October 27, 2021

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A $1 Billion Competitor for Music Rights Says ‘Content material Is Queen’

A $1 Billion Competitor for Music Rights Says ‘Content Is Queen’

It has lengthy been a inventory slogan within the media enterprise: “Content material is king.”

The thought is that mental property is significant to distribution methods like cable TV or streaming music, so proudly owning and controlling it may be highly effective leverage and a invaluable funding.

However one investor, Sherrese Clarke Soares, has a twist on the previous chestnut: “Content material is queen.”

To Clarke Soares, the founder and chief government of HarbourView Fairness Companions, a brand new agency seeking to spend money on music copyrights and different media property, the proof is on the chessboard, the place “the queen is essentially the most highly effective piece,” she stated. With know-how enabling new leisure platforms on a regular basis — suppose social media and gaming platforms like TikTok, Twitch and Roblox — the true ruler of the sport should act nimbly and decisively, zooming in any course as wanted.

The queen “can transfer in a number of completely different instructions and management the board,” Clarke Soares, 45, stated in an interview, “whereas the king can’t really transfer that a lot.”

HarbourView is the most recent participant in what has develop into a high-stakes contest within the music enterprise: the possession and management of catalogs of songs, which streaming shops like Spotify and Apple Music, together with a rising flank of social-media and gaming platforms, must maintain their customers engaged.

The final couple of years have seen a flurry of offers for music copyrights, and the royalties related to them, and buyers have poured billions of {dollars} into the hunt. Bob Dylan bought his songwriting catalog to Common Music late final yr for greater than $300 million, for instance, and different latest blockbuster offers have concerned Paul Simon and a number of members of Fleetwood Mac.

HarbourView is backed by as much as $1 billion from Apollo International Administration, the finance big, which can immediately put the brand new competitor within the league of main patrons like Hipgnosis Songs Fund, a British firm that has already spent about $2 billion on catalogs of artists like Shakira and Neil Younger; and BMG, which lately allied with KKR to spend $1 billion on music copyrights.

Though Apollo, like KKR, is called a significant personal fairness participant, its funding in HarbourView is being made by means of its credit score arm. Bret Leas, Apollo’s world head of structured credit score, stated its funding is long-term and strategic, and never beholden to the tight funding timeframe of a typical personal fairness deal.

For Clarke Soares, the daughter of Jamaican immigrants, who grew up enjoying the piano, the concept that “content material is queen” — a phrase she has trademarked — has a particular resonance. She is a uncommon instance of a Black girl main a monetary agency, and acknowledges that the slogan is partly in reference to herself.

Talking through video convention from a sparsely embellished house workplace in Newark, she defined that investing in music, and specializing in minority artists, has been a spotlight of her life for many years. Her utility to the Harvard Enterprise College, she stated, included a proposal for an funding platform to assist artists of colour.

“I needed to impression how the world noticed folks like me,” she stated, “and the quickest method to do this is thru content material, as a result of it travels to locations you and I can’t go together with our arms and our toes.”

The music world, too, has only a few Black girls in high-ranking roles. A study this yr by the Annenberg Inclusion Initiative on the College of Southern California discovered that, amongst 4,060 prime executives at document firms, streaming companies and different companies on the core of the music enterprise, there have been 17.7 white male executives for each Black feminine one.

Clarke Soares, a former managing director at Morgan Stanley who was most lately the chief government of Tempo Music Investments, one other personal equity-backed funding agency, declined to say what offers she was going after together with her new firm.

However she recommended that she could also be taking a look at sectors which have attracted much less consideration or been undervalued. Whereas there have been no scarcity of offers for the work of artists of colour — simply this week, BMG introduced an settlement for Tina Turner’s music rights — the largest splashes have been remodeled iconic white artists like Dylan, Simon and the band Aerosmith. Catalogs exterior that mainstream will be valued at decrease monetary ranges by buyers.

“We need to make investments in a different way, not coloured by preconceived notions,” Clarke Soares stated. “Simply because one thing is within the R&B sector, or within the Latin sector, we don’t consider that it ought to have a reduction.”

Shopping for music copyrights can even contain delicate diplomacy with artists. Clarke Soares stated that final yr, whereas at Tempo, she was approached about investing within the grasp recordings of Taylor Swift, who had objected loudly as a result of her work was being shopped with out her approval. Clarke Soares stated she declined, not desirous to be in an adversarial place with an artist.

Nonetheless, HarbourView might face challenges as a brand new entrant in an especially aggressive market, one the place there’s a fixed debate about whether or not costs are untenably excessive. Clarke Soares and Leas, of Apollo, argue that there’s nonetheless worth to be discovered, and that HarbourView has the liberty to take a affected person strategy in deploying its capital.

The connection to Apollo took place partly by means of Reggie Love, who was an aide to former President Barack Obama, who’s now an Apollo senior adviser. They mentioned methods to assist diversify the world of finance and personal fairness, and Love stated that, along with the monetary success they see in HarbourView’s mannequin, Clarke Soares can serve for example for the following era.

“There are going to be aspiring, proficient younger girls of colour who will see themselves in her,” Love stated, “and it will give then the imaginative and prescient, and hopefully the braveness, to attempt to be the following Sherrese.”

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