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What Does Private Equity Mean for the Music Business Long-Term?
Some writers will worry about how the new owner of their songs will treat them, but realistically — and this might sound cold, but it’s also true — that’s something creators need to think about before they sell.
Robert Levine • What Does Private Equity Mean for the Music Business Long-Term?
Writers’ concerns over PE catalogue purchases
The reason private equity has such a bad reputation is that it usually buys assets with considerable leverage and holds them for a limited amount of time, which can often result in layoffs at companies in which they invest.
Robert Levine • What Does Private Equity Mean for the Music Business Long-Term?
Music copyrights generate steady cash the way mortgages once did, but while individual investments can rise or fall, it’s harder to imagine that a financial squeeze would lead to a selling frenzy that would send prices downward across the board.
Robert Levine • What Does Private Equity Mean for the Music Business Long-Term?
How does this work? Need further research
To the extent that some aspects of copyright regulation involve political power, the influence of private equity could counter that of the big technology companies that generally lobby to undermine copyright. Two executives even suggested that private equity could serve as an engine of reform to make collective management organizations more... See more
Robert Levine • What Does Private Equity Mean for the Music Business Long-Term?
PE firms political power as a driver for counteracting big tech’s undermining of copyright and to motivate CMO reform
One lawyer said that this market is encouraging creators and publishers to improve their contracts and document-retention practices.
Robert Levine • What Does Private Equity Mean for the Music Business Long-Term?
Another advantage of PE acquisition
One of the few points of agreement is that this has been great for creators so far, especially songwriters. These deals involve creators who are already making money, but the ability to sell their catalogs lets them replace a steady stream of revenue with a one-time cash infusion — it’s “allowed artists the ability to have more liquidity... See more
Robert Levine • What Does Private Equity Mean for the Music Business Long-Term?
Re: Private Equity firm Puchases of Music Rights
“secondary sales will just expand the field for what is in play,” a publishing executive pointed out. A market for publishing assets inevitably means that not everyone will succeed — but it should also provide other buyers. A certain amount of consolidation may be inevitable, but it might not be so bad.
Robert Levine • What Does Private Equity Mean for the Music Business Long-Term?
On what happens when the catalogue a PE purchased runs its course for them
the market for music copyrights might actually be more solid than that for housing. So far, on-demand streaming has proved pandemic-proof, and it seems recession-proof, so the only danger would be a collapse of the copyright system — and it’s hard to imagine how that would happen, especially now that the music business survived illegal... See more
Robert Levine • What Does Private Equity Mean for the Music Business Long-Term?
Reasons for optimism: On-demand music streaming has weathered the pandemic, suggesting it can weather other financial crises as well.
An all-out collapse of the copyright system would need to occur for any real damage to be done. The industry has survived other threats to the copyright system ie) illegal reproductions.
They will push — using the various tools at their disposal — to raise the value of their assets. They will not do this out of goodwill, of course; they will do it out of self-interest. But any move that raises the value of the song catalogs that they own will also raise the value of the song catalogs that they do not, and this could be very good... See more
Robert Levine • What Does Private Equity Mean for the Music Business Long-Term?
“they” being private equity firms