BlackRock, Warner Music invest $750 million in female and diverse artists
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4 min read . Updated: 24 Feb 2022, 06:12 PM IST - The companies seek stakes in newer music copyrights in partnership with Influence Media
BlackRock Inc. and Warner Music Group Corp. have invested $750 million in a fund to amass music-rights catalogs from female and diverse artists, according to people familiar with the deal.
The fund, in partnership with music investment and management firm Influence Media, is taking a novel approach to the frothy market in a bet on younger songs.
Unlike many recent blockbuster deals for decades-old music that can provide stable returns for passive investors collecting royalty payments, the new fund is focused on so-called modern evergreen music. It is investing in artists who are still writing music and looking to actively work—and maintain a stake in—their catalogs alongside their investors.
Bob Dylan, Bruce Springsteen and Sting are among older mega-acts who have cashed in on their music. They have capitalized on a frenzy of deal making amid listeners’ preference for older music, tax advantages for artists on their catalog sales and high valuations driven by the idea that music is a recession-proof asset. But artists earlier on in their careers have also been looking to cut deals, and some investors are seeing upside in taking a stake in younger works.
The fund has already deployed $300 million on 20 catalogs, including that of songwriter and producer Tainy, best known for his work on hits from Bad Bunny, J Balvin, Rosalía and Shawn Mendes. The fund has also bought into production and songwriting group the Stereotypes, who co-wrote the Bruno Mars hits “24K Magic" and “That’s What I Like"; Jessie Reyez, who has penned hits for Dua Lipa, Calvin Harris and Sam Smith; and Skyler Stonestreet, a songwriter who has written for Justin Bieber and Ariana Grande.
Many investors have said older music is the safest investment, especially as streaming of decades-old catalogs has boomed, proving its staying power. Investing in newer music is seen by many as higher-risk because its popularity for the long run is untested.
Lylette Pizarro, Influence Media founder and co-managing partner, said she’s bullish on emerging and rising artists, especially in Latin and hip-hop genres. Ms. Pizarro said data are showing the work of certain younger artists is resisting the decay in listenership that has been typical for music less than 10 years old.
“What we’re seeing now is newer titles behaving differently than they have historically," she said.
Ms. Pizarro said Influence is keen on working to license copyrights in ways beyond one-off placements in advertisements or film and TV, and instead form broader strategic relationships.
For revenue growth beyond streaming on services such as Spotify Technology SA, Apple Inc. and Amazon.com Inc., music has been increasingly used in social media, videogames and for fitness apps. Ms. Pizarro pointed to videogaming, 40% of whose audience likes country music, according to MRC Data—music not often found in videogames.
“How do we approach the gaming industry so they’re using more country music and specifically using works in which we’ve invested?" she said.
Influence Media has never taken a 100% interest in any artist’s work, and has even signed some deals with songwriters for stakes in their future music. That means artists retain a stake in their catalogs and keep a hand in promoting and marketing their music alongside the investors.
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BlackRock, through its alternative-investors unit, has been involved in music since 2015, including a partnership with music publisher Primary Wave, which also allows artists to keep an interest in their work but typically works with well-established legacy acts.
BlackRock prefers to partner with firms marketing music rights as opposed to collecting cash passively by buying into a royalty stream, said Pam Chan, chief investment officer and global head of the alternative solutions group at BlackRock. “The notion of modern evergreen seems like a natural evolution from how we’ve been investing in older music previously," she said.
Warner has taken outside capital to invest in music catalogs before. In 2019, it launched Tempo Music Investments with backing from Providence Equity Partners, and last year had a $1 billion war chest, according to people familiar with the matter, after buying up music rights from the Jonas Brothers, Florida Georgia Line, Wiz Khalifa and some top producers.
This story has been published from a wire agency feed without modifications to the text
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