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1、The Future of AudioFEBRUARY 2023AUDIO MARKET UPDATE Q1 20232Executive Summary Disruption is a familiar tune.We are believers that the audio sector is in the early stages of a 10+year investment cycle that will see great value created and unlock tremendous innovation,creating new opportunities for ar
2、tists,fans,content owners,and labels alike.Despite the volatility in the economic environment,macro trends continue to propel growth and opportunity across the audio marketplace.The number of audio streaming subscribers is forecasted to nearly double.According to MIDiA Researchs“20222030 Global Musi
3、c Forecasts|The New Era of Growth,”global streaming subscribers are anticipated to grow from 670 million(2022)to 1.1 billion(2030E).As developed markets(North America and Europe)have matured,emerging markets are becoming the key growth engine for the music industry.According to MIDiA Research,the nu
4、mber of music subscribers in the APAC region is expected to nearly double in size from 2022 to 2030.Innovative platforms offer compelling new monetization channels.TikTok is estimated to have monthly active users in excess of 1 billion who average nearly one hour on the platform a day.Music streamer
5、s are considering material subscription price increases in 2023.In 2022,many of the major music streaming platforms tested smaller price increases.However,in October 2022,Apple announced sweeping subscription price increases,which may provide the necessary motivation for other streamers to follow su
6、it.Radio remains a critical component of the audio landscape.It holds the dominant share of audience attention,particularly in the car/ad-supported listening time.According to Edison Researchs“Share of Ear”report for Q3 2022,digital radio is becoming an increasingly important component of total AM/F
7、M radio listening time,increasing from 8%in 2017 to 17%in 2022,among audiences aged 25-54.Even with a rising interest rate environment,“The Song as Asset Class”continues to be a hotly pursued investment strategy.Although the pace of catalog acquisition activity slowed in the latter portion of 2022,d
8、eals continued to get done with valuations roughly in line with 2021.2022 marked the re-emergence of the music-royalty-backed security.Apollo led the largest music royalty securitization ever with a nearly$2 billion securitization of Concord rights.Generative AI entered the zeitgeist in 2022 with th
9、e ascent of ChatGPT.Although early days,we are already seeing the impact of generative AI in music.According to Tencent Music Entertainment,it created and released more than 1,000 AI-generated songs in 2022,one of which garnered in excess of 100 million streaming views.John LambrosCo-Head of U.S.Tec
10、hnology GroupJohn.LambrosHL.comDaniel GosselsManaging DirectorDGosselsHL.comJonathan NormanManaging DirectorJonathan.NormanHL.comSameer JindalManaging DirectorSameer.JindalHL.comJohn FocosiAssociateJFocosiHL.comSonum PatelAnalystSonum.PatelHL.comRonald de GierSenior Vice PresidentRDeGierHL.comJames
11、HillDirectorJames.HillHL.comHoulihan Lokeys Global Audio Coverage TeamSources:MusicBusinessW,DigitalMusicN,B,B.Brian MarlerDirectorBMarlerHL.comConrad KolasaVice PresidentCKolasaHL.comHoulihan Lokey is a leading global investment bank with expertise in mergers and acquisitions,capital markets,financ
12、ial restructuring,and valuation.Business ServicesFinancial ServicesHealthcareConsumer,Food,and RetailEnergyIndustrialsReal Estate,Lodging,and LeisureFinancial SponsorsCoverageTechnologyOur Coverage AreasOur ServicesKey Facts and FiguresCorporate FinanceFinancial RestructuringFinancial and Valuation
13、AdvisoryEquity Capital MarketsDebt Advisory2,000+CLIENTS SERVED ANNUALLY300+MANAGINGDIRECTORS(1)2,000TOTAL FINANCIALPROFESSIONALS35LOCATIONSWORLDWIDE$2.3BREVENUE$6.5BMARKET CAPITALIZATION(2)(1)As of January 2023;excludes corporate MDs.(2)As of January 2023.3Houlihan Lokey is the trusted advisor to m
14、ore top decision-makers than any other independent global investment bank.2021 M&A Advisory RankingsGlobal Technology Transactions AdvisorDeals1Houlihan Lokey1242PricewaterhouseCoopers1183Goldman Sachs&Co1144KPMG1085JP Morgan91Source:Refinitiv.No.1Global M&A Advisor for Transactions Under$1 Billion1
15、,500+Transactions Completed Valued atMore Than$3.0 Trillion CollectivelyLeadingCapital Markets AdvisorGlobal Restructuring AdvisorGlobal M&A Fairness Opinion Advisor Over the Past 25 Years*1,000+Annual Valuation Engagements2022 M&A Advisory Rankings All Global Technology TransactionsAdvisorDeals1Hou
16、lihan Lokey1162Goldman Sachs&Co1063Morgan Stanley794Rothschild&Co765JP Morgan75Source:Refinitiv.Excludes accounting firms and brokers.2022 M&A Advisory RankingsGlobal Transactions Under$1 BillionAdvisorDeals1Houlihan Lokey3812Rothschild&Co3693JP Morgan2174Lazard2065Goldman Sachs&Co203Source:Refiniti
17、v.Excludes accounting firms and brokers.*Announced or completed transactions.4Our Tech M&A Team Is No.1 Globally With Unparalleled Reach514LOCATIONSWORLDWIDE235+TECHNOLOGY BANKERS40+MANAGINGDIRECTORS115+TECHNOLOGY DEALS IN CY22No.1TECH M&A ADVISOR*Asia-PacificBeijingFukuokaGurugramHo Chi Minh CityHo
18、ng Kong SARMumbaiNagoyaOsakaShanghaiSingaporeSydneyTokyoEurope and Middle EastAmsterdamDubaiFrankfurtLondonMadridManchesterMilanMunich ParisStockholmTel AvivZurichNorth AmericaAtlantaBostonChicagoDallasHoustonLos AngelesMiamiMinneapolisNew YorkSan FranciscoWashington,D.C.Local Technology team *Sourc
19、e:Refinitiv.Excludes accounting firms and brokers.Houlihan Lokey is positioned in the large-cap and middle-market/growth sectors.CEO-level relationships with leading tech companies Large senior team with unparalleled transaction experience Broad network including Fortune 500 relationships Highest qu
20、ality client service M&A advisory and capital-raising expertiseLARGE-CAP TRANSACTION EXPERTISE Unique global access to venture,private equity,and strategic investors Growth company focus Deep sector expertise and domain knowledge Extensive capital markets access Late-stage private through public com
21、pany orientationMIDDLE-MARKET/GROWTH SECTOR FOCUS6Selected Audio Market Experience7Tombstones included herein represent transactions closed from 2010 forward.*Selected transactions were executed by Houlihan Lokey professionals while at other firms acquired by Houlihan Lokey or by professionals from
