Numbers on the Board (April 2024)

A look at the numbers defining the music news of the past month.

What MidJourney gave me when I typed “Beyonce and Taylor Swift battle to the death on the Grammy stage.”

I’m reviving a format I attempted in 2019 and quickly abandoned in 2020. I’d blame the pandemic, but I imagine my efforts would have waned regardless of a once in a generation virus. Inspired by Walt Hickey’s Numlock News, this fledgling monthly column adapts that format for the music business. Longer essays will still come every few months, but I’m planning one of these each month to provide a quick(ish) burst of thoughts on the industry landscape, diving into the numbers headlining and defining stories of interest. I plan to publish at the end of every month. Wish me luck.  

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$1.4 billion - Hipgnosis sells to Concord (or to Blackstone for 1.5b...or to Concord for $1.51b...or to Blackstone for $1.6b)

Depending on whom you ask, it can feel either like the catalog acquisition market has completely dried up or remains feverishly active.

The truth, as ever, lies in between. 

Hipgnosis’ struggles have provided ample fodder for the trades. The British company’s meteoric rise and jagged decline traced the general shape of this segment of the business over the last half decade, gobbling up high profile catalogs before careening into an abrupt, private bidding war in the past month. While Hipgnosis’ accounting practices recently fell under scrutiny and undercut confidence in the company’s lofty projections, the big swings spearheaded by Merck Mercuriadis and his team loudly reframed music rights as a desirable asset.

Economic conditions shifted dramatically in the time since Hipgnosis and a slew of other buyers opened up shop. Interest rates rose, making money more expensive to borrow. The same financial institutions that rubbed their hands together like Birdman after reading Goldman Sachs’ 2019 “Music in the Air” report now regard music rights less favorably. Many of the most established, lucrative, de-risked catalogs have sold. The remaining marketplace comprises primarily young catalogs with less clearly intelligible financial behavior, catalogs parceled off into fragmentary sales, or the rare, behemoth like Queen’s collection of generational hits or Michael Jackson’s prized collection. 

Many of the buyers who sprang into being after 2018 have remained heavy on the hunt for publishing and sound recording rights. Some search for potential sellers who need lump cash and don’t mind giving up ownership of their music. Some have found new ways to structure deals that blend sale and partnership in a way that can still be more advantageous than a record deal (though perhaps no less morally fraught if you see simply artists trading one corporate establishment for another). When it comes to the white whales, there is always a deal to be done, even when it doesn’t seem like there’s a deal to be done. 

Given the uncertain economic landscape shaped by the pandemic and numerous global conflicts, Hipgnosis’ eventual sale now feels fated. Its early aggression positioned it to become either an eventual competitor to major rights holders or otherwise find itself an attractive bundle for a major trying to gobble up market share and further de-risk its existing frontline rights business. The idea that music rights could form an attractive, publicly traded asset class remains intriguing, but every pure music company that has gone public in the last few years has seen its stock price drop or remain flat since initial public offering (true of Hipgnosis, Warner Music Group, and Universal Music Group, though Spotify and its closest non-music analogue Netflix remain blue chip). As details emerged about Hipgnosis’ questionable accounting practices and as the overall catalog market cooled, the notion that a buyer could snap up Hipgnosis seemed feasible. 

Spectacularly, few details about the sale leaked in a business notorious for loose lips in relation to deals of this scale. During a year when big shifts like UMG’s restructuring have made their way into the press as dress rehearsals for public and private reaction, Hipgnosis’ sale crash landed as front page news without an outward whisper. 

At the time I started writing this piece, the buyer appeared to be Concord, the “independent” giant that would add Hipgnosis catalog of over 65,000 copyrights and recordings (a figure that Financial Times curiously puts at 40,000 in its recent report) to its staggering trove of 1.2 million songs if the deal gets approved by Hipgnosis’ board. NYT’s Ben Sisario puts Concord’s initial $1.4b bid in perspective:

“[Hipgnosis] spent about $2.2 billion on catalog acquisitions, with top artists like Bieber receiving up to $200 million for rights to their songs. As recently as September, the value of the Hipgnosis catalog was estimated at $2.6 billion by an independent financial firm.” [Ed. Note: Hipgnosis’ website puts that collection’s worth at $3b]

As of last week, private equity firm Blackstone bested Concord’s initial bid at $1.5b. Concord responded by tendering a $1.51b all cash bid, still over a billion dollars off from the September. Billboard’s Elizabeth Dilts Marshall notes that in spite of the compelling offer, the drama may not be over:

“The new offer presents a 42.6% premium over HSF’s closing share price on April 17, the day before Concord’s initial offer became public. Any offer will require the support of investors representing at least 75% of the company’s public shares at a court meeting expected to be held on June 10; until that date, additional new offers may still be lodged.”

