What's Happening?
Josh Gruss, CEO of Round Hill Music, spoke at the Amplify Music Investment Summit about the company's strategy in music catalog investments. Gruss described catalog buying as akin to acquiring 'a royalty on nostalgia,' where classic songs become more
valuable over time as they become scarcer. He highlighted the acquisition of the song 'I Melt With You' by Modern English, a 1983 hit that continues to generate revenue through licensing deals, such as with Hershey's. Gruss noted the challenges in the music industry, with 100,000 tracks being uploaded to Spotify daily, yet only 10% of these tracks achieve over 1,000 streams. He emphasized the importance of focusing on premium catalogs, particularly Anglo music, while avoiding genres like Latin and K-pop.
Why It's Important?
The strategy outlined by Gruss underscores a significant trend in the music industry where established songs and catalogs are seen as stable investments. As the digital music landscape becomes increasingly saturated, the value of recognizable and historically successful music increases. This approach not only provides a steady revenue stream through licensing but also offers a hedge against the volatility of new music releases. For investors, this represents a shift towards more secure, long-term investments in the music sector. The focus on Anglo music suggests a strategic decision to capitalize on markets with established demand, potentially influencing future investment patterns in the industry.
What's Next?
Round Hill Music's strategy may prompt other music investment firms to reevaluate their portfolios, potentially leading to increased competition for classic music catalogs. As the market for music rights continues to grow, companies might explore innovative ways to monetize these assets, such as through new licensing deals or digital platforms. Additionally, the emphasis on premium catalogs could lead to a reevaluation of how new music is marketed and distributed, as artists and labels seek to break through the noise of a crowded digital marketplace.
