Latest / Clone Wars: The Spinoff / Inside the Catalog Gold Rush: Music as an Asset Class

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Inside the Catalog Gold Rush: Music as an Asset Class · Clone Wars: The Spinoff

• 0:00
  Welcome to the show, everybody!
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  I'm Dangerous Zygos, C.E.O.
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  of Currency Development, and I am joined as always by DJ Universe,
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  Calvin Blingwell, and Dandy Market.
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  Today we are talking about serious capital because the catalog acquisition space has
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  completely crossed the threshold from a niche retirement plan for legacy classic
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  rockers into a hyper-aggressive, institutional asset class.
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  DJ Universe, when Warner Music partnered up with Bain Capital to launch a brand new
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  one-point-two billion dollar catalog fund, did you realize the scale of money we are
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  talking about here?
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  One-point-two billion with a B from Bain Capital tells me everything I need to know
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  about where this industry is heading.
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  That is private equity money, Zygos.
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  They aren't buying music because they love the art; they are buying it because they
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  want predictable, yield-generating assets.
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  But what really caught my eye this week was Merck Mercuriadis launching a new two
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  billion dollar artist-centric co-ownership vehicle.
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  Two billion dollars specifically structured so artists don't just sell their soul
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  and walk away, but actually keep some skin in the game.
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  See, that Merck play is wild to me because as an active artist myself based out here
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  in Calabasas, the pitch has always been: "Give us your masters,
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  here is a big fat check, go buy a house and don't look back."
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  But keeping skin in the game?
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  That means if a track I made in Baton Rouge suddenly blows up on a sync placement
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  ten years from now, I still get to participate in that upside.
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  But you gotta wonder, who actually qualifies for that kind of partnership?
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  Is it just the top zero-point-one percent of superstars?
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  Exactly, Calvin!
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  You gotta stay lit to survive in this game, but you also gotta know if you're
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  actually invited to the table or if you're just the product being traded.
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  And it is not just superstar artists anymore.
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  Look at Milk and Honey partnering up with mprs to acquire producer catalogs.
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  They are going after the actual architects of the sound, the people behind the
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  boards who historically got squeezed out of the big publishing payouts.
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  That producer catalog play is highly strategic, Dandy.
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  It shows that sophisticated buyers aren't just chasing the household names on the
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  front of the album cover; they are hunting the underlying infrastructure of the
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  hits.
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  A producer might have a catalog of forty songs that they co-wrote,
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  which translates to a highly diversified stream of micro-royalties across multiple
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  artists.
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  That is a much safer portfolio for an investor than betting on a single superstar's
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  volatile career.
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  And that brings up a massive tension in the game right now.
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  A song that was thrown together casually in 2020 on a laptop and uploaded straight
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  to Tunecore might have ten million streams, but it looks completely different to an
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  investor than a song that was built like a real business from day one.
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  Investors want to see the plumbing.
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  If your split sheets are messy, they will walk away from those ten million streams
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  in a heartbeat.
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  Man, you are speaking absolute facts.
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  I remember the exact moment this clicked for me.
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  It was back when I graduated from LSU with my business degree and I released one of
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  my first independent projects.
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  About eighteen months later, I got a random royalty check from ASCAP for like four
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  thousand dollars because a sports network used thirty seconds of an instrumental in
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  the background of a college football broadcast.
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  I didn't even know they used it!
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  That was the first time I realized a song isn't just a file on a hard drive; it is
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  an active intellectual property asset that works for you while you sleep.
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  Four grand out of nowhere is beautiful, Calvin!
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  But that only happened because your paperwork was clean.
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  If you didn't register that track properly, that money would be sitting in an
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  unclaimed black box fund somewhere.
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  That's the difference between being a creative and being a business owner.
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  A catalog with proper PRO registration, clean metadata, and exact songwriter credits
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  is legible to these big buyers.
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  If you don't have that, you are basically invisible to a Bain Capital or a Warner
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  Music.
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  Let's break down the actual mechanics of why they price these things differently,
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  because artists constantly make the mistake of conflating their rights.
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  You have two distinct assets here.
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  First, you have the masters, which is the actual sound recording,
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  the specific WAV file of the song.
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  Second, you have the publishing, which is the underlying composition,
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  the lyrics and the melody.
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  Private equity buyers look at these through entirely different valuation models.
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  Masters usually decay faster but yield higher immediate margins,
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  whereas publishing is the long-tail annuity that pays out for decades.
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  And let's talk about the real sleeper in the math: sync licensing.
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  A track that gets consistent TV, film, or advertising placements can generate a much
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  steadier, highly lucrative long-tail income stream than a song that got a brief
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  spike on a streaming playlist and then fell off a cliff.
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  If you can prove to a buyer that your catalog has a history of getting licensed by
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  Netflix, Hulu, or EA Sports, your valuation multiplier goes through the roof because
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  that is recurring commercial income, not just passive consumer streams.
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  But here is the danger of this gold rush, DJ.
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  If these funds are waving millions of dollars in front of young artists,
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  the temptation is to cash out way too early.
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  You sell your catalog before it has even had a chance to mature or find its true
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  audience.
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  You take a quick half-million dollars today, and then you have to sit back and watch
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  some private equity firm collect five million dollars in royalties over the next
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  twenty years off your hard work.
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  That is the ultimate trap!
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  You gotta keep your eyes open.
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  This is why these new models of co-publishing and co-ownership are getting so
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  popular.
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  But let's not act like there's a free lunch here.
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  When you bring in a partner to co-own your catalog, you are giving them a permanent
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  seat at your table.
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  They get a say in how your art is used, who can license it,
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  and they take a massive cut of all that future value.
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  It's a trade-off.
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  And the market is moving down-funnel incredibly fast to find these opportunities.
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  Look at Futures Music Group raising six million dollars specifically to target
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  independent label and artist catalogs.
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  Six million might sound small compared to Bain's billions, but it proves that even
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  emerging indie artists are actively on the radar of institutional investors.
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  If you have structured your assets correctly, you don't need to be a global pop star
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  to attract capital.
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  That six million dollar fund is the perfect example of where the game is going.
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  The big question for artists in 2026 isn't "can I find someone to buy my music?"
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  The question is whether you actually built your career like an appreciating
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  corporate asset, or if you handed over your leverage and your legacy before the
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  music even had a chance to show what it was worth.
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  Protect your split sheets, register your works, and treat your catalog like a
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  treasury, because if you don't value it, some fund on Wall Street absolutely will.