As of yesterday, Blackstone tendered a $1.6b bid that makes it the frontrunner in an increasingly competitive bidding war.

In the midst of an escalating auction, it is worth recalling that the kinds of rights in question form assets intended to return consistent yields. Investors look at the income provided by well-vetted and carefully modeled catalogs as an annuity, an attractive source of regular return for institutional investors and pensioners alike. Aging music do not typically provide explosive growth opportunities, except in rare examples (such as UMG buying a distressed EMI in 2011, a purchase that included rights to albums by Katy Perry, Coldplay, the Beatles, Pink Floyd and the Beach Boys, among thousands of others that would prove enormously lucrative in the impending streaming era). The Hipgnosis sale could be such a black swan event that makes the eventual buyer look like a genius in a decade.  

27 & 31 - The number of songs on Cowboy Carter & Tortured Poets Department (respectively)

While we’re only four months into 2024, it feels safe to say we already have our frontrunners for Album Of the Year at the Grammy’s. 

Beyonce’s Cowboy Carter (released 3/29) comes replete with critical acclaim, commercial success, and a discourse-shaping gravitational pull inspiring conversation that reaches far beyond the album’s 27 songs. 

Taylor Swift’s Tortured Poets Department (released 4/19) is a frontrunner because it is a Taylor Swift album in the age of Eras. Its 31 song anthology edition arrived with a typically Swiftian bang. Per Billboard:

“The Tortured Poets Department launches with 2.61 million equivalent album units earned in the U.S. in the week ending April 25, with traditional album sales (purchases of digital download albums, CDs, vinyl LPs and cassettes) comprising 1.914 million of that sum. Of that sales figure, vinyl sales represent a staggering 859,000. The collected 31 songs on the deluxe edition of the album generated 891.34 million on-demand official streams.”

The last artist to achieve such a gaudy figure was, naturally, Taylor Swift. 

In an age of short songs, short attention spans, and splintered albums, either release would enter the pantheon of superfluous Grammy stats by securing the AOTY win. Barring an album with more songs being released and nominated in the submission period (which ends 8/30/24), a win for Cowboy Carter or Tortured Poets Department would make either album the AOTY winner with the third most songs comprising its runtime. Only Outkast (Speakerboxxx/The Love Below - 40) and Frank Sinatra (A Man and His Music - 32) had longer albums. The former is a famed double album that is truly two solo albums (and, notably, still one of only two albums to prominently feature rapping and win AOTY, alongside Lauryn Hill’s The Miseducation of Lauryn Hill), the latter a compilation. 

Also, because I am a nerd, I’ve decided to start keeping track of these stats for three of the major categories plus Rap Album of the Year (the only other category I really care about), including collaborator info. You can follow along in this work-in-progress Google sheet. Part of the inspiration for this exercise was a portion of my recent conversation with Rolling Stone’s Andre Gee that got cut regarding major label artists and the gaming of sales and streaming figures with bloated track lists. I wanted to see if I could divine any meaningful trends from the last 58 years (going back to 1966, when AOTY started to include both artist and producer, ushering in the modern era of behind-the-scenes participants also being awarded for their contributions in the category). While the data doesn’t return any overwhelmingly interesting trends, it confirms what you might already imagine: With few exceptions, albums have gotten longer over time. Technology certainly must be a culprit, though albums proved shortest in terms of song number and second shortest in run time during the 1980s. The first decade of the 2000s has the longest in both categories. I would imagine a much larger sample size would bring these trends into tighter focus, but I have a 19 month old child and a job, so that research is going to take a bit longer. 

80% - Percentage of Coachella tickets sold in 2024

The chatter around Coachella this year, for those not in attendance: Sales for festival season’s most famous brand flagged in comparison to past years. Ticks sold slower than they had in the previous decade, a time when Coachella moved firmly from Southern California staple to bellwether of the national festival ecosystem. 

Some blamed headliners who aren’t true Triple A superstars of the Beyonce/Taylor/Weeknd strata (a theory that holds some weight, though I have spent enough years at Coachella to know that many make the pilgrimage as much for the ~vibes~ as the headliners). Some blame...influencers? 