22、a Houlihan Lokey joint venture company.has been acquired bySellside Advisorhas confirmed a Chapter 11 Plan of Reorganization,restructuring approximately$450 million of debtSecond Lien Noteholder Advisorhas received a strategic investment fromSellside Advisor*has been acquired byA portfolio company o
23、f Sellside Advisorparent company ofhas received financing fromCoran CapshawFounder ofSellside Advisorhas been acquired by EV Events Center,LLC a joint venture between Brooklyn Sports&Entertainment and AEG Presents with its regional partner The Bowery PresentsSellside Advisorhas completed a financing
24、 consisting of$24,000,000Series D Convertible Preferred StockPlacement Agenthas completed a financing transaction in connection with its acquisition of Fairness Opinionhas been acquired bySellside Advisorhas successfully placed a senior secured credit facility in support of an acquisitionPlacement A
25、genthas acquiredBuyside Advisorhas been merged intoMerger AdvisorSecured FinancingFinancial Advisor*has divested its equity stake intoFinancial Advisor*has been acquired byFinancial Advisor*a portfolio investment ofValuation Opinionhas been acquired byFinancial Advisor*$50,000,000 FinancingFinancial
26、 Advisor*investment fromFinancial Advisor*has exchanged stations withFinancial Opinionhas been acquired bySellside Advisorcompleted an$80M share/warrant repurchase,representing 100%of the outstanding securities ofFinancial Advisorhas sold a majority stake intoSellside Advisor*has been acquired bya p
27、ortfolio company ofSellside Advisorhas made an investment inFinancial Advisor*has acquiredBuyside Advisor*has been acquired bySellside Advisorhas been acquired bySellside Advisorhas acquiredFinancial Advisor*has raised equity from Wood Creek Capital to acquireFinancial Advisor*Beats Electronics,LLCh
28、as licensed certain trademarks and trade names toDaisy,LLCFairness Opinionhas been acquired byFinancial Advisor*has been acquired byFinancial Advisor*has been acquired bySellside Advisor*Preferred Stock OfferingFinancial Advisor*has acquiredBuyside Advisor*$9,500,000Series E Preferred StockFinancial
29、 Advisor*Selected Media and Entertainment Valuations and Opinions8has successfully completed a financial restructuring of its 2.4bn credit facilitiesCompany AdvisorSony Corporation of America,Providence Equity Partners,Texas Pacific Group,DLJ Merchant Banking Partners and Comcast Corporation(the“Con
30、sortium”)have agreed to acquirefor approximately$4.85 billionFinancial OpinionDreamWorks Animation,Inc.has separated fromDreamWorks LLCas a new publicly traded corporation Financial OpinionHOB Entertainment,Inc.has completed a$110 million recapitalization of its preferred and common stock Financial
31、Advisor&Fairness OpinionPlanet Acquisitions Ltd.has acquiredfor approximately$247 millionFinancial Opinionhas been acquired byCitadel Limited Partnership andNBC Universal,Inc.Financial Opinionshas paid a special dividend of$10 per share on its common stock(approximately$3 billion in aggregate)Financ
32、ial OpinionProvidence Equity Partners,3i Investments plc,and Sparrowhawk Media(the“Consortium”)have acquired the international businesses of thefor approximately$242 millionFinancial OpinionRed Envelope Entertainment,LLCa subsidiary ofNetflix,Inc.Financial OpinionValuation opinion in connection with
33、 a potential transactionFinancial OpinionWe rendered a valuation opinion for corporate planning purposes to Image Entertainment regarding its film and television libraryIP Valuationhas completed a recapitalization transaction with Financial Advisor&Fairness Opinionformerly known ashas completed the
34、restructuring of 2.8 billion of debtFinancial OpinionWe rendered a valuation opinion for financial reporting purposes to Yankee Entertainment&Sports NetworkFinancial Opinionhas completed a spin-off ofFinancial Opinionhas acquiredFinancial&Tax Due DiligenceBeats Electronics,LLChas licensed certain tr
35、ademarks and trade names toDaisy,LLCFairness Opinionhas acquiredWe rendered a valuation opinion for financial reporting purposes to Anthem Sports&Entertainment regarding the acquisition of HDNetLLC a/k/a AXS TVFinancial Opinionhas amended its Amended and Restated Exhibitor Services Agreements with C
36、inemark USA,Inc.andRegal Cinemas,Inc.Fairness OpinionWe rendered a valuation opinion for financial reporting purposes to Hasbro,Inc.regarding the feature filmFinancial Opinionhas completed a financing consisting of$24,000,000Series D Convertible Preferred StockPlacement Agenthas completed a financin
37、g transaction in connection with its acquisition of Fairness OpinionValuation of a film library for collateral lending purposes in connection with Sound Point Capital Managements acquisition of Relativity Media.Collateral Valuationd.b.a.has completed a share repurchaseFairness OpinionValuation of a
38、film and television library for collateral lending purposesCollateral ValuationValuation of an animated film and television library for collateral lending purposesCollateral ValuationWe rendered a valuation opinion for tax&financial reporting purposes to The Topps Company regarding its sports&entert
39、ainment businessFinancial OpinionWe rendered a valuation opinion for financial reporting purposes to MGM regarding its intangible assets including the MGM film and television libraryFinancial Opinionhas completed a special dividend recapitalization through an add-on to its existing term loanFinancia
40、l Opinionhas acquired a controlling interest inKids Station Inc.We rendered a valuation opinion for financial reporting purposes to Sony Pictures Television Inc.regarding the intangible assets of Kids Station Inc.Financial Opinionhas successfully completed the spin-off ofHoulihan Lokey provided fina
41、ncial opinions to the Board of Directors of both Twenty-First Century Fox and Fox Corporation.Financial OpinionMelody Holdings,L.P.,parent of SESAC Music Groupa portfolio company ofhas completed a$265 million debt recapitalizationFinancial Opiniona portfolio investment ofValuation OpinionProvided fi
42、nancial advisory services and a valuation opinion in connection with the purchase of Tribune Medias 5%interest in Chicago Entertainment Ventures,LLCFinancial OpinionAccelerated Global Content,LLCValuation opinion in connection with strategic initiatives following AGCs launchFinancial Opinionhas acqu
43、ired an interest infromValuation Specialist/ServicesValueVision Media,Inc.has entered into an agreement to restructure and extend its Series A Redeemable Convertible Preferred Stock held byGE Capital Equity Investments,Inc.The Series A Redeemable Convertible Preferred Stock has been exchanged for:4.
