Concord Buys Hipgnosis

It's a professional business.

Why does everybody think music is run by know-nothings and they can do a better job. Even KKR couldn't make its publishing foray work.

Then again, once you get the banks involved it's all about money. And contrary to what Merck says, it's not about the guaranteed returns on publishing, but getting lucky...usage of tunes, new platforms and long term value growth. This is not a business for Wall Street flippers. There's nothing you can do to juice copyrights in the short term. If you're buying to gussy up and sell, you're delusional.

Then again, interest rates were so low, close to zero, that money was looking for a place to go, and therefore some of it went into songs and when interest rates rose everybody got pissed that songs didn't grow concomitantly.

Furthermore, despite his career in the music business, Merck really had no expertise in publishing, never mind finance. Ditto at Round Hill. So Concord gets bigger and Primary Wave, run by Larry Mestel, a man with long record company experience, continues to grow and we're seeing contraction in the sphere instead of growth. Concentration is the game in major music assets. And it's all about history in the music business, catalog, the old songs have value, because they're better known than the new songs, they hit in an era when everybody was paying attention...to Top Forty radio, to AOR, to MTV. Which is why you can live on a hit of the past. Living on a hit of now, of the future? A very different game.

There's still a ton of dough in new music publishing, but you have to pick winners, which is best done after the song gains traction and the writers want a payday/out. This is the game at Kilometre. Interesting that its majordomo, Michael McCarty, has decades of publishing experience.

But the old stuff has raw asset value. It's the backbone of not only these publishing behemoths, but the three major record labels. Sans their catalogs, they're not moribund, but they're bad businesses. You spend all that money on new music with no guaranteed return, furthermore there's no sure-fire way to make a hit, rather than controlled radio you have the open cesspool of social media, most especially TikTok, wherein the only advantage the major has is its checkbook.

This is why the majors invest in so few acts. They're looking for insurance. They want to sign what is similar to what is already successful. They don't want to take big risks. They're in the music BUSINESS, don't confuse it with art and changing the culture. That is done by independents, however indies don't have the back catalog to float them, to keep them alive. This has been the story in Hollywood for decades. If the most successful independent movie studio, Carolco, goes out of business, what are the odds you can be successful?

Carolco depended on hits. They lived and died at the box office. Whereas established studios counted the dollars from licensing their libraries, which is what they're still doing. Studios keep making fewer pictures, hoping for great success, meanwhile Netflix is all about niches.

That's how you enter a business and win. By coming up with a new paradigm, from the outside. That is ignored by the usual suspects at first, before their lunch is eaten.

Just like Spotify ate Tower Records.

No one with deep pockets is going into record production, because the numbers look too bad. So you've got cottage industry, hustlers, rolling the dice, and most of them have street values, meaning their goal is to build it and sell, not build it and hold.

As for the live business... Did you see how much that Florida investor lost in music festivals like KAABOO? Looks easy. Just find a site, book name talent and... Lose money for a few years even if you're one of the big boys. And if you gain any traction, you sell out, like Insomniac to Live Nation, like seemingly every standalone festival to Live Nation. The only indie festival still ready to be picked off is Outside Lands, and isn't it interesting that its proprietor, Another Planet, is run by people who started with Bill Graham.

Music looks easy. You don't need a degree. Actually, a degree usually works against you. Because it's more about hustle and edge than what's in a book.

And unlike Procter & Gamble, you can't plot a record company's returns in a constant upward line on a chart. You're a victim of the vagaries of the system. Some great records never made it. And now not only does a great record not guarantee success, successes often take years to happen.

So it's the end of an era.

Well, Blackstone's still in business with Merck, but that's just temporary, they have tons of college graduates running the numbers, they want to run on feel about as much as today's baseball teams, which are all managed Moneyball style. Good lunch and b.s. is the basis of entertainment, but not of finance. In finance it's all about the spreadsheet.

So, just like with Sanctuary, Merck fails again, getting rich in the process. Merck's skill is sales, someone should hire him to do that, this guy can sell ice to Inuits, a necessary skill, but one quite different from vision and management.

So this publishing craze is at about its end. Big money has moved on.

And those who sold...

How does it feel to see your songs sold again? How does it feel to have no relationship with those who own and manage your songs? How does it feel to be on your own, like a complete unknown to those who own your assets.

There is a future in the music business, but it's for lifers. And to stay in the music business is nearly impossible. If someone has survived and thrived respect their knowledge, it might not be quantifiable, but it's necessary to run a successful business. The road is littered with wannabes.

And publishing is a great asset if you're willing to count pennies and wait. Which is why I advise against selling. Sure, Merck paid top buck, might have overpaid in some cases, but in truth there keep being new avenues of compensation created. Isn't that what Universal's battle with TikTok is all about, money?

Porn runs the internet, but music comes second. Music is needed all over the web, new sites have to license. Music is all about creating tolls, and it's doing a good job of it.

The more tolls, the more money. I have yet to meet an artist who feels good about having sold their catalog. Give it a few years and ask them. Hell, almost all of them are bad with money, unlike the bankers, they get a sum and blow it, not knowing how to manage it.

So my advice here is to stay in your own lane. And if something looks easy, ripe for picking... Remember, Guy Hands couldn't make EMI work either!


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