Amid the boom in catalogue deals and Taylor Swift’s move to regain control of her music by re-recording her Big Machine albums, it’s clear that major artists are looking for new options to take control of their rights and secure capital solutions.
Launched in 2020, Empowerment IP has offices in London, New York, LA, Toronto and Sydney providing IP creators and owners with a broad range of bespoke capital solutions. The company was co-founded by manager and entertainment mogul Guy Oseary, whose roster includes Madonna and U2.
In a viewpoint written exclusively for Music Week, Empowerment IP CEO Stephen Duval looks at alternative investment solutions for artists…
Artists have been battling over the ownership of their work for decades; from Michael Jackson purchasing the rights to the Beatles in the ’80s, to Prince’s feud with Warner Bros in the ’90s. The control of an artist’s intellectual property (IP) has, throughout history, been the central dispute between the creative and the commercial side of the music industry. The question being, what does this relationship look like in 2021 and is there a way for the artist to remain centre stage?
Despite the temporary challenges to the live sector, the music market is forecast to grow at a 7% compounded annual rate up to 2030. This is largely due to digitalisation transforming the distribution and consumption of music. The proliferation of smartphones, broadband and new digital platforms allow us unbridled access to almost every song ever recorded. These positive industry trends along with high-quality, long term and uncorrelated cashflows are attracting a raft of financial players to the arena.
There should be more options for artists to monetise their work without losing it forever
Stephen Duval
Even today, with unprecedented levels of deals taking place across the music industry, there remain limited choices for artists who are seeking liquidity. Their options are selling their rights, taking an advance from a label/administrator, or bank debt. Traditional capital solutions typically mean that artists forego their future income streams and upside from their rights, or tie themselves up in creative obligations or restrictive covenants, often with personal recourse.
With so many high-profile catalogue acquisitions, many artists are becoming increasingly vocal about their roles as the creator and how their rights are owned and controlled, and rightly so. In a catalogue sale, artists typically receive a significant upfront payment but will then lose the ownership of their rights forever. This includes all future income streams and value in a growing market. Although it is ultimately the artist’s decision, I really feel that there should be more options for artists to monetise their work without losing it forever.
It’s clear that artists have historically been underserved and I believe that they should be empowered with a broader range of financing solutions in the same way that we have seen in other comparable asset classes. This is wholly the reason why Empowerment IP was founded.
We can create a range of bespoke capital solutions which provide various benefits such as significant liquidity without selling IP, or capital gains benefits whilst retaining creative control and ultimately retain 100% of all future upside value.
This is done by working with a select number of highly engaged capital partners that share our ambitions to innovate in the sports, music, media and entertainment sectors. With our track record and relationships, we are able to offer investment opportunities that provide higher yields than some established equity funds with, what we see, as a lower risk relative to full catalogue acquisitions (with LTV ratios typically between 50-60%). We see a huge opportunity in the market to structure equitable deals, which are both new and compelling to artists while still providing attractive yields to investors.
For me, the creator is the lifeblood of the industry. These creators need to be prioritised above all and be made aware that selling their IP is not the only way they can monetise their life’s work.
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