My thoughts on why are pretty simple:

1. The Coachella experience is fucking expensive. The tickets ($499 plus fees for GA, $1,069 plus fees for VIP). The food (as this YouTube short outlines in short order). A shuttle pass. Parking pass. Camping bundles (which are more expensive than VIP). The alcohol. The lodging. The dr*gs. Water. Gas. Sparkly outfits. A GA ticket and a thrifty plan will still end up running the average attendee $1000 or more for a weekend, disposable income that may be less readily available for potential festival goers in a time of economic concern and rising consumer prices across categories.  

2. There are just too many festivals with lineups that mimic, in whole or in part, the Coachella lineup. Saturation and relative homogeneity after almost 20+ years of continuous growth to the American festival market are inevitable (and have naturally resulted in the rise of counter-programmed festivals like Rolling Loud or Powertrip that speak directly to specific genre bases, or personally curated events like Tyler’s Flog Gnaw Carnival or Jack Harlow’s new Gazebo Festival).

3. In recent years, the Coachella live stream has become increasingly reliable, well-produced, and popular. Coachella has been playing footsie with the metaverse (diving headlong into Fortnite in 2024) and various AR/VR experiences for festival goers. It is not hard to imagine a full-on expansion into broadcast in coming years. Imagining a virtual decoupling from two physical weekends in April doesn’t require much of a leap. 

I think the entire festival marketplace has probably reached its over-commercialized apotheosis. Venerable Australian fest Splendor in the Grass canceled its 2024 edition. LA festival FYF went dormant in 2018, though its website still sports a 2024 copyright from owner Goldenvoice. As with any company or product in a system that prizes continuous annual profit growth, Goldenvoice (also Coachella’s promoter) is unlikely to stop as long as Coachella is profitable, cracks in the foundation be damned. But there are only so many superstars. Only so much nostalgia. Only so much money average people are willing to spend. At some point the viability of a two weekend mega festival will wane. We have already seen this with numerous festivals over the last decade, some well-established, others upstarts that couldn’t sustain. 

A hypothetical (that I know would never happen): Skip a year. Hell, just make it biannual. Build back the allure. Keep expanding the festival’s physical footprint if you must to include ever more stages and experiences, but give the actual weekends a sense of rarity that would make them feel even more special for the consumer saving their money for an expensive getaway.

Controlled burn economic suggestions aside, it is still worth noting that for all the hand wringing about waning sales, 80% of tickets sold means Coachella still moved a whopping 200,000 tickets (likely more by the time the finally tally is taken) and many acts experienced meaningful streaming bumps concurrent with the festival’s two weekend run. 

$17.1 Billion - 2023 U.S. recorded music revenue

The year I started working in music, 2012, recorded music revenue in the U.S. accounted for $7.016b. In 2013 it fell to $6.996b in revenue for 2013, then down again to $6.97b in 2014. 2023’s $17.1b in U.S. revenue isn’t exactly as much as those three years combined, but it’s an indicator of the general health of the record industry. 

No matter how many layoffs you hear of or restructurings you read about, bear in mind that recorded music revenues have gone up for their eighth straight year. That steady increase, of course, does not imply that profits or margins have gone up, but one would hope that all that new cash coming in would mean more profit.

What interests me most about this summation, however, is that it maintains a fairly rigid view of what constitutes recorded music revenue. Defined by physical sales, digital sales, and streaming (both subscription-based and ad-supported), the RIAA’s view of “recorded music revenue” seems to wholly exclude creator tools like Splice and BandLab, two newer frontiers for the purchase of recorded music that signal the broader move from the primary consumer as a pure receiver of music to the primary consumer as a creator of music (a thought I babbled about in Applied Science #13).

$120 Billion - Suno's future revenue?

I just love this number because it’s so fucking big and silly! 

$120,000,000,000!

Goldman Sachs said the entire recorded music business would be worth $131b by 2030 in the previously mentioned “Music in the Air” report. That felt crazy in 2019, before people wondered aloud whether real Drake or AI Drake had authored a diss song. It still feels optimistic, to say the least. Recorded music revenue globally hit $28.6b in 2023. An impressive number, but still well short of the exponential growth portended by Goldman Sachs. If indeed generative AI music tool Suno and other similar apps mark an immeasurable shift in music creation, are we in for a $200b+ recorded music industry? One that’s bigger than video games? That rivals wine globally? 

I’m an optimist, but I’m not sure I’m optimistic enough to believe, as Suno’s founder Mikey Shulman does (or at least puts on in an effort to inspire maximal investor confidence), that a billion people will pay $10 annually to use Suno—or that a billion people will pay $10 annually to use any music tool.

But I sure do admire a big number.