Music Publishing A Full-Stack Revolution

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The 20,000 Foot View:  Tencent’s bid for        of Universal Music Group has set a new high-water mark for what risks becoming an overheated music rights mergers and acquisitions (M&A) sector. However, investment appetite remains strong and catalogue supply constrained, so there will be plenty more activity before the inevitable contraction. This inflow of capital has far wider implications for the music business however, not least the way in which newly-enriched music publishing companies are using it to reverse into the recordings business and expand across value chains. The renaissance of music publishing catalogue is now funding a full-stack music company revolution.

Key Findings

• Between January 2010 and August 2019 the number of publicly announced music catalogue transactions across recordings and publishing totalled        billion
• Catalogue M&A is accelerating – by August 2019 there were already as many publicly announced transactions as in the whole of 2018
• The growth in transactions is driven by a) fragmentation of publishing rights, b) availability of capital for transactions, and c) willingness of publishers to sell
• Artist catalogue transactions are growing too: by August 2019 Hipgnosis Songs Fund had invested        million while Royalty Exchange had generated        million (2016- 2019)
• Music publishers, like Downtown, are using readily available capital to build recordings businesses, expand elsewhere across the music value chain and become full- stack music companies
• Kobalt’s combination of Kobalt Publishing, Kobalt Capital, AWAL and AMRA make it a full-stack powerhouse 
• Independent artists are recorded music’s growth sector, increasing        in 2018 to reach        billion while the rest of the market grew by       
• Publishing-led full-stack music companies are targeting the top of the recordings funnel, as illustrated by Downtown’s acquisition of CD Baby parent AVL

Companies and brands mentioned in this report:         Alarm Music, Anthem, AdRev, AVL, AWAL, Big Machine, BMG Music Rights, Bosshouse Music, CDbaby, the Church of England, Compact Media, Concord, Create Music Group, DashGo, Domino, Downtown Music Publishing, Fintage House, Glassnote, Hipgnosis Songs Fund, Hitco, Imagem Music,        Music, Jingle Punks, Kobalt, the Jackson Estate, Level, Ninja Tune, ole, the Orchard, Pandora, Peer Music Primary Wave, Q+A, Reservoir Media, Round Hill, Royalty Exchange, SiriusXM, Songtrust, Sony/ATV, Sony Music Entertainment, Sony Music Group, Soundrop, Spotify, Tencent Music Entertainment, TikTok, Universal Music, Universal Music Publishing, Vivendi, Warner Music, Warner Chappell, WARP, Zync