investment
While some industry observers looking back on 2024 may see a half-empty cup due to slowing music industry revenue growth, a lackluster stock performance from the publicly traded major music companies and slightly declining valuation multiples in private catalog deals, Shot Tower Capital says it sees the “half-full” side of things.
That’s because Shot Tower, the boutique investment banking firm specializing in music asset transactions, says the sector still enjoys plenty of investor interest, adding that the industry is recession-resistant, as proven over time. As a result, it foresees stable valuation multiples.
Even though fewer music asset transactions closed in 2024 than in any year since 2018, some of the transactions for music assets carried valuations larger than $1 billion resulted in the “highest dollar value year for music M&A transactions in the post-streaming era,” according to Shot Tower’s annual Year in Review and Music Industry Outlook report. In 2024, transactions with an aggregate dollar value in excess of $8 billion have closed, according to the Baltimore-based firm.
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Moreover, Shot Tower notes that while some institutional investors like KKR, Vine Alternative Investments and Elliot Management have exited the music asset space, other private equity groups have entered it or increased their investments in the sector, including Hellman & Friedman, which bought a majority stake in Global Music Rights; New Mountain Capital, which acquired BMI; and Flexpoint Ford, which launched
in the music space with an investment in Nettwerk Music Group in March 2023 and has since invested in Create Music Group, Goldstate Music and Duetti.
Finally, while interest rates now offer competitive returns on music assets, thus negating somewhat the attractiveness of some music assets while making potential deals more expensive to finance, that has been offset by the breakout of asset-backed securitization, which allows buyers to finance deals at rates more favorable than rates offered by bank lenders.
During the last 18 months, Shot Tower has been either the financial advisor or sell-side advisor in transactions that included the sale of 50% of Michael Jackson music assets to Sony Music Group; the sale of a majority interest in Mavin Records to Universal Music Group; and the sale of the Hipgnosis Songs Fund to Blackstone. And those are just the publicly disclosed deals; the company declines to say how many deals it participated in last year.
Shot Tower compiled data on some 25 publicly known and privately sold music asset transactions during 2024, including deals it advised on and other deals it was aware of, even if it wasn’t a participant. From that, it reports that typical music publishing multiples averaged 16.1 times net publisher share (NPS) in 2024 versus 16.7 times in 2023.
However, if iconic transactions — assets with valuations over $200 million — are included, then average multiples are larger but nevertheless also declined from 2023’s 18.4 times NPS to 17.5 times NPS in 2024.
(How are multiples figured? If a song catalog collects $25 million in revenue and, after paying out royalties of $15 million, leaves $10 million in net publisher share, or NPS; and if that catalog is then sold for $200 million, that means the transaction carried a 20 times NPS multiple.)
Recorded music multiples also declined last year. Net label share (NLS) fell to a 13 times multiple for music asset transactions — excluding deals of iconic assets — from the prior year’s 13.8 times NLS multiple. If iconic transactions are included, then the average multiple in 2024 was 14.2 times NLS versus 15.2 times NLS in 2023.
Looking at multiples over time, Shot Tower says that the peak year for average music publishing multiples was 2021, when 19.4 times, including iconic transactions, was the average multiple; while the peak year for recorded music transitions was 2022, when the average multiple for deals including iconic catalogs was 16.3 times. NLS generally trails NPS, but overall, the window between the two multiples is narrowing slightly.
In most years between 2014 and 2022, the multiple spread between music publishing and recorded music catalogs was bigger by a factor of 4 in favor of NPS. For example, in 2014, NPS averaged a 12.5 times multiple while NLS averaged an 8.5 times multiple. But in the last two years, that window has narrowed to a factor of three, with last year’s NPS coming in at 16.1 versus NLS at 13.0; while in 2023, NPS averaged a 16.7 times multiple while NLS averaged a 13.8 times multiple.
Shot Tower attributes the valuation gap between recorded music and music publishing to a number of factors. For one, marketing costs to exploit recorded music are much higher. Music publishing also has more diversified income streams than recorded music. Additionally, music publishing growth slightly exceeds recorded music growth, according to Shot Tower’s analysis.
Looking forward, Shot Tower says it expects music publishing valuation multiples to decline slightly to about a 15.1 times multiple in 2028 from 2024’s 16.1 times average multiple, while it expects recorded music average multiples for valuations will decline to an average of a 12 times multiple from 2024’s average of a 13 times multiple.
