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MBW’s World Leaders is a daily sequence through which we flip the highlight towards a number of the most influential business figures overseeing key worldwide markets. On this function, we converse to Jangwon Lee, CEO of Korea-based catalog shopping for fund Past Music. World Leaders is supported by PPL.
Past Music has an bold checklist of aims, and a formidable checklist of achievements in its two years of existence.
The South Korea-based music rights-buying fund says that its “mission is to revolutionize the Asian music market by instilling a strong new, quantitative monetary infrastructure for songwriters, musicians and music labels”.
It additionally already claims to be Asia’s largest music IP funding agency, having not too long ago raised a contemporary $170 million in a strategic fundraising spherical with plans to make use of that capital “to amass rights to evergreen songs”.
In line with Jangwon Lee, CEO of Past Music, the corporate is “dwelling to all-time hits similar to the Bon Jovis, Led Zeppelins and Whitney Houstons” of Asia.
“We’re probably the most well-networked and probably the most savvy participant the place we’re in Asia,” provides Lee. “And never only for deal pipelines, however after we purchase them, and our methods to maximise the worth.”
Past Music was arrange in early 2021 by hit songwriter Park Geun-tae plus Jang-won Lee (CEO), who based “Mafia Firm,” which is claimed to be Asia’s largest digital music rating platform.
In April 2021, the corporate accomplished a financing spherical price 65 billion South Korea Received ($51m) from Korean institutional buyers together with KB Securities, Base Funding, Maven Progress Companions
In December 2021, Past Music raised one other 200 billion South Korea Received ($160m) of funding from Praxis Capital.
The corporate says that the newest funding spherical ($170m in June) brings its complete quantity of capital raised to this point to almost $400 million.
Jangwon Lee can be CEO of CT Investments and Contents Applied sciences, which launched the KPOP and Korean Leisure ETF (Alternate Traded Fund) on the NYSE Arca change in September 2022.
In line with an announcement issued by CT Investments on the time, “With the launch of the KPOP and Korean Leisure ETF, buyers now have the flexibility to entry Korea Alternate-listed firms within the leisure and interactive media industries which have publicity to the potential development in Okay-pop and the broader Korean content material business”.
Commenting on the music rights M&An area in South Korea and Asia, Lee says that “there was a scarcity of a quantitative method to music catalog offers” earlier than Past Music launched in 2021, including that the Korean market specifically “was largely untapped, or much less snug with catalogs being bought and purchased”.
“When it comes to how the market approaches valuations, there’s loads of extra transparency, loads of an institutionalized manner of quantitatively approaching music offers.”
Jangwon Lee, Past Music
He provides: “It was a really conservative house. The catalog offers that occurred had been only a few and there was no clear or clear facet to the valuations, or to the legalities of issues that occurred.
“Quite a lot of songwriters and loads of labels knew comparatively little in regards to the legislation, and about contractual processes, or the monetary facet of those catalog acquisitions.
“Quite a lot of [catalogs] had been undervalued. [Sellers] had been ripped off, even when they may get higher worth for what they owned. I felt that this was each an issue and a really unhappy historical past of catalog acquisitions.”
That every one modified with the arrival of Past Music. In line with Lee, because the firm’s formation, “when it comes to how the market approaches valuations, there’s loads of extra transparency, loads of an institutionalized manner of quantitatively approaching music offers”.
Right here, Past Music CEO Jangwon Lee explains why the corporate was launched in 2021 and gives an perception into the rights-buying house in South Korea and Asia at massive…
Why did you launch past music?
A variety of [factors] occurred to return into place on the proper time. From a macro international angle, there was undoubtedly the benchmarking facet, with Hipgnosis and the massive music rights funds popping up and making a dent within the business.
I assumed it could be the best time for us within the Asian market to [pursue] such alternatives.
A second issue was my private ardour and background in my earlier firms. I’m a serial entrepreneur. That is the third firm that I based. In my earlier firm, a music expertise enterprise, I discovered the foundational data and the important thing community that acted as cornerstone property once I based Past Music.
“Whereas I used to be busy working my second firm, I used to be personally leaning in direction of doing extra capital market-facing work.”
On the identical time, all of the whereas I used to be busy working my second firm, I used to be personally leaning in direction of doing extra capital market-facing work.
I all the time thought that was the place my energy or my ardour lies, aside from music. I used to be the de facto CFO. I raised all of the capital for my earlier firm, nevertheless it wasn’t a capital market-focused enterprise.
Going again to the trifecta of how I got here to discovered this enterprise: [First was the] macro impact or affect, second, in my serial entrepreneurial journey, I occur to have a foundational data of how the Korean music rights market works, by founding the music platform enterprise; after which [reason] three, from a private energy and fervour angle, I used to be all the time leaning towards the capital markets.
You talked about macro-economic elements, globally and in Korea. In what state was the rights acquisition house in Korea on the time of launching past music, and the way has it developed since then, when it comes to the quantity and frequency of catalogs that you just see coming to market?
The notion was that folks didn’t know that you can promote or purchase rights. To a level, it was considerably frowned upon, in that the entire thought of music rights being your brainchild. It was a really early stage of market.