44、9 million shares of 12%Series B Redeemable Preferred Stock due 2014Warrants to purchase 6.0 million common shares at$0.75 per share$3.4 million cashFinancial Advisor&Fairness OpinionTombstones included herein represent transactions closed from 2004 forward.Houlihan Lokey is a leader in providing val
45、uation and financial opinions in the media and entertainment industry.The Long-Term Bull Case for Audio9New technologies are helping to better monitor IP usage and enforce paymentUse of data to better understand consumer behaviors;emergence of AI across the value chain from creation to distributionN
46、ew forms of content beyond music(e.g.,podcasts and audiobooks)driving engagement and improved economics to digital service providers(DSP)Improved Ability to MonetizeStrong structural drivers of global demand suggest upside opportunityEmergence of podcasting/audiobooks enhancing offerings and user en
47、gagementAdditional runway within established marketsusers,penetration,usageTechnology(i.e.,5G)enhancing the rapid ability to capitalize on the emerging market opportunityHigh barriers to entry with global brand commitment to increase value to consumers and create high switching costsDigital Subscrib
48、er GrowthRapidly expanding high-speed broadband internet,smartphone usage,connected vehicles,and smart speakers broaden reach and listening timeSocial media platforms,health/wellness apps,video games,and the metaverse create new use cases and monetization drive potential for outlier outcomes Distrib
49、ution opportunities creating greater reach and access to music and all audio productsEmergence of creator tools powering a new generation of music/audio creators and contentNew Platforms and TechMusic serves as a valuable hedge against inflationAsset class may be less impacted in a recessionIncrease
50、s in interest rates offset by a similar increase in growthMacro EnvironmentThere are a number of core themes and data points that support the investment thesis across the sector.Audio Sector Navigating Turbulent Macro Environment10“Its no secret that weve been challenged on multiple fronts,as we hav
51、e navigated financial volatility,rising interest rates,inflation,declines in online advertising spend,and currency headwinds.In addition,weve been navigating the complexities created by the pandemic and dealing with the impact of the war in UkraineAs we look ahead,there is tremendous momentum in bot
52、h the short and long term.Stephen Forbes Cooper,CEO and Director WMG Earnings Call,November 2022“The global music subscriber market is approaching a pivot point.It is realistic to assume that the global recession and the organic maturation of the global subscriber market will result in some slowdown
53、 of growth in 2023,even if the sector remains otherwise resilient.”January 2023“We said that 2022 would be an investment year,and it was.And in light of our recent news on cost and staff reductions,Im sure some of you are wondering if we believe that that investment was a mistake.And the answer is n
54、o and yesThings change,and the macro environment has changed significantly in the last year.And,in hindsight,I probably got a little bit carried away and overinvested relative to the uncertainty we saw shaping up in the market.”Daniel Ek,CEO Earnings Call Q4,January 2023“Home entertainment tends to
55、perform well during recessions,not least because people are inclined to cut down on leisure spend(eating out,bars,clubs,etc.)and thus spend more time at home.In previous recessions,lipstick sales boomed,reflecting their role as an affordable luxury that consumers turn to when they can no longer affo
56、rd the more expensive luxuries.Music subscriptions have a good chance of playing a similar role in the coming recession.”January 2023Music Industry Blog“Despite a softening of some ad categories in 2022 and perhaps beyond,streaming audio platforms appear positioned for growth as a main source of mus
57、ic and the increasingly popular podcast category.Advancements in advertising efficiency and audience measurement,along with significant content investments,should help drive the segments continued ad revenue growth over the next 10 years.”“When revenue performance disappoints,what typically follows
58、is a downward revision of advertising spendingBut,inevitably,history repeats itself and ad budgets get trimmed.”January 2023Media&Internet 2023 Year End Report,January 20232023 poses several challenges to the industry with a potential recession and its implications for consumer/advertiser spend.An I
59、ndustry on the Move11(1)Goldman Sachs,“Music Is in the Air”;Morgan Stanley,“Micd Up:Is Podcasting the Next Big Thing?”(July 2021);other publicly available information.$32$35$42$45$50$54$59$65$71$77$84$91$12$12$14$16$16$17$18$18$19$20$21$23$27$14$26$29$30$31$33$34$35$36$37$1$2$3$4$5$6$7$8$9$11$13$15$
60、72$54$73$91$99$107$114$123$133$143$154$20212022E2023E2024E2025E2026E2027E2028E2029E2030ERecorded MusicMusic PublishingLive MusicPodcastingAudio Industry Expected to Double by 2030.Spurred by the Growth in Recorded Music Revenue,Which Is Driven Mainly by Streaming$5$5$5$5$5$4$4$4$3$3$3$3$2
61、$1$1$1$1$1$3$3$3$3$3$3$4$4$4$4$4$11$13$17$19$22$25$28$31$34$38$42$46$20$22$26$28$30$32$35$39$42$45$49$5320022E2023E2024E2025E2026E2027E2028E2029E2030EPhysicalDigital(ex.Streaming)OtherStreamingGlobal recorded music net revenue(i.e.,record label or publisher share);streaming includes reven
62、ue from subscriptions and ads;$in billions(1)$3The audio industry demonstrated resilience during COVID-19 and is poised for considerable growth over the next 10 years.Total global industry revenues by segment;$in billions(1)Music Streamers Look to Emerging Markets for Growth12(1)MIDiA Research Music
63、 Model.Much of Anticipated Subscriber Growth Coming From APACGlobal music streaming subscribers(1)Emerging Markets Represent Big Opportunity:Today,Spotify has penetrated nearly a third of its 600 million-person TAM in established markets.While it will likely beat a lower ARPU initially,the emerging
64、markets opportunity is sizeable,representing a large growth engine over the next several years.”SPOT Initiating Coverage,October 2022“Emerging markets will represent the majority of global music subscribers by 2026,and this is going to drive the next wave of evolution for music distribution companie
65、s.Emerging markets are going to be the engine room of growth for streaming users and subscriber growth.The music culture of emerging markets is booming likeit has never done before,and that will accelerate over the coming years.”Mark Mulligan,MIDiA Research,January 20222.1%CAGR 2022 2030E7.6%10.6%5.
