“Don’t sell music royalties or your copyrights” is the slogan of Sound Royalties. How about selling your company though? Having built a business from offering royalty advances to artists, songwriters and producers without taking a slice of their copyrights, Sound Royalties is now itself being acquired.
The buyers are GoDigital Media Group (GDMG) – the parent company of music company Cinq and social media rights manager AdShare – and investment company MEP Capital. While the exact price has not been disclosed, MBW reported that it is a “high eight-figure” purchase – so tens of millions of dollars.
For now, it will be business as usual for Sound Royalties, whose management team are staying on, with GDMG and MEP executives sitting on its board. CEO Alex Heiche said the deal will “enable us to expand our technology platform and grow more rapidly”.
The company has sought to position itself as an alternative to catalogue/rights sales for artists, songwriters and producers. For example, Heiche wrote this blog post last October advising people to be cautious even when big cheques were dangled in front of them.
“For example, if an artist is offered $1.5 million on a catalog that has been providing a $100,000 annual revenue stream, they might jump at the offer as they are being offered 15x their current annual revenue on the catalog,” he wrote.
“However, as the artist begins to receive previously uncollected royalties as a result of the MMA and more streams of their music than ever before, the catalog may begin to generate $300,000 in annual revenue compared to the $100,000 it was receiving before. If the same $1.5 million deal was made at this time, the catalog’s sale price would actually represent a 5 multiple rather than a 15 multiple. A true 15 multiple would bring $4.5 million.”
That may be true, but the steady flow of prominent musicians selling their catalogues has continued nonetheless. Sound Royalties and its new owners will be hoping that with more backing, they can make it an even stronger alternative in the eyes of musicians mulling such sales.
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