There have been a few gamers earlier than we began. However they had been all counting on one or two rich households’ private fortunes. It wasn’t institutionalized in any respect.
The dimensions of those early firms was on the most $10 to $20 million when it comes to catalog measurement. Since then, we’ve been on the frontier of all of those adjustments, when it comes to notion of how these catalog acquisitions should not simply [about an artist or songwriter] promoting out on [their] property, however actually in some methods, buying money to provide extra music.
“We now have been on the frontier of all of those adjustments.”
And by promoting partially, working with us to handle the property in a extra productive, extra dynamic manner. These perceptional adjustments have occurred since we grew to become lively within the house.
When it comes to measurement, previously, these rich individual-backed [deals] had been not more than $10 to twenty million. Since us, the market has matured, in order that catatalog acquisition offers occur far more regularly and in a a lot larger trend.
The final two years, there have been a number of $40 to $50 million catalog offers, which weren’t there a few years in the past. We’re a purchaser of all three of the traditionally largest music catalog offers, all within the vary of $40 to $60 million and all of those occurred within the final three years.
For the reason that market has began to mature, have you ever seen elevated competitors from firms from Europe or from North America, When it comes to competitors for offers in Korea or in wider Asia?
Not notably. We’ve seen some advances that occurred. However to my data none of them, or no less than not most of them had been very profitable. I do know of a case the place KKR approached a Korean catalog.
“The catalog acquisition enterprise or the music rights funding enterprise is actually a really native enterprise.”
And elsewhere exterior Korea in Asia, by different gamers within the States or the UK. I do assume that the catalog acquisition enterprise or the music rights funding enterprise is actually a really native enterprise.
It requires not simply capital however long-standing belief, credit score, repute, and rapport. The understanding of the intricacies of relationships between every celebration and figuring out who’s associates with whom and who just isn’t associates.
These are the nooks and crannies of the business that individuals who’ve been within the house for a very long time can learn about, nevertheless it’s troublesome to method exterior of the insular nature of the Asian market.
You’ve stated in a earlier media assertion that your music is dwelling to hits which are similar to the Bon Jovi’s and the Led Zeppelin’s of Whitney Houston’s of Asia. What do you search for within the catalogs that you just purchase or goal to probably purchase?
I wouldn’t say we’re restricted in our targets in direction of a sure kind of acquisition. I do know that there are funds which are extra aggressive in direction of publishing.
There are some which are extra lively in masters house. These are some focus areas within the States and the UK, however for us, because the market [in Asia] is comparatively youthful, the method is comparatively new and subsequently, with much less competitors.
We’ve been capable of do all sorts of offers, together with publishing and masters. We haven’t carried out producer royalties as a lot as a result of we do want having a extra lively function, when it comes to administration after we make investments/ purchase the property.
“We’ve been capable of do all sorts of offers, together with publishing and masters.”
We’ve been comparatively agnostic when it comes to whether or not we want publishing or masters. We’ve been doing each. When it comes to classic, we do want songs which have aged sufficient and with sufficient money movement information to do a comparatively quantitative projection.
And when it comes to area, I might say we’re undoubtedly extra centered in Korea and in Asia. That’s the place our forte is, the place our networks lie. The place there’s loads of upside for the market itself too. Korea is the sixth or seventh-largest home music market on the planet. Japan is quantity two.
China is rising rather a lot too. Simply add Korea and Japan collectively, it’s not too totally different from all the Europe when it comes to market measurement.
As a substitute of making an attempt to compete towards the larger gamers within the States, or the UK, or Europe, we want to be the primary to every deal.
You acquired a music catalog from Greg Wells in December… Are there plans to amass extra catalogs in North America?
I might say it’s not our uppermost precedence. It’s extra opportunistic. We’re not going to do it in any respect. It’s not towards any of our mandates or inside instructions, however there are comparatively extra alternatives in our regional focus, when it comes to upside, and when it comes to proximity.
These are for us proprietary pipelines, whereas they is likely to be harder to come up with for our international counterparts.
how lively the rights house is when it comes to catalogs coming to market and alternatives for offers?
It strikes largely in tandem with the worldwide market, as a result of rates of interest or the price of capital strikes usually in tandem [with the global market].
There’s a little little bit of delay. The US strikes the needle first, after which Korea, Japan, different elements of Asia comply with swimsuit. There’s that delay facet however usually talking, it’s a really related sample.
Earlier this yr, Q1, the market right here was slowed down not only for rights offers, however usually all of the markets. M&A startup investments enterprise capital cash: all of them got here to a halt final This autumn.
Issues are choosing up comparatively talking slightly bit since Q2, however not on the tempo that loads of these investments occurred a yr handed final yr. That’s similar to the market circumstances within the US.
You lately raised $170 million in strategic fundraising. Bringing your complete capital to round 400 million I consider, are there plans to lift any extra funds within the close to time period future?
Additionally opportunistic, I might say. We now have raised simply sufficient capital to final us by the following yr or two and most on the velocity we’re buying property.
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