MBW Explains is a collection of analytical options through which we discover the context behind main music trade speaking factors – and recommend what would possibly occur subsequent. Solely MBW+ subscribers have limitless entry to those articles.
One of many largest music enterprise tales of the yr has been lacking one thing: official affirmation.
And did SMG then splash an extra USD $400 million on Pink Floyd’s recorded music catalog, plus ‘title, picture, and likeness’ rights?
Sufficient trade sources and credible media studies have mixed to quasi-confirm that sure, it did.
Earlier this month, talking to Bloomberg in Los Angeles, SMG boss Stringer publicly verified for the primary time that Sony has purchased each these historic catalogs (even when he didn’t affirm the worth).
Stringer additional confirmed that Sony not too long ago acquired a stake in Michael Jackson’s catalog, a deal which is assumed to embody 50% of the King of Pop’s music rights portfolio.
If you happen to consider trade whisperers (MBW included), Sony — backed by money from Apollo — has cumulatively spent over $2 billion mixed on MJ, Queen, and Pink Floyd.
So why did Stringer and Sony lay down such huge sums on these classic catalogs? And, Jackson apart, why has Sony wager so large on ‘basic rock’ in an age when it’s removed from the dominant style on streaming companies?
Listed here are three good causes…
1) ‘eventized’ potential
At Bloomberg’s occasion this month, Rob Stringer confirmed that Sony acquired “title, picture, and likeness” rights to 2 of the three acts in query. We all know Pink Floyd is one; he didn’t affirm the opposite.
Stringer instructed that buying these ‘NIL’ rights would allow Sony to creatively and financially take part within the “experiential potential” and “occasion potential” they provide.
Photos of ABBA Voyage instantly spring to thoughts: the concept of replicating the imagery and sound of a legendary act, in a number of venues internationally, by way of cutting-edge expertise.
Might ABBA Voyage-esque productions, owned by ‘title & likeness’ domain-holders, finally grow to be the brand new ‘tribute band’?
If that’s the case, no surprise Stringer’s seeing greenback indicators.
The Australian Pink Floyd (TAPF), to choose one instance, has often appeared in Pollstar’s quarterly Prime 100highest-grossing live performance lists in recent times.
Credit score: Sony Music Group
“It’s like an act touring times-five – that’s fairly profitable!”
Rob Stringer on Sony’s stake in MJ: The Musical, and the actual fact it may play in a number of cities on the identical evening
The persevering with recognition of the Aussies’ copycat Pink Floyd ‘expertise’ is not any nice shock: individuals generally overlook that the actual Pink Floyd secured the biggest-grossing world dwell present of the complete of the Nineteen Eighties with the A Momentary Lapse Of Motive tour.
(Sure, it grossed much more than Michael Jackson’s legendary Unhealthy tour that decade – although Floyd performed 197 exhibits vs. MJ’s 123.)
The thought of a Sony-owned or co-owned “experiential” manufacturing, taking part in in a number of places every night, is clearly one Stringer likes very a lot.
“[Sony] has a share of MJ: The Musical, a share with the Michael Jackson property, as does our image firm,” Stringer confirmed on the Bloomberg occasion.
Stringer stated variations of this musical could be taking part in in 5 cities worldwide over the following yr (doubtlessly on the similar time).
That, he stated “is like an act touring times-five – that’s fairly profitable!”
2) Traditional Rock isn’t lifeless… it’s streaming like wild
‘Title, Picture, and Likeness’, then – and the place possession of it would lead within the dwell house – is an important a part of why Sony spent what it did on these catalogs.
So too is bodily music and merch gross sales – one other beneficiary of ‘NIL’.
However there’s a extra fashionable cause why Stringer and SMG splashed the money: streaming.
At this level, you would possibly assume, “Streaming’s all very properly for Michael Jackson, however classic rock like Pink Floyd isn’t precisely down with the youngsters.”
On the floor, you’d be proper: Beneath you possibly can scan a chart primarily based onLuminate‘s current mid-year market report (and different comparable historic studies displaying half-year information for the US).
It exhibits the recognition of the three largest genres within the US – ‘Rock’, ‘Pop’, and ‘R&B/Hip-hop’ (as categorized by Luminate) – within the Jan-Jun interval over the previous few years.
As you possibly can see, ‘Rock’ has barely grown share throughout this timeline, however: (a) It hasn’t spectacularly gained market share, up 110 foundation factors since 2019; and (b) that’s regardless of a major decline (minus 500 foundation factors) in market share for ‘R&B/Hip-hop’ since 2020.
(Latin Music has been the massive market share gainer since H1 2019, rising from a 4.2% mid-year share that yr to 8.3% in H1 2024.)
By taking the above stats and making use of them to the whole audio streams within the US market in H1 2024 (all 665.8 billion of them), we will estimate the whole stream volumes for every style within the interval.
That is arguably a greater illustration of the gulf between the preferred genres within the States.
Once more, ‘Rock’ doesn’t do badly on this image, however as you’d anticipate, it’s dwarfed by ‘R&B/Hip-hop‘.
However now look.
Luminate’s mid-year 2024 report contains the slide beneath, which provides an approximate impression of the share of whole streams inside every style which can be from tracks which can be much less than 5 years previous vs. tracks which can be extra than 5 years previous.
