Music business: Is musical talent the new commodity?

Shakira (L) signed the rights of her music titles to Hipgnosis Songs Fund and in recent months Bob Dylan sold the rights to 600 of his songs to Universal Music Publishing Group (UMG) in a deal believed to be worth more than $300 million. (Shutterstock/File Photos)
Shakira (L) signed the rights of her music titles to Hipgnosis Songs Fund and in recent months Bob Dylan sold the rights to 600 of his songs to Universal Music Publishing Group (UMG) in a deal believed to be worth more than $300 million. (Shutterstock/File Photos)
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Updated 16 January 2021

Music business: Is musical talent the new commodity?

Shakira (L) signed the rights of her music titles to Hipgnosis Songs Fund and in recent months Bob Dylan sold the rights to 600 of his songs to Universal Music Publishing Group (UMG) in a deal believed to be worth more than $300 million. (Shutterstock/File Photos)
  • What does this new way of doing business mean for the music industry?

BERN: Monetization of an artist’s craft has always been a tricky issue. It is also a bifurcated one: Very few top names earn big money and the vast majority just get by, if even that.

That holds true in all art forms, but particularly in the music industry. In 2017 the top 1 percent of recording artists dominated income in all categories — 78 percent of music sales, 68 percent of live performances, and 56 percent of merchandise.

Very few recording artists operate at that level. The chosen few have recently started taking control of their future earnings power by signing mega deals on their music rights. In recent months Bob Dylan sold the rights to 600 of his songs to Universal Music Publishing Group (UMG) in a deal believed to be worth more than $300 million.

Others have followed. Shakira, Neil Young, Lindsey Buckingham, Debbie Harry, and Mark Ronson signed the rights to all or part of their music titles to Hipgnosis Songs Fund. This catapulted Hipgnosis, which was founded and is run by former Elton John manager Merck Mecuriadis, into the super league when it comes to buying rights and providing upfront liquidity to the stars of the music business.

It is a win-win move for both parties allowing the artist to capitalize on their name recognition while they are on top of their game, while ideally constituting little risk for the music publishers, because they only choose musicians whose name recognition they expect to be of enduring quality.

The risk, which looks manageable, is taken by the publisher, which is different to the Bowie bonds of the late 1990s, which were self-liquidating debt instruments with a 10-year tenor that used future revenues of the recording asset as collateral.

In both cases the artist aimed to monetize future revenue streams rolling the risk of future performance onto an end-investor, which in the case of Bowie was the general public who decided to invest in the bonds and in the case of the recent transactions a music publisher taking on equity risk.

Hipgnosis, which has become a force to be reckoned with thanks to these transactions, has been doing something right for some time. It floated on the London stock exchange in 2018, immediately reaching a market cap of £1.25 billion ($1.71 billion). Its revenues for the first six months of 2020 reached £50 billion.

The deals constitute tremendous earnings power for the company — as long as the popularity of songs and artists remain, which is a portfolio risk because the company signed on several artists.

What does this new way of doing business mean for the music industry? It turns a few names into a sought-after bankable commodity, leaving the rest of the pack behind with no negating, and very little, earnings power.

This phenomenon always existed but was exacerbated when the importance of streaming services for distributing music rose, because Apple, Amazon, and Spotify markedly tilted the earnings power in favor of the publishers rather than the artists.

Taylor Swift fought against that trend in 2018, when her condition to sign on with UMG was that the publisher shared the proceeds of the sale of its Spotify stake with all the artists. This was remarkable, because Swift did not just optimize her own earnings but allowed the company’s whole stable of artists to share in the windfall.

For the smaller artists, earning money has not become any easier since then. It also had its pitfalls for the superstars. The coronavirus disease (COVID-19) pandemic, with its restrictions on live performances, has taken a further toll on the industry.

In that sense the recent deals allow the artists to take their mind off new earnings structures, as the industry is dealing with the vagaries of a pandemic while new forms of disseminating music evolve. The superstars can now focus on their craft — or whatever else takes their fancy.

The question remains, what this means for the great masses of lesser-known or unknown artists and how they can earn a living? Most great names have started small. Will this new way of financing the top 1 percent help or hinder smaller artists to develop into the next Shakira or Neil Diamond while they struggle to keep body and soul together lacking any bargaining power?

The new deals are great for the top 1 percent of artists and for the publishers. These deals are a real win-win for stars and publishers. They are big business with a capital B.

  • Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources. Twitter: @MeyerResources

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO
Updated 8 min 47 sec ago

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO
  • Mubadala to take part in private placements before IPO
  • Ontario Teachers’ Pension Plan Board also investing $100 million

NEW YORK: UAE sovereign investment vehicle Mubadala plans to invest $100 million in Full Truck Alliance Co., a Chinese trucking startup that styles itself as “Uber for trucks,” Bloomberg reported.
Full Truck Alliance (FTA) said on Tuesday it is aiming for a valuation of over $20 billion in its US initial public offering, marking another high-profile Chinese stock market listing in New York this year.
This coincides with a private placement in which the Ontario Teachers’ Pension Plan Board and Mubadala will each purchase $100 million worth of Class A ordinary shares, Bloomberg said.
FTA, more popularly referred to as Manbang in China, said it is offering 82.5 million American Depositary Shares (ADS) at between $17 and $19 per ADS. Each ADS represents 20 Class A ordinary shares.
At the top end of the price range, FTA could raise as much as $1.57 billion from the IPO,which would make it the largest US listing for a Chinese company this year, according to data provider Refinitiv. Chinese vaping firm RLX Technology Inc. raised $1.4 billion in its US IPO in January.
Those figures are expected to be dwarfed in the coming weeks when China’s largest ride-hailing company Didi Chuxing launches its IPO, which is expected to be the biggest share sale of the year. Reuters has previously reported that Didi could raise as much as $10 billion from its stock market flotation.
A spate of richly valued Chinese tech startups have targeted IPOs in the US in recent years, as they can tap into the deepest capital pool in the world and avoid tighter regulatory scrutiny in major Asian exchanges like Hong Kong.
Last year, Chinese companies raised $12 billion from US listings, nearly triple the amount raised in 2019, according to Refinitiv data. This year is expected to comfortably surpass last year’s tally.
Chinese companies have so far raised $5.82 billion in the United States this year, according to Refinitiv data.
FTA, formed out of a merger in 2017 between two digital freight platforms, Yunmanman and Huochebang, is led by former Alibaba executive Peter Hui Zhang.
The company runs a mobile app that connects truck drivers to people that need to ship items within China. It was the world’s largest digital-freight platform by gross transaction value last year, according to research from China Insights Consultancy that was commissioned by the company.
In November, FTA was valued at nearly $12 billion after a $1.7 billion investment, Reuters reported. That investment round was led by Japanese conglomerate SoftBank’s Vision Fund, Sequoia Capital, Permira Capital and Fidelity.
China’s tech giant Tencent Holdings Ltd. is also one of the company’s backers.
Morgan Stanley, CICC and Goldman Sachs are among the underwriters for FTA’s offering in New York. The company plans to list on the New York Stock Exchange under the symbol “YMM.”


Saudi Arabia dominates slow MENA IPO market in Q1

Saudi Arabia dominates slow MENA IPO market in Q1
Updated 19 min 35 sec ago

Saudi Arabia dominates slow MENA IPO market in Q1

Saudi Arabia dominates slow MENA IPO market in Q1
  • MENA IPOs lagged the global market in Q1, which was the best first quarter in terms of both deal numbers and proceeds for the 20 years

DUBAI: Saudi Arabian companies accounted for two of the three initial public offerings in the Middle East and North Africa region during the first quarter of 2021, representing 96 percent of the amount raised, according to consultancy EY.
The two listings on the Tadawul in Q1 raised $281.6 million. That compares with $1.45 billion from four listings for the whole of 2020, which represented a 78 percent share of the MENA IPO market, EY said in a report.
Alkhorayef Water & Power Technologies raised $144 million after its retail offering was oversubscribed by 1,511 percent and the institutional offering by 6,320 percent. Theeb Rent a Car Company collected $138 million from its IPO, which was oversubscribed by 6,010 percent for the institutional tranche and 3,385 percent for the retail offering.
MENA IPOs lagged the global market in Q1, which was the best first quarter in terms of both deal numbers and proceeds for the 20 years, generating $105.6 billion from 430 offerings, EY said. MENA IPOs raised $294.8 million, a 64 percent decline from the same period in 2020 and down from $925 million Q4, 2020.
“The MENA region’s IPO market was off to a slower than expected start in 2021, despite expectations for an increase in IPO activity after an uptick and stronger performance in Q4 of 2020,” said Matthew Benson, EY MENA strategy and transactions leader. “We expect IPO activity to bounce back over the coming months while economic conditions in the region continue to improve, aided by the accelerated vaccine rollouts and the possibility of reaching herd immunity against COVID-19.”


Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups

Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups
Updated 40 min 33 sec ago

Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups

Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups
  • Wa’ed has up to SR100 million ($27 million) at its disposal to hand out in loans and venture capital investments to commercially feasible ventures

DHAHRAN: Saudi Aramco’s entrepreneurship arm Wa’ed on Wednesday launched its first roadshow event to unearth and fund the next generation of Saudi entrepreneurs.

Wa’ed has up to SR100 million ($27 million) at its disposal to hand out in loans and venture capital investments to commercially feasible ventures that would fill existing gaps in the Kingdom’s economy.

Aiming to support game-changing ideas that will create new jobs, the Wa’ed entrepreneurship roadshow will hold a series of events in six Saudi cities from September to December.

