Business

‘The European portfolio market will continue to accelerate.’

MBW’s World Leaders is a regular series in which we draw attention to some of the most influential figures in the industry outside of the US and UK markets. In this feature, we talk to Hein van der Ree, one of four managing partners at the Netherlands-based Pythagoras Music Foundation. World leaders backed by PPL.

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As portfolio values ​​continue to soar, the buyback space is becoming home to a number of new funds with the goal of acquiring music rights.

One of such funds is based in the Netherlands Pythagoras Music Foundation.

Founded in September 2021, PMF is funded by private and institutional investors, who have pledged 100 million euros ($117 million) to purchase the rights.

Hein van der Ree, one of PMF’s four managing partners along with John Ewbank, Rob Hendriks and Michiel Boere, told MBW that PMF is “on the way to investing those funds” and added that the fund expects value Its final is “beyond 100 million euros.

He also explained that the plan is to acquire the master rights, publication and copyright, as well as neighboring rights and the royalties of the producer.

PMF’s first acquisition, announced in September, is a 100% stake in Dutch music companies Nanada Music and Red Bullet from Dutch music industry legend Willem van Kooten, home of the Artists include Shocking Blue, Golden Earring and Focus.

The catalog contains around 30,000 copyrights and 6,500 master recordings, with what Pythagoras says are “many important Dutch artists” such as BZN, Earth & Fire and Sandy Coast.

In January, Pythagoras announced the acquisition of the Soulshock & Karlin catalog from the US-based Grammy-nominated Carsten Schack and Kenneth Karlin.

The deal includes shares of the writers and publishers in their entire 500-song catalog, including their part in works like I’m against the world by 2 Pac, Left by Jojo and Heartbreak Hotel by Whitney Houston.

Looking to future deals, PMF’s van der Ree told MBW that PMF is “currently discussing a number of possible acquisitions in the UK” and “their focus is also heavily on acquisitions”. back in Europe”.

However, the company has not ruled out acquisitions in the US, marked by the purchase of the Soulshock and Karlin portfolio.

Before working with Pythagoras, Hein van der Ree spent many years in independent music, in roles such as Mothership Music Publishing, Epitaph, as well as IMPALA and Merlin.

Here, Hein van der Ree speaks to MBW about the Pythagoras Music Foundation, his experience in independent music, and his predictions for the music rights acquisition market.


How competitive is the music rights acquisition scene in Europe right now?

The investment space in music rights is becoming more and more competitive. Investors are increasingly realizing that music rights generate steady cash flow and are a sensible addition to a portfolio that already includes accredited investments such as bonds and real estate.

We have seen some major rights deals from superstars in the last 12 months, What is your prediction for the European and global portfolio trading market in 2022?

I have no doubt that this trend will continue and I fully expect that the catalog trading market in Europe will also continue to accelerate. Especially for transactions related to the writer’s share. Writer’s share deals, in Europe, are still pretty rare.

Pythagoras has done some of those deals, and we’re the first hedge fund to focus on writer’s share buybacks, in Europe. In the United States, writers are members of the BMI, AS SOON AS POSSIBLE or SESACand those memberships are non-exclusive.

“Of course, the reason for selling is usually age. But a successful young writer might also decide to use ‘monetization moment’, to then go on to build a new portfolio. “

In Europe, as well as the UK, memberships are exclusive. Therefore, the process of working with European societies on such transactions is more complicated. You can’t just send the LOD and ask them to pass the revenue back to the fund. On the other hand, European societies are becoming more commercial in the way they do business, the CRM directive has created more competition between societies. They recognize the trend and realize that, if a writer wants to sell, they need to find a reasonable way to facilitate the desired writer.

I believe that over time all European societies will facilitate these transactions. They are there to serve their members, and if some of those members choose to take advantage of these new financing options, either for themselves or in planning their properties, they will make it. work.
Of course, the reason for selling is usually age. But a successful young writer might also decide to use the “cash moment” to then go on to build a new portfolio.

When acquiring author shares, it’s important to respect existing publishing agreements. We get the writer’s cash flow, but the publisher’s role remains the same.


PMF recently acquired a 100% stake in Dutch music companies Nanada Music and Red Bullet from Dutch music industry legend Willem van Kooten – what makes these companies attractive acquisition targets guide?

Willem van Kooten has been one of the most influential music entrepreneurs in the Netherlands for the past 50 years. He was involved in the career development of Golden Earring and Shocking Blue and later also acquired the rights to Focus. The catalogs contain 6,000 originals and 30,000 copyrights. Willem also invests in music rights in the US and UK, such as I swear by All – 4 – One and I love it, I love it recorded by Tim McGraw.

