Author: djfrosty

President Trump’s global tariffs, which were paused for 90 days shortly after going into effect on Wednesday (April 9), have set global markets on a rollercoaster downhill and put on hold many of the year’s most-anticipated IPOs. Although markets rebounded strongly after the U.S. Treasury Department lowered most tariffs to a flat 10% — China is a notable exception — some anticipate the market volatility could present an opportunity for music catalogs and debt in the coming months, as investors look for more stable ground.
Both sectors — investing in music intellectual property and buying asset backed securities (ABS) collateralized by music rights — could see more demand from institutional investors looking to stockpile cash and safeguard against equities, several royalty investors, music valuation experts and entertainment bankers tell Billboard. For over a decade, music catalog returns have held relatively steady even during economic downturns, which may appeal to investors looking for assets they can easily cash out of in a pinch, those sources said.

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“The royalties space has been relatively calm over the last week given the volatility seen elsewhere, with many investors expecting their portfolios to remain resilient as they have been through other macroeconomic and geopolitical events, although it’s still early days,” says Stephen Otter, managing director at the Swiss-based private equity firm Partners Group. An investor in Harbourview Equity Partners, Round Hill Music and Lyric Capital Group, Partners launched its own royalty investment strategy in February to acquire music, healthcare, renewable energy and other royalties, with the aim of accumulating $30 billion in assets under management by 2033.

“As investors reassess their portfolio allocations in today’s environment, we expect many may consider casting their net wider to incorporate other asset classes, such as royalties,” Otter adds.

The rise of paid music streaming, which accounted for 51% of global recorded music revenues in 2024, according to the IFPI, has helped stabilize music royalties and make their returns more predictable into the future. While rights holders have some exposure to recessionary changes such as advertising spending and consumer discretionary spending, “Music streaming tends to perform well and has historically offset other declines,” says Brad Sharp, senior managing partner at Virtu Global Advisors.

Shot Tower Group, a Baltimore-based boutique investment bank, said that investor interest in music assets remains high despite industry reports of slowing streaming growth, although that outlook could change if macro-economic uncertainty persists, or a trade war were to take hold.

Brian Richards, managing partner at the music-focused investment bank Artisan, tells Billboard, “We haven’t seen any evidence of pullback in the music market during this past week of turbulence.”

Two sources said they expect more activity in the near-term in the credit markets for music. In the past 18 months, a growing number of music companies, like Concord, HarbourView and Recognition, formerly Hipgnosis, have raised money in the debt markets by selling asset backed securities backed by the songs they own in their portfolios.

These sources anticipate more esoteric debt like this to become available to investors because corporate bonds have been rallying since the beginning of the year, driving a narrowing in the difference between the yields of Treasury bonds and corporate bonds. A narrow, or tight, spread between those bonds typically signals optimism.

Shot Tower says it expects at least one music company to issue an asset-backed security in April, which could provide a gauge of investor sentiment. If the chaotic market mood and global uncertainty stick around, however, it could mean fewer music catalogs come up for sale and financing becomes more selective, Shot Tower says.

At least one industry group expressed fears over the possibility of retaliatory tariffs on digital services companies, such as Apple Music, Amazon, Meta and YouTube, and maybe even issues collecting royalties.

“Since creative industries are among the few American industries that have a positive balance of trade with other nations, we will be watching closely to see if other countries target American music in any retaliation, which could include tariffs or other actions like withholding royalty payments,” A2IM president/CEO Richard Burgess wrote in an email to members this week.

The withholding of royalties is unlikely, says Sharp, or may be limited to countries such as China that have higher tensions with the U.S.; on Wednesday, the Treasury raised the tariff on goods from China to 125% following the country’s imposition of retaliatory tariffs on U.S.-made goods.

“A rise in global economic tensions may result in an increase in consumption of more localized content on a by-country or by-region basis,” says Sharp. Economic policy could also result in higher inflation, he adds, “which will potentially impact interest rates and have a knock-on effect on valuations.”

Additional reporting by Ed Christman.