One of the reasons Shot Tower thinks institutional investors will remain interested in investing in music assets is because of the increasingly popular use of asset-backed securitization (ABS) to finance deals due to “stable royalty income streams.” According to Shot Tower’s analysis, a buyer using asset-backed securitization can pay about 10% higher than a bank-financed buyer while achieving the same equity return. ABS deals also allow for a greater ratio of debt to equity (up to 65% leverage) than deals financed using bank financing (55% leverage).
Consequently, “this represents a meaningful offset to rising interest rates,” the report notes.
Vermillio, an AI licensing and protection platform, raised $16 million in Series A funding led by Sony Music and DNS Capital, the company announced on Monday (March 3). This marks the first time Sony Music has invested in an AI music company.
Sony Music’s relationship with Vermillio dates back to 2023, when the two companies collaborated on a project for The Orb and David Gilmour. Through the partnership, fans could use Vermillio’s proprietary AI tech to create personalized remixes of the acts’ 2010 ambient album Metallic Spheres.
According to a press release, Vermillio plans to use the funds to scale operations and “continue building out solutions for a generative AI internet that enables talent, studios, record labels, and more to protect and monetize their content.”
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Vermillio’s goal is to create an AI platform that securely licenses intellectual property (IP). One of its core products is TraceID, which provides protection and third-party attribution for artists. Through it, the company claims artists and rights holders can control their data and AI rights.
Apart from its collaboration with Sony Music for the AI remix project, Vermillio has also worked with top talent agency WME to shield its clients from IP theft and find opportunities to monetize their name, image and likeness rights by licensing their data. Sony Pictures also worked with Vermillio to create an AI engine that allowed fans to make their own unique digital avatars in the style of Spider-Verse animation. Each of the fan generations were then tracked using TraceID so that all works could be tied back to the filmmakers’ original IP.
“We are setting a new standard for AI licensing — one that proactively enables consent, credit, and compensation for innovative opportunities,” said Dan Neely, co-founder/CEO of Vermillio, in a statement. “With the support of an innovation leader like Sony Music, Vermillio will continue building our products that ensure generative AI is utilized ethically and securely. At this critical moment in determining the future of AI and how to hold platforms accountable, we are proud to protect the world’s most beloved content and talent.”
“Sony Music is focused on developing responsible generative AI use cases that enhance the creativity and goals of our talent, protect their work, excite fans, and create new commercial possibilities,” added Dennis Kooker, president of global digital business at Sony Music Entertainment. “Dan Neely and the team at Vermillio share our vision that prioritizing proper consent, clear attribution and appropriate compensation for professional creators is foundational to unlocking monetization opportunities in this space. We look forward to expanding our successful collaboration with them as we work to support the growth of trusted platforms by enabling secure AI solutions that are mutually beneficial for technology innovators, artists and rightsholders.”
Shareholder advisory groups Institutional Shareholder Services (ISS) and Glass Lewis advised Warner Music Group investors to vote against the election of certain board members at the company’s annual meeting on Tuesday, including Val Blavatnik and Lincoln Benet.
The groups say that insider status — Val is the son of WMG owner Len Blavatnik, and he sits on the executive compensation committee — and WMG’s multiple classes of stock present risks for outside investors. WMG says its focused on creating value for all its investors and that most of its directors are independent should allay any investor concerns.
Investor opposition to these directors’ election would need the support of Len Blavatnik to succeed. His Access Industries and its affiliates own more than 70% of WMG’s stock controlling more than 97% of the voting power in WMG. Nonetheless, ISS and Glass Lewis’s concerns put a spotlight on the corporate governance requirements WMG can skirt by being a controlled public company.
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For example, WMG is listed and trades on the NASDAQ stock exchange and is exempt from NASDAQ’s requirement that companies traded on its exchange have a majority of independent board members appointed to the committee that decides executive compensation.
A spokesperson for WMG says, “We welcome input from our shareholders, with a governance structure that goes beyond what is required of controlled companies, including the majority of our directors being independent. Our board and management team are focused on creating long-term value for all investors.”
Shareholder advisory groups like ISS and Glass Lewis exist to research publicly traded companies’ proxy statements and make voting suggestions for investors ahead of annual shareholder meetings. Both groups say in their 2025 benchmark policy guidelines that they broadly support board independence, but they agree controlled companies should be exempt from certain requirements, such as having an independent executive compensation committee, because “controlled companies serve a unique shareholder … whose voting power ensures the protection of its interests,” Glass Lewis’s policy states.
