2021 saw a rise in new investors entering the market to compete for evergreen music catalogues. However, the crowded market makes it harder to stand out as a company, especially one in which artists can trust their legacies. One strategy to stand out and maximise returns is choosing a specialty to drive acquisitions, as Kilometre Music Group has done.
A group of former SOCAN executives launched Kilometre in early 2021, specifically to invest in Canadian icons, with the purpose of reclaiming royalties for Canadian songs — many of which are held by foreign rightsholders — so that revenue can flow back into developing Canada’s next generation of talent. In partnership with Toronto-based investment firm Barometer Capital, Kilometre set a target of $200 million in acquisitions. It did not take long for the company to rack up deals, perhaps aided by competing in spaces where other investors may not be looking.
In less than a year, Kilometre acquired stakes in songs recorded by contemporary Canadian icons, including Drake, The Weeknd, and Justin Bieber (not to mention non-Canadian stars as well, such as Eminem, Rihanna, and Taylor Swift). Kilometre’s pop, hip hop and R&B-leaning repertoire is a stark contrast to the widespread investor strategy of targeting classic rock, which is considered a safer bet. Nonetheless, Kilometre’s acquisitions give it a stake in 10% of Spotify’s most-streamed songs of all time, without pigeonholing Kilometre into a specific decade or genre. With its mission of championing Canadian talent, Kilometre is also building trust with artists and songwriters who may have less incentive to sell.
Even so, specialisation comes with its own challenges and competitors. Another Canadian music company involved in acquisition, Anthem Entertainment, is funded by the Ontario teachers’ pension fund, bringing a social purpose to its pitch. Furthermore, while Kilometre can acquire stakes in iconic modern hits, there may be less opportunity to generate immediate engagement, as these songs may have already been heavily commercialised in the recent past.
Finally, once the cataloguehas been acquired, the next step is song management, to raise the value of the assets. This requires expertise, as Hipgnosis Songs Fund recognised by acquiring Big Deal Music Group for its talent as much as its catalogue. New entrants in the catalogue space must consider how to stand out from both an acquisition and an asset management standpoint.