From HYBE’s $400m+ in Q3 to Kobalt’s partnership with Morgan Stanley… it’s MBW’s Weekly Round-Up – Music Business Worldwide

Welcome to Music Business Worldwide’s weekly round-up – where we make sure you caught the five biggest stories to hit our headlines over the past seven days. MBW’s round-up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximize their income and reduce their touring costs.

This week brought news of two significant developments in the music rights M&A space.

On Wednesday (November 1), Kobalt announced a new partnership with investment funds managed by Morgan Stanley Tactical Value to invest more than USD $700 million to acquire music copyrights over the next few years.

Yesterday (November 2), Concord announced that it has completed its acquisition of Round Hill’s UK-listed music fund, Round Hill Music Royalty Fund (RHM), after the RHM Board approved the firm’s proposed USD $468.8 million sale to Concord last month.

In a statement issued on Thursday, Concord said that the deal highlights its own “continued growth and overall confidence in the copyright marketplace”.

Also this week, Thomas Coesfeld, CEO of BMG, confirmed to staff that the company is reorganizing its global structure in pursuit of his strategic goal for the company to become “more efficient and more effective”.

Plus, MBW explained that Deezer‘s ‘artist-centric’ streaming model now has a new ‘user-centric’ element, while HYBE reported that its Q3 revenues were up 20.7% YoY to over $400 million.

Here’s what happened this week…

1) MORGAN STANLEY IS INVESTING MORE THAN $700M TO BUY MUSIC COPYRIGHTS IN PARTNERSHIP WITH KOBALT

This week, Kobalt announced a new partnership with investment funds managed by Morgan Stanley Tactical Value to invest more than USD $700 million to acquire music copyrights over the next few years.

As part of the venture, Kobalt will manage the creative, synch, licensing, administration, and investment services for the copyrights.

“Kobalt is a pioneer in investing in music, increasing the value of copyrights, and creating music as a viable asset class,” said Laurent Hubert, Chief Executive Officer, Kobalt.

“Morgan Stanley Tactical Value’s trust in Kobalt is a testament to our platform and leadership in the music industry. We are proud to form this unique partnership…”

2) CONCORD ACQUIRES ROUND HILL’S UK FUND, AFTER $469M SALE WAS APPROVED BY LATTER FIRM’S SHAREHOLDERS LAST MONTH

As expected, Concord has acquired Round Hill’s UK-listed music fund, Round Hill Music Royalty Fund (RHM).

Concord confirmed the news on Thursday (November 2), noting that the deal includes over 150,000 songs and 51 catalogs, including works by The Beatles, Alice In Chains, The Offspring, and hits recorded by Elvis Presley, Meatloaf, James Brown, and Billie Holiday.

It also includes a stake in the Carlin Catalog, which includes hits made famous by artists including Johnny Cash, Aretha Franklin, Ella Fitzgerald, Elvis Presley, Peggy Lee, and George Harrison.

3) BMG, FOLLOWING ‘MORE EFFICIENT AND MORE EFFECTIVE’ STRATEGY UNDER NEW CEO THOMAS COESFELD, REORGANIZES STRUCTURE; AROUND 40 STAFF CUT

Thomas Coesfeld, CEO of BMG since July, has made another major move at the Bertelsmann-owned company.

MBW revealed in September that, under Coesfeld, BMG was taking the digital distribution of its music in-house – bringing its longstanding distribution deal with Warner Music Group/ADA to an end. (BMG has since confirmed that, while keeping digital distribution in-house, it’s inked a deal with Universal Music Group to handle its physical distribution business.)

Now, Coesfeld is enacting another set of significant changes at BMG, which posted an operating EBITDA of €90 million ($97m), up 22.6% YoY, in the first six months of 2023….

4) SALES FROM SEVENTEEN, JUNGKOOK AND OTHER BTS SOLO STARS DROVE HYBE’S REVENUES TO OVER $400M IN Q3

South Korea-based entertainment giant HYBE generated revenues of 537.85 billion South Korea Won in Q3.

That quarterly revenue tally for HYBE’s Q3 (the three months to end of September), converts to approximately $404 million, and was up 20.7% YoY.

The company’s adjusted EBITDA in Q3 was 90.77 billion South Korea Won ($68.22m), up 13.1% YoY…

5) DEEZER’S ‘ARTIST-CENTRIC’ MODEL NOW HAS A NEW ‘USER-CENTRIC’ ELEMENT WHICH, DESPITE NOT REALLY BEING ‘USER-CENTRIC’, IS QUITE A CLEVER IDEA.

We’re heading towards Halloween, aka the last day of October, aka the last day of the month in which Deezer’s much-debated new ‘artist-centric’ royalty model is due to launch in France.

Said launch should impact payouts to artists signed to recorded music companies (including Universal Music Group and indie label Wagram) who’ve signed up for ‘artist-centric’ on Deezer’s platform.

The three core pillars of Deezer’s ‘artist-centric’ model, as announced with Universal last month?

1. Artists who attract over 1,000 listens a month (from over 500 unique listeners) on Deezer getting a “double boost” in their streams on the service;
2. This ‘double boost’ then doubling again if a play of said artist’s music has been actively searched for by listeners vs. being algorithmically served to them;
3. Deezer’s plan to “replace non-artist noise content” on its platform with its own Deezer-made “content in the functional music space”. Deezer will then completely de-monetize all “noise” content.

Except now there’s a new fourth entry on Deezer’s ‘artist-centric’ menu of royalty model changes – and it takes a bit of explaining.

MBW’s Weekly Round-Up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximise their income and reduce their touring costs.

 Music Business Worldwide