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You may hearken to the newest MBW podcast above, or on Apple Podcasts, Google Podcasts, Spotify, Stitcher, iHeart etc. via this link.
Becoming a member of Music Business Worldwide founder, Tim Ingham, on this MBW Podcast is Scott Cohen, the CEO of JKBX.
JKBX is a brand new platform that permits traders (together with so-called ‘retail traders’) to amass royalty shares in hit songs. It would, in future, additionally help you commerce these royalty shares by promoting them to others.
JKBX launched in September and based on Bloomberg had over $1.7 billion -worth of music property secured.
Proper now on the platform, JKBX is providing royalty shares in hit songs like Halo carried out by Beyoncé, Hearsay Has It carried out by Adele, Welcome To New York carried out by Taylor Swift, and lots of extra.
Nevertheless, as you learn this, you may solely reserve your acquisition of royalty shares on JKBX. Earlier than it completes any transaction, the corporate is within the means of trying to safe regulated approval from the US Securities and Change Fee (aka the SEC).
In addition to its major investor, Dundee Companions, JKBX has reportedly attracted strategic traders together with Spotify, Live Nation, YouTube, Crimson Mild Administration, and others.
Issues to learn about Scott Cohen earlier than we get into the podcast?
He’s the co-founder of The Orchard – which he co-launched with Richard Gottehrer within the second half of the nineties, earlier than promoting it to Sony Music for a complete of round $250 million, partly in 2012 and partly in 2015.
Earlier than becoming a member of JKBX, Cohen was most just lately Chief Innovation Officer at Warner Music Group, the place he saved his ear near the bottom on tech akin to synthetic intelligence, the metaverse, and blockchain.
On this podcast, we ask Cohen about JKBX’s prospects, the altering nature of expertise’s involvement in music, and the teachings he realized constructing the Orchard right into a big music firm.
Pay attention above for the complete interview, or learn an abridged model of the dialogue under…
Think about that I’m the proprietor of a portfolio of music rights that’s price $2 billion, $3 billion, $4 billion. What can JKBX do for me, and the way does it really work?
Nicely, the very first thing I can do is congratulate you on amassing an incredible catalog price two, three or 4 billion {dollars}!
What [JKBX] can do is unlock among the worth of that, the identical approach [as] when firms IPO and turn out to be listed; oit’s a approach of unlocking trapped worth.
We take revenue streams from hit songs – so a rights holder has a track that generates $1 million a 12 months, as an example, possibly we take 10% of that revenue, $100,000. We put some a number of on it, let’s say a 20x a number of, and that’s completed by means of an issuing firm, and that issuing firm takes it to the SEC in America, the Securities and Change Fee, to get it certified.
So basically what we do is we take revenue streams after which convert them into regulated securities. And once I say “we,” it’s the issuer that does it, after which it’s listed on the JKBX platform.
Bloomberg reported earlier this 12 months that there was $1.7 billion of music rights solely secured for JKBX. In addition they mentioned that JKBX had a objective of elevating that to $4 billion. How is that mission going?
Nicely, I’d prefer to congratulate Bloomberg on their optimism that we might go from $1.7 billion [in] music rights to $4 billion. That’s wonderful.
With that mentioned, I’m not gonna provide you with a quantity. But when I mentioned they missed it, underreporting it by an element of three, you may have some understanding, I feel, with out saying the quantity… $12 billion as a substitute of $4 billion.
You want buy-in from the business’s largest rightsholders, and never simply the three majors, however different organizations that maintain billions of {dollars} of music of their portfolios. So how is that course of going for you? How are you discovering the extent of curiosity from these organizations?
That is the place we’re getting the buy-in, is from these massive rights holders.
What we’re not doing is working with small unknown artists. I imply, there’s a spot for that, however that’s not what we’re doing… We’re speaking about songs recorded by Ed Sheeran, Adele and Beyonce – people of that degree – being listed on the platform. These solely come from these massive rightsholders.
Is there any battle or hazard, in your thoughts, in bringing music followers into the dangerous sport of investing in music catalogs? Some individuals may argue that followers and traders ought to be saved separate…
I don’t know who these persons are [who are] positing this philosophical query. I don’t wish to say it’s foolish and I don’t wish to be dismissive of it, nevertheless it doesn’t make sense to me.
In America alone, 63 million Individuals have particular person funding accounts. There’s the same share within the UK and round Europe. So persons are investing: they’re investing for his or her pensions; they’re investing as a result of they’re buying and selling.
“I’m an enormous buyer, and really a fan, of Apple – however I’m additionally an investor in Apple. I personal inventory in Apple. I don’t see these two issues as mutually unique.”
The identical persons are additionally followers of music. It’s not just like the people who make investments their cash are one group and followers of music are a distinct group. They’re the identical group of individuals.
I’m an enormous buyer of Apple. I’ve two MacBooks, one private, one enterprise, I’ve an iPad, an iPhone. I’m an enormous buyer, and really a fan of Apple, however I’m additionally an investor in Apple. I personal inventory in Apple. I don’t see that these two issues are mutually unique? I feel they really work very well collectively.
It’s an attention-grabbing time within the music rights enterprise. Streaming development is sustaining its wholesome tempo and worth rises are serving to, however everybody sort of acknowledges that issues are slowing down from the explosive development we’ve seen during the last 5 to seven years. Are you assured within the long-term future worth of music itself?
