Music rights hit the mainstream as 99% of institutions call IP a formal asset class
Music IP has reached “firm institutional legitimacy” and 78 percent of senior decision makers overseeing US$3.24tn in assets expect investment into music to grow this year.
Fourth Pillar’s inaugural Music Investment Barometer and related release draw on responses from 125 decision-makers and senior advisers across five continents.
Respondents include music investment platforms (24 percent), investment managers (16.8 percent), private capital firms (16.8 percent), music labels and publishers (12.8 percent), investment banks (11.2 percent) and law firms (9.6 percent).
They completed more than 1,600 music transactions in the previous 12 months and collectively oversee more than US$3.24tn in assets under management.
Seventy‑two percent operate at managing director level or above, and 86 percent are C‑suite level.
Ninety‑nine percent of respondents agree that music IP – “from recorded music and publishing catalogs to royalty income streams” – is now “recognized and treated as a formal asset class” by institutional investors.
The material notes that music “has long been recognized for its enduring value by publishers, labels, creators and consumers”, but in the last five years there has been “a consequential shift in how its value is determined, measured and understood.”
It attributes this shift to technologization, “the globalization of music through streaming, improved data and reporting, and a series of landmark transactions, fund launches and public listings.”
Capital deployment appears set to rise.
Seventy‑eight percent expect total allocations to the music industry to grow over the next 12 months. Eighty‑six percent plan to increase their own investments in music rights in the same period.
The survey describes dealmaking in music rights – “the songs, catalogs and revenue streams that underpin the modern music economy” – as growing in “sophistication, volume and appeal.”
Deal flow and ticket sizes already look active.
The average investor completed more than one deal per month in the previous 12 months, with an average deal size of US$87m.
Sixty‑six percent say the number of available deals increased year on year.
Looking ahead, 85 percent expect deal sizes to hold steady or grow over the next 12 months; 34 percent expect them to hold steady and 51 percent expect them to grow.
Valuations show a mixed pattern.
Thirty‑three percent say valuations increased in the last 12 months, 45 percent say they remained steady and 22 percent say they decreased.
Even so, 76 percent say valuations have been “achievable throughout the previous 12 months.”
Respondents highlight several factors driving decisions to invest in music rights.
Yield profile ranks first at 67 percent, followed by a “positive outlook for music industry growth” at 64 percent. Other factors include “protection from wider market movements” (55 percent), diversification (54 percent), capital appreciation (30 percent) and interest rate movements (21 percent).
When assessing catalog acquisitions, 60 percent rely most on “broker / advisor materials.”
Independent valuation reports and industry databases each stand at 36 percent, followed by discussions with rights owners at 34 percent and deal benchmarking data at 17 percent.
Beyond returns, respondents rank “track record” as the top factor in determining who receives capital, followed by “CEO / leadership team reputation,” “company reputation,” “clarity and differentiation of investment strategy,” “transparency and quality of reporting materials,” “financial alignment” and “governance.”
Sentiment towards the asset class is strongly positive. Ninety‑two percent say they are “mostly or very optimistic” about the financial outlook for the music industry over the medium to long term.
Artificial intelligence emerges as both a concern and a manageable risk. In the key findings, 42 percent cite the impact of AI on the industry as their top issue for the next 12 months.
At the same time, a majority are not overtly negative about its effect on music asset values: 33 percent are neutral, 21 percent are “somewhat unconcerned” and 4 percent are “not concerned at all” about AI negatively impacting the value of music assets.
Claire Turvey, managing partner at Fourth Pillar, says the findings show that music intellectual property “has achieved firm institutional legitimacy,” and that the focus now is on how investors navigate a more complex and competitive market.
