Private Equity Turns to Indie Labels After Big Catalog Deals

The market for music rights has moved beyond household names. After high-profile catalog sales involving Bob Dylan, Justin Bieber, and Pete Townshend, private equity and other institutional buyers are now pursuing smaller independent labels.

Aaron Schultz, who runs the three-person soul-funk label Bastard Jazz Recordings, described the shift in a July 2 Facebook post. “This week alone, I’ve had something like 6-8 catalog acquisition / PE folks banging down my door to try and purchase masters from artists we’ve worked with over the years,” he wrote. “It’s a feeding frenzy and it feels gross.”

Schultz told Rolling Stone that offers appeared occasionally for the last couple of years but have accelerated in recent months. The dynamic is not limited to private equity, according to Patrick Clifton, executive director of the international indie organization ORCA. “Big institutional money is flowing into the industry, and the independents are under focus, because a lot of them have catalogs and rights that are potentially valuable,” he said.

Duetti, which raised $200 million in January for catalog acquisitions, has lowered its required financial history for master recordings from two years to six months. CEO Lior Tibon said institutional buyers traditionally wanted five to ten years of data before investing. That change helps explain why even modestly successful independent catalogs are now receiving sustained attention.