it different, and that's okay.
• 5:11
  But the rule I live by?
• 5:13
  Never sell an asset you can't afford to buy back.
• 5:15
  Ooh.
• 5:16
  That one's going on a hoodie.
• 5:17
  Alright, good talk, y'all.
• 5:19
  See you next one.