With this acquisition, Pythagoras also now has an infrastructure that we will use to manage future acquisitions and, most importantly, to optimize the management of the rights we hold. Okay. This will add value to the music rights in our portfolio.


Pythagoras also recently acquired the Soulshock & Karlin portfolio – Why is PMF interested in this deal?

Kenneth Karlin and Carsten Schack are Danish musicians who moved to Los Angeles in the 90s.

They worked hard to get their first break in the business, thanks to the support of Clive Davis, who picked their song. Before you walk out of my life was recorded by Monica on her debut album Miss Thang in 1995.

Afterwards, Kenneth and Carsten worked with 2-Pac, Whitney Houston and Jojo, to name a few. This category works consistently. The songs were recorded over 20 years ago and generate a very steady cash flow. Those ingredients make for a very compelling acquisition, and of course the songs are great.


Can we expect more acquisitions from PMF in the short term?

Sure. We are in the process of completing some transactions, most of the transactions in progress are for writer’s shares.


Speaking from your experience as a former BUMA/STEMRA CEO for over five years and a Partner at Mothership Music Publishing, the biggest challenges musicians, composers and publishers face What is the current face music?

My experience at BumaStemra has taught me a lot about the intricacies of copyright management and how important these organizations are to the protection of the rights of authors and publishers.

Every year there are hundreds of lawsuits where music users refuse to pay, for whatever reason. We read about settlements with things like FacebookTikTok, Peloton, Roblox, etc. but at the local level, there are also ongoing challenges that require each society to fight for the rights of publishers and composers.

Another major challenge is to address inefficiencies in copyright/publishing rights management at the DSP level, throughout the digital space. Advances are being made in Europe by the most powerful societies, Sacem and ICE ( PRS, GEMASTIM), who have the financial strength to invest, but are far from perfect.

“The time between when you stream a song to when a payment is made to a copyright holder these days is too long and it’s not transparent.”

The time from when you stream the song to when you pay the copyright owner today is too long, and it’s not transparent. MLC in the US is also a step forward, but the matching and identification processes are not streamlined and there are no industry standards.

“There are a lot of initiatives, also at the private/commercial level, so I expect the situation to improve but we have a long way to go, compared to the pay cycle in mainstream streaming, where one stream said in January, taking into account the labels, the following month.

“Copyright management is much more complicated than managing a master’s degree. Splitting up copyrights and multiple members of society often creates a Christmas tree for copyright holders but there must be a solution and when done it will provide double digit growth in music earnings. author and publisher.


You have worked in independent music for many years, such as Mothership, Epitaph, as well as IMPALA and Merlin – Your predictions for the market share and value of independent music in the coming years, in Europe European and global?

The independent sector has always been going strong and I have no doubt that it will stay that way. Business skills, A&R qualities, and an independent spirit are must-haves.

Impala and Merlin play an important role in ensuring that there is a level playing field between majors and independent units. At the political level, addressing the “value gap”, communicating with the EC and contributing, and shaping legislation, these factors are important and will continue to be important roles for Impala and Merlin.


What are the biggest challenges facing the music business as a whole in the Netherlands, Europe and globally at the moment?

The Netherlands is a country that is famously liberal when it comes to copyright protection and the rights of its neighbours. That is our biggest risk. In the past, the government has even managed to support a view according to which downloading from an illegal source is considered legal.

Thankfully, the European court eventually came to the logical conclusion that, if the source was illegal, the download must also be illegal.


What are the biggest opportunities for the music business in the Netherlands, in Europe and globally in 2022?

The biggest opportunity is the growing use of music in everything. There are constantly new ways to use music in devices and apps, from Peloton to TikTok and more. With the “Internet of Things”, music goes hand in hand with action. With the metaverse also comes the music and now we are trying to develop the NFTs.


What would you like to change about the music franchise and why?

There is certainly an imbalance in how streaming revenue is divided between primary use and copyright use.

The current divide is an extension of a historical division that, in today’s world, cannot be justified. It needs to be resolved. I completely agree with the IMPF’s position on this matter.


World leaders backed by PPL, a leading international collector of neighborhood rights, works with best practices to help performers and recording rights holders worldwide maximize their royalties. Founded in 1934, PPL collects money from across Africa, Asia, Australia, Europe, and North and South America. It has grossed over £500 million worldwide for its members since 2006.Worldwide music business

https://www.musicbusinessworldwide.com/the-catalog-deals-market-europe-will-continue-to-accelerate/ ‘The European portfolio market will continue to accelerate.’

Fry Electronics Team

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