Why is Sony Music willing to spend big money on Queen and Pink Floyd records?

one of the largest Music Business Stories of the Year Something’s missing: official confirmation.

Sony Music Group (SMG) is made up of Rob Stringerreally pay US$1.2 billion purchase queen’s Catalog, including worldwide publishing rights and recorded music rights outside North America?

And then does SMG make a further splash? $400 million exist pink floyd A catalog of recorded music, plus “name, image and likeness” rights?

Sufficient industry resources and Credible media reports Join forces to confirm exactly that yes, it is.

Earlier this month, with Bloomberg Los Angeles SMG Boss Stringer First public confirmation that Sony purchased both historical catalogs (even though he didn’t confirm it price).

Stringer further confirms Sony’s recent acquisition Michael Jackson’s Directory, a transaction deemed to be covered 50% of the king Music rights portfolio for popular music.

If you believe industry rumors (MBW including), Sony—backed by cash from Apollo — Cumulative spending exceeds US$2 billion combined with jordan,queen, and pink floyd.

So why stringer and sony Let go of this Huge amounts of money On these vintage catalogs? and, jackson By the way, why is Sony making such a big bet? “Classic Rock” In an era far removed from mainstream genres on streaming services?

Here are three good reasons…

1) “Eventization” potential

exist Bloomberg’s This month’s event, Rob Stringer Confirm Sony acquisition “Name, image and likeness” rights to two of the three acts involved. we know pink floyd It’s one; he doesn’t identify the other.

Stringer recommends getting these “zero’ The rights will allow Sony to participate creatively and economically in the “experience potential” and “event potential” they offer.

pictures aba travel What immediately came to mind: the idea of ​​replicating the image and sound of a legendary performance through cutting-edge technology in multiple venues around the world.

Can ABBA Voyage style Works owned by Name and Likeness domain holders eventually become new “Tribute Band”?

It would not be surprising if so Stringer’s See the dollar sign.

this Australian Pink Floyd (TAPF)to give an example, often appears in poll star quarterly Top 100 A list of the highest-grossing concerts in recent years.

“That’s like five tours – that’s pretty profitable!”

Rob Stringer on Sony’s stake in MJ: The Musical and the show’s ability to play in multiple cities on the same night

The continuing popularity of Australian imitators pink floyd ‘Experience’ isn’t shocking: People sometimes forget about real experiences pink floyd The highest-grossing live show in the world throughout the 1980s and temporary loss of sanity travel.

(Yes, it earns even more than Michael Jackson’s legendary Bad Tour Those ten years – even though Freud Played 197 games while MJ played 123 games.

idea Owned by Sony Or a co-owned “experiential” production that plays nightly in multiple locations, apparently one of them Stringer Like it very much.

“[Sony] own one MJ: The Musicalpercentage and Michael Jackson Legacyjust like our picture company,” Stringer Confirmed in Bloomberg event.

Stringer says a version of the musical will be performed in five cities around the world (possibly simultaneously) next year.

He said, “It was like five tours – that was pretty profitable!”

2) Classic rock isn’t dead…it’s going crazy

“name, image and likeness”, Well – and what its ownership might bring about in a living space – is a key part of why sony Spend everything it does on these directories.

The same is true body music and merchandise sales – Another beneficiary of “NIL”.

But there is a more modern reason Stringer and submachine gun Throw money: Streaming.

At this point, you might be thinking, “What’s the point of streaming media? Michael Jacksonbut like retro rock pink floyd The kids weren’t entirely disappointed.

On the surface, you’re right: below you can scan a chart based on: luminous The most recent mid-year market report (and other similar historical reports showing U.S. half-year data).

It shows the popularity of three major genres in America – ‘rock’, ‘Pop music’and “R&B/Hip-Hop” (according to Luminate classification)—January to June period in past years.

As you can see, “rock”‘s share has grown slightly over this timeline, but: (one) not yet spectacularly Market share grew 110 basis points since 2019; and (two) This is despite the fact that “R&B/Hip-hop” has seen a significant decline in market share since 2020 (minus 500 basis points).

(latin music has been a substantial gainer in market share since the first half of 2019, 4.2% Mid-year share for the current year 8.3% First half of 2024.

By taking the above statistics and applying them to total audio stream In the US market First half of 2024 (all 665.8 billion where), we can estimate total traffic for every genre period.

This is arguably a better explanation The divide between America’s most popular genres.

again, ‘rock’ Not bad in this photo, but as you might expect, it’s not the same as ‘R&B/hip-hop‘.

But look now.

luminous The 2024 Midyear Report includes the slideshow below, which roughly shows the percentage of total streams in each genre from the following tracks less Under five years old with tracks more Under five years old.

This tells us in a snapshot, “R&B/Hip-Hop” Seems to be more dependent than newer version ‘rock’.