This tells us, in a single snapshot, that the recognition of ‘R&B/Hip-hop’ seems to be way more reliant on new releases than ‘Rock’.
Over 1 / 4 (26.7%) of R&B/Hip-hop tracks streamed in H1 2024 had been much less than 60 months previous, whereas almost three-quarters of ‘Rock’ tracks (70.5%) had been extra than 60 months previous.
Now, let’s take the approximate figures above and apply them to precise H1 2024 US stream volumes divided by style.
This provides us new perception into how every style fares in actual phrases should you solely rely streams of music older than 5 years/60 months (‘Deep Catalog’).
(Warning: a few of that is guesswork primarily based alone eyes. Luminate confirms numbers for 3 genres within the above chart, however for different genres it presents an indicative coloured chart. For instance, trying on the above, it seems that 48% of ‘R&B/Hip-hop’ streams – the yellow bar – had been of ‘Deep Catalog’ within the interval, judging by the values on the Y axis.)
Conclusion: while you solely take into account music older than 5 years, within the first half of 2024, ‘Rock’ near-or-less saved tempo with ‘R&B/Hip-hop’.
Value a point out right here: Queen is at the moment the 51st most-streamed world artist on Spotify of all time, with 23.7 billion performs to this point.
Michael Jackson is 94th with 15.56 billion performs.
Pink Floyd is 209th, with 10.07 billion performs – forward of the likes of Mariah Carey, The Rolling Stones, Enrique Iglesias, and ABBA.
3) Once they zig, you zag… particularly if forex’s in your facet
There are many different potential elements value mentioning for Sony’s big-spending on catalog music titans in current months, together with curiosity and trade charges in Japan.
As rates of interest have ballooned within the ‘West’ over the previous few years, limiting the willingness of blockbuster spending on music catalogs, rates of interest in Japan – set by the Financial institution Of Japan (BoJ) have sometimes been unfavorable in the identical interval, at round -0.10%.
Extra not too long ago, Japan’s rates of interest have climbed to +0.25%, the best since 2008, however nonetheless significantly decrease than the US/UK/EU (see beneath).
Japan’s rates of interest as per the Financial institution Of Japan over the previous few years (supply: TradingEconomics)
In the meantime, Japan’s Yen has weakened considerably towards GBP and USD in recent times.
Instance: as not too long ago as February 2021, one US Greenback would have price you 0.0092 Yen; right this moment, that very same greenback prices 0.0065 Yen.
Placing that in easier phrases: should you needed to spend USD $400 million on Pink Floyd’s catalog right this moment, and also you had been changing the money to pay for it into USD from Yen, it might at the moment price you round a 3rd much less (in Yen phrases) than it did three years in the past.
Sony would, subsequently, be capable of make the most of forex tendencies by buying US/UK-based catalogs with its Japan-based treasury. (And it’s a critically giant treasury: Sony Corpended its newest FY in March with 1.907 trillion Yen in money and money equivalents – at the moment value round USD $12.5 billion.)
The Japanese company would additionally doubtlessly be capable of borrow debt regionally at far cheaper charges than US, EU, or UK corporations if required.
(Then once more, Sony Music Group may not even have wanted all that a lot cash from its dad or mum: don’t overlook that Apollo led a $700 million “capital resolution” for SMG earlier this yr, cash that may have been put to good use within the Pink Floyd deal, and certain the Queen deal too.)
Backside line: Sony Music Group’s entry to capital isn’t in query.
This would possibly partly assist clarify why, when its rivals have appeared to ‘zig’ on blockbuster single-artist catalog offers – slowing down the big-spending we noticed on the top of the market – Sony has ‘zagged’, spending greater than ever.
Common Music Group, for instance, has but to publicly announce any large-scale catalog acquisitions by way of Chord Music — the $1.85-billion-valued automobile UMG minority-owns (and Dundee Companions majority-owns), as introduced in February.
We’ve additionally seen general worth slowdowns in catalog pipeline offers prior to now 12 months at corporations together with Reservoir and BMG, whereas consolidation has hit music’s catalog M&A sector elsewhere: witness the sale of music catalogs from Spherical Hill, Opus, and Vine Different Investments to rival music corporations.
(It’s solely proper to level out that, amid this slowdown, the likes of Harmony and Litmus have nonetheless pulled off a number of nine-figure acquisitions of artist catalogs.)
That determine ($2.2 billion) is roughly, based on studies, the identical quantity Sony has spent on simply three catalog offers: Queen, Pink Floyd, and 50% of Michael Jackson.
Talking to Bloomberg this month, Rob Stringerinstructedthat Pink Floyd’s recorded music catalog was primarily priceless, and that purchasing it was tantamount to an artwork collector shopping for a Picasso.
In some methods, that analogy doesn’t fairly match: somebody buying a Picasso is unlikely to earn a whole lot of hundreds of thousands from it in royalties and T-shirts over the course of its copyright-able lifetime.
But in one other sense, Stringer’s analogy completely mirrored his firm’s philosophy in these offers.
In any case, no critical artwork investor buys a priceless Picasso with out feeling assured that in ten years, or fifty years, will probably be value considerably extra than it’s right this moment.Music Enterprise Worldwide