Glass Lewis advises against voting for the election of Val Blavatnik, 27, in its report because of his status as an insider on the compensation committee. Val holds the title of senior director, business development of Warner Chappell Music, and he was elected to WMG’s board in April 2023.
As the chief executive of Access Industries, Glass Lewis considers Lincoln Benet, 61, an affiliate and non-independent board member, and they advise against voting for his election because WMG’s multi-class share structures gives him disproportionate voting rights.
In its report, ISS advises voting against the of seven of WMG’s 11 board members—Val Blavatnik, Lincoln Benet, Len Blavatnik, Donald Wagner, Noreena Hertz, Ynon Kreiz and Cecilia Kurzman. For Val Blavatnik, Benet and Wagner, it raises similar concerns to Glass Lewis about their seats on certain board committees as non-independent members. For the remainder of the directors, ISS raises concerns about their support for a “dual class structure that is not subject to a reasonable time-based sunset provision.”
It also advises voting against Len Blavatnik because “his ownership of the super voting shares provides him with voting power control of the company.”
ISS has advised voting against the majority of WMG’s board members for at least the past three years, and it has taken similar stances against the election of board members of Meta and Alphabet.
Five out of WMG’s 11 board members, or 55%, are independent, including its chairman, nominating and corporate governance committees.
It is worth noting that the WMG chief executive Robert Kyncl’s total compensation of $18.6 million declined 9% from the year prior.
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Jay-Z and his Roc Nation business have reportedly entered into a partnership with a South Korean company that will enable fans to invest in the music royalties of artists. The deal with Jay-Z, Roc Nation, and Musicow was mentioned late last year and is now in total fruition according to new reports.
As reported by Billboard, the partnership is framed as “the first Music Equity Service Provider in the United States” and will allow investors to earn while betting on music royalties and the like. The owners of the song rights will be able to trade royalty shares and they will be allowed to sell shares of those tracks.
As said by Roc Nation Vice Chairman, Jay Brown, “The music industry is evolving into a shared ecosystem where fans and creators can earn together. Our mission is not only to support and empower artists by providing the tools and services they need to build a better music ecosystem but also to give everyone access to the financial opportunities the music industry offers.”
Musicow CEO Woo Rhee added that partnering with the company is an “incredible opportunity to drive innovation and redefine the future of our industry. I’m confident that together, we have the vision, expertise, and enthusiasm to create transformative progress and unlock limitless potential.”
The Korea Economic Daily reported on this deal in November 2024, writing that Jay-Z was investing $5 million and would become the second-leading shareholder of the company.
The service is expected to launch in March of this year.
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Photo: Getty
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It seems LVMH is looking to increase their portfolio within the luxury apparel sector. The conglomerate has made an investment into Moncler.
As spotted on Hype Beast the French holdings company announced on Thursday, September 26 that they acquired a 10% stake in Remo Ruffini (the investment vehicle controlled by Ruffini Partecipazioni Holding) which owns a direct stake in Moncler. The move will not only increase Double R’s ownership from 15.8% to 18.5%, but also affords LVMH the right to appoint two board seats at Double R. According to Yahoo! News long tenured LVMH executive Antonio “Toni” Belloni will get one of the seats while the other has yet to be announced. Remo Ruffini will remain as Moncler’s CEO and Chairman.
He expressed his enthusiasm in a formal statement. “This partnership reinforces Double R’s position in Moncler and provides the stability needed to execute my vision for the future” he said. “I have long admired Bernard Arnault’s entrepreneurial spirit and unique understanding of the luxury sector, and I am delighted he so clearly supports my long-term ambitions for our Group’s extraordinary brands.”
Bernard Arnault, Chairman and CEO of LVMH, also commented on the agreement. “Moncler has been one of the most significant entrepreneurial success stories in the industry over the past twenty years. Remo Ruffini’s vision and leadership are remarkable and I am delighted to invest in his holding company to reinforce his position as leading shareholder on Moncler and support the independence of the Moncler Group.”
Moncler is an Italian luxury ready to wear apparel company based in Milan. They are most known for their down jackets
At least half a dozen independent music distributors are fundraising or exploring selling their businesses as investors and major music companies, including Warner Music Group, vie for a piece of the business sector serving DIY artists.
Stem, the indie distribution darling that started as a fintech platform offering royalty splits, is in the early stages of a fundraising round that will be its largest to date, while Larry Jackson’s gamma. concluded its second round of fundraising. Downtown’s board of directors is exploring a sale and has held talks with Believe after an earlier dialogue with WMG fizzled. (Sources say WMG continues to eye acquisition targets.) ONErpm aims to put together around $40 million next year for its own mergers and acquisitions (M&A) fund, and indie streamer/distributor SoundCloud is expected to move into the final stages of either a sale or fundraising round later in 2024 to replace some of its existing shareholders.