66、5%3.8%With North American and European markets maturing,music streamers see less-saturated markets as a key area of growth.90095924768536373798793998280485666758493658567074281,01
67、91,0621,2022E2023E2024E2025E2026E2027E2028E2029E2030ENorth AmericaEuropeAsia-PacificLatin AmericaRest of WorldCompetition Intensified Among Large Global Streamers13(1)Morgan Stanley,“Media and Entertainment Has the Streaming Reckoning Arrived?,”December 2022.Percentages may not sum to 100
68、%due to rounding.DSP Platform Market Share 2018Global market share%(1)“The slowing subscriber growth should be the catalyst for what needs to come next,especially in developed markets,unlocking growth pocketsthrough differentiation.Western DSPs have managed to grow with largely undifferentiated prod
69、uct propositions.Music rights holders should explorecreative ways in which they can empower their DSP partners with differentiated content assets to enable them to super-serve specific consumersegments and,thus,unlock extra growth within them.”December 202238%23%11%6%4%3%2%13%OthersOthers34%15%15%7%
70、14%2%6%8%DSP Platform Market Share 2022Spotify has lost share to competitors in recent years but is expected to maintain its current position in the coming years.New Platforms Are Driving Music Industry Revenue Expansion14New Platforms Are Driving Global Advertising Revenue to the Music IndustryGlob
71、al revenue for DSPs and new platforms(i.e.,non-DSP streamers);$in billions(1)(1)Goldman Sachs,“Music Is in the Air”;Morgan Stanley,“Micd Up:Is Podcasting the Next Big Thing?”(July 2021);other publicly available information.(2)Music Industry Blog,“The Music Industry Needs a New Format,”October 2022.(
72、3)MIDiA,“Growth From TransparencyReframing the Value of Music Through Creator Rights,”November 2021.But Requires New Distribution Methodology to Fairly Compensate ArtistsDSP Revenue From AdsDSP Revenue From SubscriptionsNon-DSP Revenue From AdsNon-DSP streaming platforms have been a boon to the indu
73、stry,notwithstanding some growing pains.The value music is bringing to digital platforms is clearly accelerating.UGC revenue was worth$4 billion in 2022,with$2.2 billion of that being potential music rights holder income.With the current innovation in social media,this potential income is set to dou
74、ble to$8 billion by 2028.(2)MIDiA introduces the idea of a“creator rights framework”as a potential future distribution model,whereby music-making,experiential music(which they define as the emergence of experiential music such as live streaming,fan-funded,fan clubs,and virtual events),and the image
75、rights of artists and their brand can be packaged and licensed at scale.(2)“The music industry needs a new format for non-DSP environments,one that will ideally pave the way for metaverse monetization also.Non-DSP music behaviors rarely revolve around the full-length song,nor full-length music video
76、s.Instead,they revolve around components and snippets of songs as well as the music creators non-music activity.The music industry needs a licensable format that reflects this new usage.”(3)$26.5$29.1$31.9$35.0$38.4$42.1$46.2$50.7$55.6$7.9$8.9$10.1$11.3$12.8$14.3$16.1$18.1$20.2$3.4$4.0$4.8$5.7$6.8$8
77、.0$9.5$11.3$13.5$37.8$42.0$46.7$52.0$57.9$64.5$71.8$80.1$89.3202220232024202520262027202820292030What TikTok Could Mean for the Music Industry 15 TikToks usage continues to increase;MAU total 1.1 billion,with each user consuming 28 hours of content per month.(2)TikToks rapid success has been both a
78、benefit and a challenge for the music industry.TikTok has helped labels identify new artists and cultivate engaged fan bases;however,music royalties paid by TikTok have been an area of acute focus.In 2022,the company was expected to generate$10 billion of revenue.(3)It is estimated that music is ess
79、ential to 88%of TikToks user engagement.(2)However,only$200 million were paid to rightsholders.(1)Licensing negotiations are frequent,and many are refencing YouTube as a benchmark for resetting terms.TikTok Diversifies Into New PlatformsThe TikTok Value Gap(1)$2,600M$200M260Bhr/yr280Bhr/yrEngagement
80、 With Music on PlatformPayment to Rights OwnersYouTube generates 280 billion hours of engagement with music content each year vs.260 billion hours for TikTok,yet it pays the industry$2.6 billion vs.$200 million for TikTok“New artists and musical creators are a vibrant community within TikTok,and Sou
81、ndOnis designed to support them as they take the first steps in their career.Were incredibly excited about how this will surface and propel new talent and how SoundOn will contribute to an increasingly diverse and growing global music industry.”(6)March 2022:TikTok launched an all-in-one platform fo
82、r music marketing and distribution.The platform allows artists to upload their music directly to TikTok and begin earning royalties when that music is used on both TikTok and other music platforms.Ole Obermann,Global Head of Music,TikTok“Ressos brand philosophy is extremely unique,and we believe tha
83、t an offering such as ours doesnt exist in the market.Resso is designed to revolutionize how music is consumed by filling the longstanding gap between music streaming and social networking.We understand our audience and know what they want,and our app gives them the platform to use music as a medium
84、 to connect.”(5)March 2020:TikTok launched a streaming service(currently available in India,Brazil,and Indonesia)to compete with the likes of Spotify and Apple Music.The company is currently in talks with the major labels to expand its service globally but is facing headwinds after failing to renew
85、its contract with Sony Music.(4)Hari Nair,Head of Music Content&Partnership,Resso India(1)Morgan Stanley,Music Everywhere,December 2022.(2)Bank of America,Year Ahead 2023,January 2023.(3)Financial Times,November 2022.(4)Wall Street Journal,“TikTok Parent ByteDance Sets Sights on Spotify With Music S
86、treaming Expansion,”October 2022.(5)Music Plus+,“Interview of the Week Hari Nair,”March 2022.(6)TikTok Press Release,March 2022.(7)Music Business Worldwide,February 2023.With a realignment of renumeration to rights holders,TikTok could represent a multibillion-dollar opportunity for the music indust
87、ry.“TikTok announced that it had struck a deal with Snoop Dogg for a major streaming exclusive.Perhaps of more concern to the majors:Snoop Dogg has inked a go-forward agreement to directly distribute the Death Row catalog to ByteDance products(including TikTok and Resso)via TikToks SoundOn.”(7)Will
88、We See Further Subscription Price Hikes in 2023?16Selected Recent Price Increase Announcements(1)“Apple Music may have opened the floodgates on Monday when it announced that it will raise prices on its Apple Music subscription service Apples decision to ask subscribers for more money signals a tide
89、change and will likely embolden competitors to follow suitPrices for music subscription services have remained stubbornly low for the past decadeto the chagrin of rights holders and creators who want higher royalties from streaming platforms.”October 2022“We are confident that price increases by pla
90、tforms will be positively accepted by consumers.Sweden,one of the most penetrated markets,is an interesting example.It is one of the most mature music markets and provides some clue on the impact of price increases.Spotify increased the price of its core package from SEK99 to SEK109 in Q1 21.Subsequ
