Cost of Capital

There was a moment, not that long ago, when music rights acquisitions felt almost mechanical- streaming growth was steady, capital was abundant. The underwriting conversation revolved around a small set of variables: historical cashflow, growth assumptions, discount rate, and multiple. If you believed in the long-term durability and expansion of streaming, the rest followed.

The music industry has always existed as a vehicle between art and commerce. In the last decade, a third dimension has pervasively entered the mix, and has been delicately impacting the status quo- institutional finance. Catalogs that were once considered illiquid creative assets are now treated as financial instruments. Music rights are being packaged, leveraged, and traded with the same language and logic once reserved for bonds, real estate and pension funds.