More than a quarter (26.7%) R&B/Hip-hop tracks streamed in the first half of 2024 are less More than 60 months old, and nearly three-quarters of the “rock” tracks (70.5%) yes more Over 60 months old.

Now, let’s put the approximate numbers above into practice U.S. live streaming volume in the first half of 2024 Divided by genre.

This gives us new insights into how each type actually performs, if you Only counts music streaming older More than five years/60 months (“Deep Catalog”).

(Warning: some of this is guesswork based on my own eyes. bright Figures are confirmed for three types in the table above, but for other types it provides indicative color charts. For example, looking at the above, it seems 48% Judging from the value on the Y-axis, the number of “R&B/Hip-hop” streams (yellow bars) is the number of “Deep Catalog” during that period.

Conclusion: When you only think about music older In more than five years, by the first half of 2024, ‘rock’ Almost up to date “R&B/Hip-Hop”.

It’s worth mentioning here: Queen Currently, he is the 51st most popular artist in the world. Spotify throughout history, with 23.7 billion Playing to this day.

Michael Jackson Is the 94th 15.56 billion Play.

pink floyd It’s No. 209, 10.07 billion drama – ahead of Mariah Carey, The Rolling Stones, Enrique Iglesias, and Aba.

3) When they zigzag, you zigzag…especially when the money is on your side

There are many other potential factors worth mentioning Sony’s has invested heavily in catalog music giants in recent months, including Japanese interest rates and exchange rates.

as interest rate has surged in the “West” over the past few years, limiting the willingness to spend huge sums on music catalogues, Japanese interest rates – The Bank of Japan (BoJ) usually sets negative During the same period, approx. -0.10%.

Recently, interest rates in Japan have climbed to +0.25%the highest level since 2008 but still well below the US/UK/EU (see below).

At the same time, Japan’s JPY has been significantly weakened GBP and Dollar recent years.

Example: As of February 2021, you still need to spend $1 0.0092 yen;Today, the same dollar cost 0.0065 yen.

In short: if you want to spend money $400 million In Pink Floyd’s catalog today, if you convert cash from yen to dollars, you’ll spend about a third less today (in yen terms) than three years ago.

Sony Music Of course the parent is the Tokyo headquarters Sony Corporation.

sony Therefore, will be able to take advantage of currency trends through acquisitions US/UK based directories with its Headquartered in Japan treasury. (This is a very large vault: Sony Corporation The latest financial year ended in March 1.907 mega JPY Cash and cash equivalents – currently valued at approx. $12.5 billion.)

Japanese The company may also be able to local borrowing Much cheaper than US, EU or UK companies if needed.

(Then again, Sony Music Group You may not even need that much money from your parents: don’t forget Apollo Led a $700 million “capital solution” submachine gun Funding that could have been put to good use earlier this year pink floyd trade, and likely Queen Transactions too.

Bottom line: Part of Sony Music Group Access to capital is no problem.

This may go some way to explaining why when its competitors seem ‘Zigzag’ On blockbuster single-artist catalog deals—slowing down the huge payouts we saw at the peak of the market— sony Already “bent”, spending is higher than ever.

universal music groupFor example, No large-scale catalog acquisitions have been publicly announced via Chord music— this Valued at US$1.85 billion Vehicles for minority shareholders in UMG (and majority shareholders at Dundee Partners), as announced in February.

We’ve also seen a slowdown in the overall value of catalog pipeline deals from the likes of Reservoir and BMG over the past 12 months, while the music catalog M&A industry has also been subject to consolidation elsewhere: Witness Music Catalog Sales round mountain, workand Vine Alternative Investments Compete with music companies.

(It must be noted that in an economic slowdown, harmony and litmus Still completed multiple nine-figure artist catalog acquisitions.

Here’s one last statistic worth noting: Earlier this year, black stone Salary US$1.584 billion purchase Hipgnosis Song Fund and a share of 40,000 songs provided by its public owners. The deal gives HSF a business valuation in the region $2.2 billion.

That number ($2.2 billionIt is reported that ) is about the same amount sony It only took three catalog transactions: Queen, pink floydand 50% Michael Jackson.

talking Bloomberg this month, Rob Stringer suggestion That Pink Floyd one The catalog of recorded music is inherently priceless, and purchasing it equates to a purchase by an art collector Picasso.

In some ways, the analogy doesn’t quite fit: someone gets Picasso Unlikely Earn hundreds of millions in royalties and T-shirts during its copyrighted lifetime.

However, in another sense, Stringer’s The analogy perfectly reflects his company’s philosophy in these deals.

After all, no serious art investor would buy a priceless piece of art Picasso No confidence that in ten or fifty years it will Significantly higher value More so than today.global music business