91、ently,the Swedish market growth accelerated from 4%in 2020 to 12%in 2021.”January 2023(1)Music Business Worldwide,company releases,other publicly available information.“So,to put things in context,in 2022,we increased our price point in more than 40 markets around the world.So,its definitely somethi
92、ng that were doing,and were looking at it as a balanced portfolio approach where in some markets,were selectively increasing prices because were in a more mature place.In some markets,were mostly focused on subscriber growth.So thats our general approach.SPOT earnings call,January 2023Subscription p
93、rices have been stagnant for years;Apple may have paved the way for other streamers to increase prices.PlatformDatePlan/ChangeRegionJanuary 2023Unlimited/+10%U.S./U.K.November 2022Family/+13%U.K.October 2022Premier/+10%Family/+13%Annual/+10%GlobalOctober 2022Premium/+28%FamilyGlobalOctober 2022Premi
94、um/+10%Premium/+20%U.S./FranceU.K.April 2022Premium/+11%GlobalApril 2022Student/+20%Family/(varies)U.S.,U.K.,10 European marketsPodcasts Growing in Importance,With Daily Listening Increasing Across All Demos17(1)Morgan Stanley,“Micd Up:Is Podcasting the Next Big Thing?”July 2021 and Spotify forecast
95、s.(2)Audio Active Group,Share of Ear,Q3 2022.(3)Activate Consulting,Activate Technology&Media Outlook 2023.“Digital audio”includes audio streamed via mobile and desktop/laptop;“radio”excludes digital radio.9%22%12%9%5%3%3%13%31%33%27%15%9%6%44%41%175%200%200%200%100%13-1718-2425-3435-4445-5455-6465+
96、Q3 2017Q3 2022%Change(17-22)$2$3$4$5$6$7$8$9$11$13$02220232024202520262027202820292030Daily Podcast Listening Has Increased Across All Demographics%of listeners who listen daily(2)Most Music/Podcast Listeners Use the Same ServiceU.S.,2022%of listeners that engaged with music and podcasts
97、at least once per month(3)“Millennials and Gen Z represent the biggest demos when it comes to podcast listenershipthey remained the primary drivers of podcast streams in 2022but this trend may not last for much longer.In 2022,it was the outlying demographics that showed the strongest growthOur findi
98、ngs show that both teenagers(ages 1317)and the 55+category showed increased engagement,with 42%49%growth.”Spotify Advertising Team,January 2023of music/podcast listeners use the same service to listen to both music and podcasts81%Podcast Market Growing 22%YoYGlobal podcast total addressable market;$
99、in billions(1)39%37%30%14%12%9%8%5%5%3%2%Podcast Sector Selected Transaction SnapshotAfter a frenzy of M&A activity in 2019 and 2020,M&A activity has slowed,with a greater focus on podcast tech companies thatsupport podcasting platforms(via advertising/data and analytics and audience insights).Sourc
100、es:Company filings,other publicly available information.Dec.21June 2021Feb.2021Nov.2020Sept.2020July 2020June 2020Mar.2019Feb.2019Feb.22Mar.2021Dec.2020Oct.2020Aug.2019Feb.2022:Spotify acquires podcast ad measurement company Podsights to help advertisers more accurately measure the impact and action
101、s driven by their podcast ads.Feb.2022:Spotify acquires podcast analytics platform Chartable,which provides audience insights and promotional tools to podcasters.Dec.2021Spotify acquires Australia-based podcast hosting,distribution,and monetization platform Whooshkaa,including its tech to enable rad
102、io broadcasters to turn their existing audio content into on-demand podcasts.June 2021:Amazon acquires podcast adtechplatform Art19,which provides tools for the hosting,distribution,and monetization of podcasts and detailed measurement metrics for publishers and advertisers.June 2021:Spotify acquire
103、s Podz,a startup providing tools to enhance podcast discovery by users.Mar.2021:Audio-focused content creator and platform Audacy acquires self-serve podcast marketplace Podcorn,which enables advertisers to connect with podcasters for native sponsorships.Feb.2021:Audio company and podcast publisher
104、iHeartMedia acquires Triton Digital,a global platform focused on audio,podcasts,and providing industry metrics.Dec.2020:Amazon acquires Wondery,an independent podcast producer and network.Nov.2020:Spotify acquires podcast advertising and publishing platform Megaphone,which enables advertisers to sca
105、le their reach through the Megaphone Targeted Marketplace.Oct.2020:iHeartMedia acquires Voxnest,provider of a suite of advertising capabilities and tools to develop its capabilities in podcast ad tech.Sept.2020:Apple acquires Subverse(Scout FM),a startup podcast publisher that creates smart stations
106、 for podcast listeners.July 2020:Audio entertainment company Sirius XM acquires podcast platform and creator of original podcast content Stitcher.Aug.2019:Audacyacquires creator,distributor,and monetizer of independent podcast content Pineapple Street Media.June 2020:Audio entertainment company Siri
107、us XM acquires digital media,entertainment,and podcast service provider Audio Ventures.Aug.2019:Audacyacquires creator of premium on-demand audio and podcast content Cadence13.Mar.2019:Spotify acquires podcast creator Cutler Media.Feb.2019:Spotify acquires Gimlet Media,which produces narrative podca
108、sts and enables users to share,subscribe to,and download podcasts.Feb.2019:Spotify acquires Anchor FM,a podcast technology platform focused on hosting and distributing podcasts.Oct.2022:Spotify acquires content moderation company Kinzen,which uses machine learning to identify disinformation and dang
109、erous content within online communities.July 2022:Malcolm Gladwells Pushkin Industries acquires Transmitter Media,a podcast producer.This is Pushkins first acquisition.18July 2022:Acastacquires Podchaser,an operator of the worlds largest podcast database35%32%26%17%16%6%4%3%3%3%3%$4$2020202030Audiob
110、ook Market Expanding Rapidly19“As audio formats blur,audiobooks can capitalize on the new attention accruing to podcasts.As attention inflation(i.e.,people consuming multiple formats simultaneously)leads consumers to multitask entertainment,audiobooks can also occupy the same background listening sp
111、ace as podcasts and music,and multi-entertainment ecosystems,like Apple and Amazon,can cross-promote audiobooks with related content like films and television shows based on books.”(2)January 2023(1)Storytel Earnings Call,November 2022.(2)MIDiA,“Audiobook Consumer ProfileFollowing in Podcasts Footst
112、eps,”January 2023.“Were encouraged because we think fundamentally that audiobooks have a massive opportunity and that there are very few consumers that are currently participating in the ecosystem.And if you compare to our other verticals,music and podcasting,we thought pretty much the same thingNow
113、 were just heads-down focused on executing.And during 2023,youll see a lot of new things roll out in the audiobook category from Spotify.”Daniel Ek,Founder,CEOSPOT earnings call,January 2023Global audiobook revenues;$in billions(1)Audiobook Market TAMAudible Leads the Audiobook MarketSurveyors were
114、asked where they normally access audiobooks,Q3 22 by segment(U.S.,U.K.,Australia,Canada,Germany,France,Sweden,South Korea)(2)Global Music Concert Ticket Sales Expected to be Robust in 202320Global Music Ticket Sales$in billions(1)(1)Morgan Stanley,“Media&EntertainmentHas the Streaming Reckoning Arri
