How Wall Street stormed the music business
Investors poured billions into buying rights, turning pop songs into a new asset class — but then the economy stalled
https://www.ft.com/
As NFT royalty feuds heat up, there’s a lesson in music backed bonds for how opaque pricing can skew valuations even in regulated markets.
What started off as Bowie Bonds has become a billion dollar asset class that relies on the fat head of songs
If a fund owns over 3000 No.1 songs, but 13% of its royalties come from 10 covers of Leonard Cohen’s revered “Hallelujah”, that’s a fat head biz model, reliant on low interest rates to be profitable in a world where inflation cuts back on that margin.
When the music stops
A broader culture clash is being felt in the music industry as Wall Street enters a sector that had een used to operating more informally, with deals subject to the whims of big personalities and personal relationships.
Securitising songs has led to some unusual forms of financial analysis, such as a Kroll report that last month told bond investors a cover of Cohen’s “Hallelujah” by Pentatonis, a US acappella group, accounts for more than three times as many Spotify streams as the original. It also beats Jeff Buckley’s cover. When 10 different versions of the song “Hallelujah” are added together they account for almost 13% of the Blackstone catalogue’s royalties.
Hallelujah by Johnny Depp he sings lead on the first and third verses and plays lead guitar.
FYI: Hallelujah by Leonard Cohen is a song about sex.
Blackstone (NYSE: BX) and Hipgnosis Song Management Ltd (“HSM”) announce partnership
https://www.reuters.com/lifestyle/blackstone-among-bidders-pink-floyds-catalog-sources-2022-08-24/
Chief Executive Stephen Schwarzman pocketed at least $567.8 million in 2018 dividends and compensation, making him yet again the private equity industry’s highest earner, a regulatory filing showed 3/1/2019.