Once I take into consideration the way forward for music, I take a look at it by means of a few totally different lenses. One, music as an asset class is an uncorrelated asset. That signifies that whatever the macroeconomic circumstances, no matter [whether] there’s a pandemic or a recession, if music is performed, someone’s getting paid. It doesn’t matter what’s taking place with the financial system if a track is streamed… That’s the fantastic thing about an uncorrelated asset.
Once I take into consideration the music business, it’s at all times been topic to format adjustments and new income sources. It’s been this fashion for practically 100 years. [In the early 20th century] there have been 78s after which within the Fifties, it was all in regards to the 45 singles, after which within the Sixties we get albums, within the Seventies we get cassettes, within the 80s it was CDs after which we moved into downloads and streams.
“when you take a look at the historical past of music, and [understand] there’s at all times new codecs, at all times new income sources, and also you consider that pattern will proceed into the long run, then you definitely would make choices primarily based on that.”
My level being that, if we simply take a look at streaming and say, ‘Oh my god, streaming is slowing,’ it [implies] that’s the tip of the road. There will probably be nothing else coming after that to generate income. Should you consider that, then, properly, make your choices primarily based on that.
However when you take a look at the historical past of music, and [understand] there’s at all times new codecs, at all times new income sources, and also you consider that pattern will proceed into the long run, then you definitely would make choices primarily based on that.
In your earlier position with Warner Music Group, an enormous a part of your obligations was retaining your eye on forthcoming technological developments. As you realize, generative AI has exploded as a subject of debate within the music business prior to now six to 12 months, each by way of music making, and what we might name ‘music aping’ platforms, as an example the latest “pretend Drake” observe that replicated the voices of superstars. The place do you sit, typically, on the business menace versus the business alternative spectrum of generative AI?
If you realize me in any respect, you realize that I’m an everlasting optimist, which additionally means I feel all of it is a large alternative. I used to be chatting with Mark Mulligan… a few weeks in the past, and I feel we see eye to eye on this. He talks about [how] the music business has traditionally been primarily based on a consumption mannequin. We make cash by monetizing consumption – radio, CDs, downloads, streaming.
However when you take a look at what’s taking place on the earth for the reason that net, we 1698826475 have a creator financial system. [In pre-internet times] there have been people who wrote books or articles in magazines, or they wrote for newspapers, and that was a small variety of individuals and the remainder of the inhabitants consumed these issues. However as soon as individuals had entry to the online, they began writing themselves… everybody was now creating one thing.
There was once photographers and… now everybody expresses themselves by means of images. And then you definitely get issues like YouTube and TikTok, and now we’re in a world the place individuals aren’t simply consuming video content material by means of TV, movie and – in right this moment’s world – issues like Netflix. They’re additionally creating simply as a lot as they’re consuming.
“May AI help us to precise ourselves by means of music? Once I take a photograph on my iPhone, I simply merely change to portrait mode and the expertise behind it takes over and makes this wonderful {photograph}. I don’t actually must know something about F-stops and aperture… May this occur with music? And the reply is sure With AI.”
So individuals have been expressing themselves utilizing phrases, photographs, and video. However what’s subsequent? May AI help us to precise ourselves by means of music?
Once I take a photograph on my iPhone, I simply merely change to portrait mode and the expertise behind it takes over and makes this wonderful {photograph}. I don’t actually must know something about F-stops and aperture and you realize, I don’t know any of that terminology or easy methods to use a 35-millimeter digital camera. I simply put up my iPhone, flip to portrait mode and take an incredible {photograph}. May this occur with music? And the reply is sure. With AI.
And so now, as a substitute of simply having the music business be primarily based on a consumption mannequin, we will additionally generate cash from creation. If numerous individuals, thousands and thousands of individuals globally, tens of thousands and thousands, lots of of thousands and thousands of individuals, are taking items of current music that’s licensed, making use of some AI to create what they need… if that half will be monetized, think about the scale of the music enterprise sooner or later.
Let’s leap 5 years into the long run. What does the best situation appear like for JKBX, and the way large can it turn out to be?
What I’d prefer to see is a future the place music, as an asset class the place common individuals purchase it, is totally normalized. That that is no totally different than investing in actual property, or investing in shares of Apple or Tesla or Microsoft… That’s sort of my future. After we began The Orchard… we have been telling individuals not solely will individuals be consuming all their music digitally, [they will be] creating digitally, and and this was only a mind-blowing thought for individuals.
“What I’d prefer to see is a future the place music, as an asset class the place common individuals purchase it, is totally normalized. That that is no totally different than investing in actual property, or investing in shares of Apple or Tesla or Microsoft.”
We began a number of years earlier than Napster, however even when Napster got here alongside, individuals within the business considered it as piracy, however they have been dismissive of it as a result of in the end, why would you need some crappy mp3 obtain? Individuals need the CD, they need the liner notes, they like to carry it of their hand, the tactile expertise, and so they love going to the file retailer and all that. And so they might by no means think about that the business would flip to what it’s right this moment.
In order that’s what I’m saying about music investing. We’re investing in music, and I need this to be as normalized as digital music turned. I simply hope the timeline isn’t as lengthy.
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