115、ved,”December 2022.(2)Live Nation Survey,November 2022.(3)Activate Consulting,Activate Technology&Media Outlook 2023.Concerts May Be Less Impacted in a DownturnVirtual Concert Attendance Down in 2022%represent the share of individuals who ranked category in top 3(2)Last Experience to Cut BackTop Pri
116、ority Experience30%27%20212022“Taking off after the global pandemic,immersive virtual reality concerts seemed,for a moment,poised to become the music industrys next big thing.However,following our collective return to IRL shows,the momentum behind the phenomenon seems to have slowed down significant
117、ly.Perhaps Harris endorsement will change thatperhaps not.”January 2023%of U.S.music listeners that attended a live virtual music event(3)“Less than a year after the final coronavirus restrictions were dropped on concert capacity and attendance,the countrys largest two concert promoters are forecast
118、ing record sales in 2023 across a broad swath of building categories and genresAEG Presents president for North America Rick Mueller says that ticket sales for shows already on sale in 2023 indicate record revenue and attendance at every capacity level in the concert space.”November 2022$22.6$5.8$11
119、.3$20.7$22.9$24.0$24.9$25.82019A2020A2021A2022E2023E2024E2025E2026EDespite recession concerns,2023 is anticipated to be a strong year for the segment,as concerts and music festivals are a top priority experience for consumers.84%68%50%24%15%14%10%Concerts/MusicFestivalsVacation TravelDining OutLive
120、Sporting EventsBar/Lounge/ClubGoing to the MoviesLive Theater6%13%23%25%39%23%29%Radio Remains a Critical Component of Audio21(1)Beyond Words,“Spoken-Word Audio Statistics 2022:Listener Habits&Demographics.”(2)Audio Active Group,“Share of Ear,”Q3 2022.(3)Morgan Stanley,“Media&EntertainmentHas the St
121、reaming Reckoning Arrived,”December 2022.(4)Activate Consulting,Activate Technology&Media Outlook 2023.“Digital audio”includes audio streamed via mobile and desktop/laptop;“radio”excludes digital radio.Supporting a Steady OutlookGlobal broadcast radio revenues;$in billions(3)74%Radios share of all a
122、d-supported audio listening(2)89%Radios share of all ad-supported listening in the car(2)88%Of adults listen to the radio weekly(1)12 hoursThe average amount of time listeners are tuning in weekly(1)$25.9$25.5$26.2$25.9$26.420222023202420252026Contrary to the common belief that the segment is in a r
123、apid decline,radios signal still reaches a massive,engaged audience.Average daily audio time per adult aged 18+by type(4)1:231:301:371:401:501:201:141:111:111:062:432:442:482:512:56200222026Digital AudioRadio45%38%63%55%58%58%51%49%42%42%of total audio time.However,Engagement on Streaming
124、 Platforms Has Surpassed RadioRadio Fundamentals Endureand Streaming is Growing as a%of total AM/FM Listening,Among Persons 25-54Share of audio time spent between over-the-air AM/FM listening and digital streaming AM/FM radio,persons aged 25-54(2)92%92%91%89%89%85%83%8%8%9%11%11%15%17%Q3 2016Q3 2017
125、Q3 2018Q3 2019Q3 2020Q3 2021Q3 2022Over-the-Air AM/FM RadioAM/FM via StreamingMusic Catalog Market Update22(1)U.S.Department of the Treasury.(2)CNM Lab,Music Business Worldwide,Billboard,Variety.(3)Variety Intelligence,Barclays and J.P.Morgan equity research,other publicly disclosed information.The
126、low interest rate environment of the past decade was certainly one factor in rising catalog valuations.Following the Federal Reserves 0.25%rate increase in March 2022,the pace of catalog transactions has slowed.However,throughout 2022,catalogs continued to trade at aggregate valuation roughly in lin
127、e with 2021.A few factors are potentially supporting the sustained valuation levels:The influx of capital in recent years earmarked for catalog acquisitions.An upward revision in music industry growth forecasts,supported by stronger than expected sub-growth,new monetization channels(e.g.,TikTok,Pelo
128、ton,metaverse),and the over-indexing of catalogs in streaming.In 2020/2021,there were concerns that the Biden administration would amend the treatment of capital gains.With the post-midterm divided government,a revision in capital gains tax treatment seems less likely.0.0%1.0%2.0%3.0%4.0%5.0%6.0%201
129、0200.0 x5.0 x10.0 x15.0 x20.0 x25.0 x020406080200022Number of TransactionsAverage NPSCatalog Deal Activity Has CooledCapital Costs Have Risen30Y U.S.Treasury Yield(1)Catalog transaction volume(2)and average NPS(3)The pace of deal activity cooled in 2022;ho
130、wever,catalogs that transacted did so at aggregate valuations in line with 2021.Recent Catalog Acquisitions23Q1 2022Q3 2022Q1 2023Q4 2022Q4 2021Q2 2022BMG AcquiresTina Turner CatalogOct.2021Value:$300MBMG AcquiresMotley Crue CatalogNov.2021Value:$150MBMG and KKR AcquireZZ Top CatalogDec.2021Value:$5
131、0MSony Music AcquiresBruce Springsteen CatalogDec.2021Value:$500MUMG AcquiresNeil Diamond CatalogFeb.2022Value:$145MPink Floyd Catalog Rumored AcquisitionMay 2022Value:$500M+UMG Acquires Sting CatalogFeb.2022Value:$300MHipgnosis Acquires Justin Timberlake CatalogMay 2022Value:$100MBMG Acquires Hadda
132、way CatalogNov.2022Value:N/ADomain Capital Acquires Iggy Azalea CatalogNov.2022Value:N/APrimary Wave AcquiresHuey Lewis CatalogNov.2022Primary Wave Acquires Whitney Houston CatalogNov.2022Value:$50M$100MBMG Acquires Peter Frampton CatalogDec.2022Value:N/ABMG Acquires Chris Rea CatalogDec.2022Value:N
133、/ALitmus Acquires Keith Urban CatalogDec.2022Value:N/APrimary Wave AcquiresAmerica CatalogJan.2022Value:$40MPrimary Wave AcquiresPaul Rodgers CatalogJan.2022Value:$20MSony Music AcquiresBob Dylan CatalogJan.2022Value:$175MWMG AcquiresDavid Bowie CatalogJan.2022Value:$250MBMG Acquires Jean-Michel Jar
134、re CatalogJuly 2022Value:N/AReach Music Acquires Chuck D CatalogSept.2022Value:N/AConcord AcquiresPhil Collins CatalogSept.2022Value:$300MHarbourview Acquires Stake in Brad Paisley CatalogJuly 2022Value:N/AInfluence Media Partners Acquires Future CatalogSept.2022Value:$75MHarbourview Acquires Stake
135、in Lady A CatalogJuly 2022Value:N/AShamrock/Universal AcquiresDr.Dre CatalogJan.2023Value:$200M+Primary Wave Acquires Manzarek/Krieger rights in The Doors CatalogJan.2023WMG Acquires Yes CatalogJan.2023Value:N/AHipgnosis AcquiresJustin Bieber CatalogJan.2023Value:$200M+Source:Company announcements,M
136、usicBusinessW,DigitalMusicN,B,B,V,other publicly available information.The Song as an Asset Class242011:Kobalt raises$350 million fundMay 2016:Shamrock Capital closes$250 million EntertainmentIP FundSept.2022:blackx Music Fund launched an intial raise of$100 millionAug.2020:Concord raises$1 billion
137、in debt financingMar.2021:Influence Media Partners launches$100 million catalog fundJuly.2022:SESAC closes$335 million bond transactionDec.2021:Northleaf raises$303.8 million through securities backed by music rights2002020212022July 2014:Round Hill establishes$209 million+Royalty Fund IJ
138、une 2018:Hipgnosis raises$268.4 million in IPOOct.2021:KKR acquires Kobalt KMR Music Royalties portfolio for$1.1 billionAug.2022:Carlyle invests$500 million into newly launched Litmus Music Oct.2021:Blackstone invests$1 billion in music rights via HipgnosisDec.2022:Apollo priced a$1.8 billion bond b
139、acked by Concords music rightsReflects Music ABS TransactionFounded in 2019Founded in 2013IthacaHoldingsFounded in 2011Feb.2022:Iconoclast launches with backing from PimcoAug.2022:Litmus launches with$500 million of backing from CarlyleOct.2021:HarbourView launches with$1 billion of capital from Apo