Jubail, Yanbu, Riyadh, Jeddah, Makkah, and Madinah will play host to the tour being organized in association with some of Wa’ed’s key partners, including the Royal Commission for Jubail and Yanbu, Monsha’at, the Saudi General Authority for Small and Medium Enterprises, development firm Namaa Almunawara, and investment company Wadi Makkah.

“These shows are a coordinated effort with our partners to find and fund new entrepreneurs who will add value to the Saudi entrepreneurial ecosystem and accelerate the pace of economic diversification in the Kingdom,” said Wassim Basrawi, Wa’ed managing director.

Wa’ed’s aim is to seek bold ideas with potential to positively contribute to the development and diversification of the Saudi economy.

“Seventy out of over 100 startups we supported were the first of their kind and received their first-ever investment from us, and this is what we are targeting now; distinguished and not yet supported startups and ideas,” Basrawi added.

Online applications for all Saudi-based entrepreneurs were due to open on Wednesday. After two selection rounds, successful applicants will be invited to participate in the roadshows in their cities, where events will include startup pitch competitions in the style of TV’s “Shark Tank,” and industry discussions and debate.

The tour will focus on sectors such as financial, agricultural, and environmental technology, industrial applications, reverse engineering, drones, petrochemicals, supply chain, and tourism.

In addition to Wa’ed’s incubation and mentoring services, participants will either earn fast-track funding, including loans for up to SR5 million or venture capital investments with up to SR19 million, and non-refundable grants of SR25,000, SR50,000, and SR75,000.

Amin Nasser, chief executive officer of Aramco, said: “Wa’ed has come a long way since 2011 to support talented Saudis to help them turn their business ideas into real drivers for growth and innovation.

“But the next 10 years will be even more crucial for our entrepreneurial ecosystem as the pace of transformation in-Kingdom accelerates with opportunities emerging in new business growth sectors such as technology, e-commerce, and renewable energy.

“That’s why the roadshows by Wa’ed in six cities across the Kingdom are important to make the most of these opportunities to nurture and enable a more vibrant entrepreneurial culture in Saudi Arabia.”

All those taking part in the roadshow will be able to join and benefit from Wa’ed’s Innovation Ecosystem Society which has more than 1,500 local and international members and around 400 mentors.

Enrichment events and meetings with inspirational speakers, as well as interview-based podcasts, workshops, and webinars will start ahead of the competition and will continue until the end of the program in order to provide value to as many potential beneficiaries from the initiative as possible.

Through the scheme, Wa’ed intends to expand its portfolio more evenly throughout the country. Currently, around 60 percent of its investments are in the Eastern Province, with the remainder distributed around the Kingdom.

Wa’ed has also set a goal to double its annual loan and venture capital deal volume by 2023 in a bid to support the Kingdom’s entrepreneurial ecosystem and keep up with the pace of transformation and emerging opportunities in crucial sectors including technology, e-commerce, and renewable energy.

Wa’ed currently supports more than 100 entrepreneurial businesses in Saudi Arabia by providing the necessary financial support, guidance, and tools for entrepreneurs with creative ideas and startups.

Saudi Aramco’s entrepreneurship center was established in 2011 with a mission to nurture Saudi entrepreneurs and their businesses to strive and help develop the Saudi economy. Since its inception, Wa’ed has invested more than $100 million.

It is the only no-collateral lender and largest institutional venture capital investor in Saudi-based startups.


Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai

Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai
Updated 16 June 2021

Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai

Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai
  • The new listings bring Indonesia’s total value of listed sukuk to $19.75 billion

DUBAI: Three sukuk tranches, amounting to $3 billion, have been listed on Nasdaq Dubai by the Indonesian government.
The new listings bring Indonesia’s total value of listed sukuk to $19.75 billion, the Dubai Media Office reported.
“This mounting presence of international issuers clearly underscores Dubai’s active role in promoting Islamic economy, shariah-compliant financial markets as well as supporting sustainable economic development across the world,” Hamed Ali, CEO of Nasdaq Dubai, said.
The three sukuk tranches include one of $1.25 billion yielding 1.5 percent on a five-year maturity; a $1 billion bond with a coupon of 2.55 percent yield and 10 years maturity; and a $750 million green sukuk yielding 3.55 percent yield over 30 years.
Many central banks and sovereign wealth funds in Southeast Asia and the Middle East have expressed strong interest in the paper, with a combined order book exceeding $10.3 billion.


Saudi Electricity approves Apple Pay for settling bills

Saudi Electricity approves Apple Pay for settling bills
Updated 16 June 2021

Saudi Electricity approves Apple Pay for settling bills

Saudi Electricity approves Apple Pay for settling bills

RIYADH: The Saudi Electricity Company has made it possible for its subscribers to pay their electricity bills through Apple Pay, SPA reported.

The Kingdom’s electricity provider already offers payment through credit and debit cards through its website, through a bank account, by phone, certified bank check and through point-of-sale locations.

Apple Pay launched in Saudi Arabia in February 2019.