Already this year, Believe founder and CEO Denis Ladegaillerie bought 95% of the outstanding shares of the French music company with roughly $1.7 billion in backing from investors that include TCV and Swedish private equity firm EQT in order to take the company private. And the Chicago-based firm Flexpoint Ford bought a stake in Create Music Group for $165 million. Last year, Exceleration Music bought indie distributor Redeye for an undisclosed sum, and gamma. launched with a $1 billion war chest.
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Indie executives say there are numerous factors pushing them to seek funding; among them are the growing influence of artificial intelligence in music-making and next-gen creators’ evolving feelings about independence. Some would rather take a big check from a major if it comes with guaranteed autonomy — which means indie distributors must achieve scale to survive.
Meanwhile, these indies’ collective share of the market is growing, prompting major music companies to make acquisitions and investments as a defensive play. And backers outside the music industry, such as private equity funds and institutional investors, see opportunity in betting on these companies that purport to have the pole position serving the music-makers of tomorrow. Non-major labels and self-releasing artists’ share of the global recorded-music market was 36.7% in 2023, up from 28.6% in 2015, according to MIDiA Research.
“The amount of money being thrown around right now is more than I’ve ever seen,” Stem co-founder and CEO Milana Rabkin Lewis says. “If you’re not out there fundraising right now, you’re not doing your job.”
Another reason to invest: Indie distribution companies are handling an increasing share of the songs that do best on streaming services. In the first half of 2024 in the United States, such companies were responsible for 13.6% of tracks played between 100 million and 500 million times and 22.1% of those played between 50 million and 100 million, according to Luminate.
That said, the indie digital distribution sector remains highly fragmented, and executives say they expect significant consolidation as the roughly 25-year-old segment of the music industry matures.
“You’ll see a lot of DIY distributors sell over the next six months,” says Greg Hirschhorn, CEO of Too Lost, an indie distributor that Hirschhorn says distributes music for over 300,000 artists and labels. “It’s a good time to run an indie distributor.”
Earlier this year, French securities regulators forced WMG to disclose it was considering making a $1.8 billion bid for Paris-based Believe. Warner CEO Robert Kyncl has said the company backed out before making a formal offer because of the brief amount of time it had to undertake due diligence for the deal, among other reasons.
The consortium of investors led by Ladegaillerie ultimately succeeded in taking Believe effectively private this summer, leaving WMG and others that bid on the company, like BMG, hunting elsewhere for acquisitions. Sources say WMG’s decision not to submit an offer for Believe may lead to more deals in this space.
Downtown has been a beneficiary of that fallout. Its chief investor, the family of late New Zealand beer baron Douglas Myers, has been mulling an exit for months. The company’s board has held exploratory talks with WMG and Believe, among others, according to sources.
Downtown declined to comment about any deal talks, but executive chairman Justin Kalifowitz says the current spate of deals is a natural next step resulting from the significant amount of investment dollars that flowed into music-related businesses between 2018 and 2022.
“A lot of cool ideas were born out of that. Some of them have grown up to be real companies, achieving scale but not profitability,” Kalifowitz says. “There is an efficiency that these businesses in the services sector are providing that is frankly not available at the majors.”
A significant portion of outside investment that flowed into music in recent years went to acquire song catalogs, which indie executives point out provide more stable, though lower, returns than active companies. Private equity funds controlled by banks like Goldman Sachs are warming to music companies, one executive says. “You could buy an asset and forecast it 20 years into the future. But in a music world, that’s really hard,” the executive says. “They realize that music acts like an annuity.”
ONErpm CEO Emmanuel Zunz says the indie distribution space is facing an inflection point in its maturation driven by more than investment and deal-making. Moments like this put pressure on companies that may have loads of debt or aren’t profitable to prove their business makes sense. Zunz estimates the company he founded roughly 15 years ago now ranks third, behind Believe and Downtown, among the largest full-service independent music companies. ONErpm, which has no debt and operates off its own earnings, is planning to put together a $40 million M&A fund next year to buy smaller companies around the world.
“It’s going to be interesting to see how it plays out over the next two to three years,” Zunz says. “Some folks are going to crash and burn. There’s going to be consolidation. But the ones that stay are going to have a compelling offer that provides a lot of value for artists.”