140、lloOct.2021:Lyric launches with$500 million backed by Spirit Music GroupAug.2019:Hipgnosis raises$62.8 million in stock offeringSept.2020:Hipgnosis raises$500 million in stock offeringApr.2021:Reservoir SPACs to acquire more catalogsFeb.2022:KKR sold$732 million of securities supported by publishing
141、 and sound securitiesAug.2022:Hipgnosis raises$222 million through an ABSSept.2019:Hipgnosis raises$297.2 million in stock offeringApr.2019:Hipgnosis raises$185.6 million in stock offeringFounded in 2017 Founded in 2010June 2017:Royalty Exchange raises$6.4 million in later-stage VCNov.2020:Round Hil
142、l raises$282 million in fund IPOMar.2022:Kobalt raises$550 million for catalog acquisitionsOct.2022:Brookfield commits$1.7 billion to Primary Wave June 2016:Primary Wave establishes$300 million+IP Fund IFeb.2019:Primary Wave establishes$500 million+IP Fund IIJan.2018:Round Hill establishes$263 milli
143、on Royalty Fund IIFollowing a sustained period of equity-focused capital raises,2022 marked the resurgence of music-royalty-backed securities.Source:Company announcements,MusicBusinessW,DigitalMusicN,B,B,V,Pitchbook,S&P Global Capital IQ,other publicly available information.Until recently,artificial
144、 intelligence has primarily been used in repetitive,rules-based tasks.Rapid advancements in computing and data storage has allowed for the development of generative AI models that,in response to human prompts,can produce novel content,including articles,blog/social media posts,poetry,artwork,imagery
145、,program code,and audio/music.Text is currently the most advanced application of generative AI.Large language models(LLM)ingest massive data sets and,through a process of trial and error,learn how to synthesize clear,human-like responses to questions and produce longer-form written content.Not far b
146、ehind in its development is generative AI for music.Music AI functions in a similar way to LLMsoftware is programmed to parse through immense amounts of data and create tracks.At present,the technology is adept at producing instrumental songs and has recently shown progress with AI-generated vocals
147、that mimic the human voice.In 2022,Tencent Music Entertainment announced that it created and released more than 1,000 AI-created tracks containing vocals and that one of those tracks had more than 100 million streams.Thousands of new AI tracks are being created daily.In November 22,Boomy,an AI music
148、 company,announced that 10 million+original songs had been created on its platform.Some have speculated that as this technology advances,capabilities will emerge that will allow for the real-time creation of bespoke tracks for specific settings.Presently,generative AI in music doesnt seem to be nega
149、tively impacting musicians;however,there are concerns the industry is grappling with:(i)the potential for artist displacement,(ii)copyright infringement/derivative works,and(iii)oversaturated/homogenized content.Regardless of the potential concerns,several bootstrapped AI music companies have attrac
150、ted strategic and financial investorinterest in recent months.Generative AI and the Music Industry25Image created using DALLE“Other applications for generative AI include creating“entirely new formats for listening,”said Endel co-founder/CEO OlegStavitsky.“This includes personalized music for gaming
151、,wellness,and soundtracksThe music business,which is alreadygrappling with oversaturation,will need to recalibrate.Instead of focusing on consumption and owning intellectual property,more companies may shift to artist services and the development of tools that aid song creationMajor music companies
152、arealso investing in and establishing relationships with AI startupsThe advancement of AI-generated music has understandablysparked a debate over its ethical and legal use.Currently,the U.S.Copyright Office will not register a work created solely byAI,but it will register works created with human in
153、put.However,what constitutes that input has yet to be clearly defined.”December 2022Generative AI could be a spark for radical changes in the way music is created and consumed.Ann.DateTypeCompanyInvestor/Acquirer$M Invested/PurchasedCompany DescriptionOctober2022Acquisition$32MSupertone offers voice
154、 synthesis and cloning for singing and speaking,enabling users to create artificial voices that sound like real humans.October2022Financing$101MStability AI is a community-drive,open-source AI company for imagery,language,audio,video,etc.June2022FinancingN/AAuthentic Artists makes interactive virtua
155、l artists using deep learning technologies.June2022Financing$3.1MBoomy is a generative AI company that enables anyone with a smartphone to produce and monetize original songs.April 2022FinancingIndividuals$3.8MSoundfuls platform gives creators the ability to generate royalty-free tracks using AI.Apr
156、il 2022Financing$15MEndels app creates individually tailored soundscapes that are designed to help people relax,focus,and sleep.March2022Financing$14.5MUsing AI and building blocks supplied by real-world musicians,LifeScore delivers an ever-evolving composition.February2022AcquisitionN/AAI Music use
157、s artificial intelligence to generate tailor-made music and adapt existing tracks into new forms.Select Recent Transactions in Generative AI26Sources:S&P Global Capital IQ,PitchBook,451 Research,Mergermarket,Music Business Worldwide,WallStreet Research.The Music Landscape Is Evolving With Digital Re
158、platforming27Sources:S&P Global Capital IQ,PitchBook,451 Research.MUSIC VALUE CHAIN:Live Concert StreamingArtist and Label ServicesArtist PlatformsAI Tools and AnalyticsRights ManagementDIY and DistributionDistributorsDSPsB2BIndie LabelsLarge-Scale PublishersMajor LabelsLive Event Mgmt.Fan Engagemen
159、tDAWs,Creator Platforms,and ServicesGenerative AIVideo and CreativeLabels and Publishing Distribution Artist Services and Rights Management Production and Engagement Tools Notable Sector Transactions28(1)Primary Wave Press Release,October 2022.(2)Music Business Worldwide,“Kobalt Music Group Sold to
160、U.S.-Based Private Equity Firm Francisco Partners,”September 2022.Company OverviewHeadquarters:New York,New YorkFounded:2006Description:Primary Wave is an independent music publisher with a portfolio that includes songs by Stevie Nicks,Whitney Houston,Bob Marley,etc.;it also raises,creates,and manag
161、es funds that are used to acquire music rights Announced:October 2022 Brookfield will buy a significant minority interest and provide an additional$1.7 billion(1)The deal is valued in excess of$2 billion CAA will become a strategic partner and minority shareholder$700 million from the companys funds
162、 1 and 2 will go into a new permanent vehicle with more than$300 million worth of deals,previously finalized year-to-date,and$600 million of pending transactions expected to be completed by year-end“We are thrilled to deliver a comprehensive capital solution to Larry and the team at Primary Wave to
163、support their continued acquisition of the worlds most iconic music IPStrongsecular growth trends,scarcity value of assets,and the continued penetration of music in new forms of content delivery underpin this significant commitment to the assetclass.”(1)Selected CommentaryAngelo Rufino,Managing Part
