MBW’s Stat Of The Week is a collection wherein we spotlight a single information level that deserves the eye of the worldwide music trade. Stat Of the Week is supported by Cinq Music Group, a technology-driven file label, distribution, and rights administration firm.
Final 12 months, Common Music Group went public.
The actually nice information about that for music trade muckrakers like MBW? In idea, we should always get extra transparency on UMG’s fiscal numbers than we ever noticed again when it was owned by Vivendi.
And so it proves in the present day (March 3), with Common not solely revealing the sum of money it spent on “content material funding” final 12 months, however additional breaking down that determine into what it spent on: (a) Catalog acquisitions; and (b) Royalty advances to signed artists and songwriters.
Probably the most intriguing class out of these two, in fact, is catalog investments.
And due to UMG’s aforementioned fiscal transparency, we now know not solely what Common spent on catalog buyouts in 2021, however in 2020 too.
We additionally know that – based on a brand new investor presentation given by UMG’s EVP/CFO Boyd Muir – that Common doesn’t take into account participation within the catalog buyout gold-rush as “required” to fulfill its core future enterprise goals.
In 2020, Common spun the top of the worldwide music enterprise by spending what’s believed to be near USD $400 million to purchase Bob Dylan’s track catalog.
That acquisition, it transpires, was a part of €929 million (USD $1.06 billion) complete annual spend by Common on music catalogs that 12 months.
In 2021, nevertheless – the 12 months UMG floated on the Amsterdam Euronext – UMG’s expenditure on catalog buyouts slowed significantly.
In reality, it was down by 58% YoY… lower than half the scale it was within the prior 12 months.
In line with that investor presentation handed to shareholders in the present day (March 3), Common spent €388 million (USD $459m) on catalog rights final 12 months.
Clearly, the very best a part of half a billion {dollars} is, y’know, nonetheless a princely sum. But it surely’s additionally a considerably smaller determine than sure different gamers splashed on music catalogs in 2021.
For instance, KKR spent a whopping $1.1 billion shopping for a portfolio of rights from Kobalt Music Group in October final 12 months.
Sony Music Group then spent an estimated $550 million (with a little assist from Eldridge Industries) on Bruce Springsteen’s publishing and recorded music catalogs in the identical 12 months.
Sony additionally spent north of $150 million on Bob Dylan’s recordings catalog in 2021, and it purchased Paul Simon’s publishing rights in a deal rumored to be price upwards of $200 million.
To not be outdone, Warner Music Group splashed $250 million on the David Bowie track catalog, in addition to splurging over $100 million on David Guetta’s recordings.
All of that being stated, Common has already been noticeably extra energetic within the blockbuster catalog buyout area in 2022 than it was in 2021.
Up to now month alone, UMG has introduced its acquisition of Sting’s track catalog – in a deal believed to have price north of $300 million – in addition to the buyout of Neil Diamond’s track catalog and grasp recordings.
Within the presentation given by Boyd Muir to Common traders in the present day (see slide above), UMG notes that it considers itself a “extremely selective, strategic acquirer of belongings we are able to management and [for which we can] enhance monetization”.
It provides that it’s not eager on shopping for “passive rights” – aka music earnings streams over which it has no management – and takes a “financially disciplined, ROI [return on investment]-based method” to catalog acquisitions.
Value noting for context: UMG has advised its traders it’s aiming to attain an EBITDA margin within the “mid-twenties” as a part of its mid-term outlook.
On an adjusted foundation, that determine hit 21.0% in 2021.
Apparently, UMG suggests in its new investor presentation that its funding in advances to energetic songwriters and artists are, in contrast to catalog acquisitions, “required/core to our enterprise”.
UMG additional notes that it’s at the moment spending huge on “front-loaded advances” to “safe long-term, broader, multifaceted rights” from artists.
The presentation reveals that UMG spent €364 million ($430m) on royalty advances to expertise throughout the course of 2021, down 38% year-on-year.
In line with MBW’s calculations primarily based on UMG’s newly-announced annual outcomes for 2021, the most important music firm topped USD $10 billion in annual income final 12 months, with an annual adjusted EBITDA above $2 billion.
Be aware: EUR-USD forex conversions on this story are primarily based on the IRS’s printed annual common change charges.
Cinq Music Group’s repertoire has gained Grammy awards, dozens of Gold and Platinum RIAA certifications, and quite a few No.1 chart positions on quite a lot of Billboard charts. Its repertoire consists of heavyweights resembling Unhealthy Bunny, Janet Jackson, Daddy Yankee, T.I., Sean Kingston, Anuel, and tons of extra.Music Enterprise Worldwide