Additional reporting by Elias Leight.
TickPick has raised $250 million from Brighton Park Capital and golfer Rory McIlroy’s investment partnership Symphony Ventures, it was announced Thursday (Aug. 22). TickPick was founded in 2011 by co-CEOs Brett Goldberg and Chris O’Brien as an independent ticketing marketplace. Since launching, TickPick has been downloaded 14 million times and transacted more than $1 billion […]
Investment giant Apollo Global Management is backing Sony Music Group to the tune of $700 million to help the company fund music acquisitions, it was announced Friday (July 26). The deal could provide the financial assistance needed for Sony’s planned acquisition of Queen‘s recording and music publishing catalogs. Sources have told Billboard the band is […]
Billionaire hedge fund titan Steve Cohen‘s Point72 Asset Management has acquired a 5.5% stake in Sphere Entertainment Co, the MSG Entertainment spin-off company that owns the state-of-the-art Las Vegas Sphere venue. Point72 disclosed in a regulatory filing on Monday (June 24) that it acquired 1.56 million shares of Sphere Entertainment Co in the second quarter, […]
Love Renaissance (LVRN) has invested in Jerk X Jollof, an event series dedicated to celebrating Afro-Caribbean culture, Billboard can exclusively announce Thursday (June 6).
LVRN’s investment comes more than a year after the Atlanta-based label and management company itself received an investment from Matt Pincus‘ MUSIC, valuing LVRN at more than $100 million. LVRN’s Jerk X Jollof investment is part of its commitment to developing the Afro-Caribbean entertainment space.
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“We at LVRN are excited to expand our reach within the Afro-Caribbean community with the investment in Jerk X Jollof,” said Tunde Balogun, CEO/co-founder of LVRN, in a statement to Billboard. “This is yet another impactful way to further the culture and unify like-minded people from the diaspora through the transformative power of music and entertainment.”
Last year, for the unveiling of Billboard’s U.S. Afrobeats parties guide, Jerk X Jollof founder Brendan Asante told Billboard that the Jerk X Jollof series initially started in 2014 as “an idea in college. Some friends of mine and I just threw a sweaty dance party. Someone brought some jerk chicken, someone brought some jollof rice, and it translated.” Asante and the other founders officially brought the party series to Detroit, Mich., in 2016, and since then, Jerk X Jollof has expanded to cities around the world including Los Angeles, Chicago, Atlanta, Miami, New York, Toronto, London, Paris, Berlin, Johannesburg and Accra, Ghana. Uncle Waffles, Skepta, Sarz, Spinall, DJ Tunez and more have all performed at the popular party, while previous all-star attendees include Ayra Starr, Davido, Brent Faiyaz and Chris Brown.
“It was an obvious decision to partner with LVRN in order to broaden the Jerk X Jollof brand,” said Asante in a statement. “The alignment of our vision for the enhancement of Afro-Caribbean culture was immediately evident, and we eagerly anticipate the future of this joint venture.”
LVRN and Jerk X Jollof first collaborated on a party during New York Fashion Week in 2022, an event that was also a partnership with Afropunk. “That one was so wild because Brent Faiyaz [pulled] up to the party. [We brought] him, Kawhi Leonard, Joe Freshgoods through the side door. This s— is so comical because I never thought in a million years that I would be dealing with these dope people that are coming to the party,” Asante previously told Billboard. “From that moment, thinking about when it was a sweaty dance party in a college basement, I think that’s one of my favorite memories. Ari Lennox came through, and I was chopping it up with her before she left. I was talking about how she came to Ghana and how she enjoyed it. I was like, ‘Oh yeah, you should come back.’ Those type of moments happening under the roof of us doing something just gave me a glimpse into what the future could hold for it.”
Last month in Atlanta, LVRN and Jerk X Jollof partnered again on a Memorial Day function that was hosted by local music festival brand Milk + Cookies. Another notable achievement in the partnership is the creation of the Jerk X Jollof Stage at Promiseland Australia, which will take place at Doug Jennings Park in Gold Coast Oct 4-6 following the scheduled Jerk X Jollof parties in Melbourne on Sept. 27 and Sydney on Sept. 29. The Jerk X Jollof and LVRN teams worked with the festival to curate an amapiano stage that would showcase a diverse lineup of the genre’s leading talent including Uncle Waffles, Major League Djz, Focalistic and Tyler ICU, along with Jerk X Jollof mainstay hosts/DJs Jae Murphy, Blakito and V-Live — all booked by Jerk X Jollof.