A couple of days after the UK streaming inquiry’s report sparked more debate about musicians’ ‘right to recapture’ the rights to their work, we’ve got another reminder of the money being sunk into businesses that are energetically buying those rights from songwriters and artists.
Round Hill Music Royalty Fund was hoping to make at least $50m from its latest placement of shares, but the round has actually raised $86.5m according to the company. It now plans to spend the money (as well as its existing credit facility) to “assist in acquiring its near-term pipeline of copyrights” within the next three months.
Those are the dynamics of the rights market at the moment: Round Hill, Hipgnosis and other funds have been putting in the hours identifying catalogues to buy, so that as soon as they raise new funds by selling shares, they can seal those deals. And then plan their next tranche of funding to mop up more rights.
It’s a dizzying race, and one that has led some sceptics to question how sustainable it is – although the companies involved have been making their cases for music rights as a sensible long-term bet rather than a precarious bubble. Judging by Round Hill’s latest placement, investors still agree.
Round Hill CEO Josh Gruss addressed the bubble question in his appearance at the NY:LON Connect conference earlier this year. “Given the future growth expectations of these rights… even at an industry norm of, let’s say, 20x multiple on a publishing asset, that is actually less expensive than it was 10 years ago,” he said then.
“Although 10 years ago you might have paid a lower multiple, you had flat to one-to-two per cent growth, whereas today the growth expectations for publishing are around six, seven, eight per cent… it’s fairly valued at 20x. As soon as you go over that level, then it’s a different story.”
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