164、ner at BrookfieldpppCompany OverviewSelected CommentaryHeadquarters:New York,New YorkFounded:2000Description:Kobalts creator-focus music services offer music publishing,label services,and innovative technology to foster a more transparent environment for artists Announced:September 2022 Francisco Pa
165、rtners purchased a 90%stake in the company for$750 million(2)MUSIC and Dundee Partners also acquired a minority stake In February 2021,Kobalt sold AWAL and Kobalt Neighboring Rights to Sony Music for$430 million“Our investment should help bring more resources,experience,and alignment to continue to
166、build Kobalt as a premier destination for creators,further grow AMRA as the only globaldigital licensing platform,and support and invest in technology innovation across the entire Kobalt ecosystem to address the needs of creators and publisher.”(2)Primary Wave Partners With Brookfield&CAATransaction
167、 highlights financial institutions continued interest in music IPFrancisco Acquires a Majority Stake In KobaltImproving the content creator experience remains a key focus for music companies Matt Spetzler,Partner at Francisco PartnersTransaction HighlightsTransaction HighlightsNotable Sector Transac
168、tions(cont.)29(1)Music Business Worldwide,“Spotify to Acquire AI Voice Platform Sonantic,”June 2022.(2)Music Business Worldwide,“Hybe Acquires Fake Voice AI Company Supertone in$32M Deal,”October 2022.(3)Pulse News,“K-Pop Powerhouse Hybe Buys AI Sound Startup Supertone,”September 2022.Company Overvi
169、ewSelected CommentarypCompany OverviewSelected CommentaryHYBE,the publicly traded music giant behind superstars BTS,is in diversification mode to become less financially reliant on its flagship act.Founded in 2020,Supertone claims tobe able to create a hyper-realistic and expressive voice that is no
170、t distinguishable from real humansCould a major push into artificial intelligence be next on the agenda?”(2)Headquarters:Seoul,South KoreaFounded:2020Description:Supertones AI technology offers voice synthesis and cloning for singing and speaking,enabling users to create artificial voices that sound
171、 like real humans Announced:October 2022$31.75 million valuation(2)HYBE previously invested$3.6 million of developmental capital into Supertone in February 2021,valuing the company at$17.5 million(3)“We believe in the power voice has and its ability to foster a deeper connection with listeners aroun
172、d the world,and we know we can be better than ever on the worlds largest audioplatform.”(1)Headquarters:London,U.K.Founded:2018Description:Sonantic uses AI to create believable human voices from text and partners with actors to create models that emulate their voice to be used in various projects An
173、nounced:June 2022 Financials not disclosed News of the acquisition broke a week after Spotifys investor day,where CEO Daniel Ek announced the companys ambition to move into the audiobook space.With Sonantics technology,Spotify is well positioned to dominate the space(1)Prior funding round in March 2
174、020 was led by EQT VenturesZeena Qureshi and John Flynn,Co-Founders of SonanticSpotify Acquires SonanticBringing flexibility and a steady income to actorsHYBE Acquires SupertoneOffering artists the opportunity to monetize their voices effortlesslyTransaction HighlightsTransaction HighlightsNotable S
175、ector Transactions(cont.)30(1)Music Business Worldwide,“Downtown Makes Strategic Investment in LinkedIn for Creatives Vampr,”November 2022.(2)Music Business Worldwide,“Downtown Buys Independent Services Company FUGA,”January 2020.(3)Music Business Worldwide,“Downtown Music Holdings Acquires Curve Ro
176、yalty Systems,”January 2023.(4)PR Newswire,“Songtradr Expands Its B2B Music Technology Solutions Acquires Leading Advanced AI Search Company Musicube,”June 2022.(Company OverviewSelected CommentaryCompany OverviewSelected Commentary“In order to have the worlds best B2B music search and recommendatio
177、n technology,we need premier metadata enrichment technology,which is a key component of the B2Bmusic supply chain.Adding the Musicube technologies,data,and extraordinary team to Songtradr will help accelerate our enterprise customer user experience.“(4)Headquarters:Hamburg,GermanyFounded:2019Descrip
178、tion:Musicube develops music search technology that uses AI to tag songs into categories and builds personalized playlists according to mood,genre,and artist preferences Announced:June 2022 Financials not disclosed Songtradr also recently acquired Massive Music(June 2021),Big Sync Music(February 201
179、9),and Song Zu(March 2021)(4)“In Downtown Music,weve combined innovative technology and industry-leading services to create an offering that empowers music businesses and their creators.Curveperfectly complements our mission to be the leading music industry platform,and their past work speaks to the
180、ir high standards and pioneering technology.”(3)Headquarters:London,U.K.Founded:2019Description:Curve develops a music royalty software that is able to distill massive volumes of data into standard statements in minutes Announced:January 2022 Financials not disclosed Downtown also invested in networ
181、king platform Vampr in November of 2022(1)Downtown has been highly acquisitive in recent years,purchasing B2B music tech company FUGA in 2020 and indie distributor CD Baby in 2019(2)Paul Wiltshire,CEO of SongtradrDowntown Music Acquires CurveExemplifies the increasing importance of data in monetizat
182、ion capabilitiesSongtradrAcquires MusicubeImproving the user experience for music platformsPieter van Rijn,President of Downtown MusicTransaction HighlightsTransaction HighlightsNotable Sector Transactions(cont.)31(Company OverviewSelected Commentary“QED invests in companies driving the future of fi
183、nance,and Stem is leading that charge in the music industry.Stem co-founder and CEO Milanas vision for the future of payments inthe music business promises to disrupt the status quo and empower artists,labels,and creators of all sizes.”(2)Headquarters:New York,New YorkFounded:2015Description:Stem is
184、 the developer of a platform that provides distribution and payment solutions for artists,labels,and managers that works to improve efficiency and transparency Announced April 2022 The$20 million investment was led by QED Investors and Block,with previous investors Slow Ventures and Quality Control
185、also participating(1)QED Partner Frank Rotman will join the Stem board as part of the transaction This investment will help fund Stems next growth phase,enabling it to offer a wider range of financial tools to artists and labelsFrank Rotman,Founding Partner at QEDStem Press Release,April 2022.Music
186、Business Worldwide,“Music Distribution and Payments Platform Stem Raises$20 Million in Fresh Funding Round,”April 2022.Orfium Press Release,January 2023.Company OverviewSelected Commentary“Were committed to solving the entertainment industrys most complex problems.We continue to develop technology s
187、olutions built on the latest in machine learning and AI,empowering rights owners,creators,and key stakeholders to realize more value as new platforms for media consumption emerge and scale.(3)Headquarters:Malibu,CaliforniaFounded:2015Description:Orfium is a music management platform that identifies
188、online copyright violations and monetizes content for producers,publishers,record companies,and other IP owners Announced:November 2022 The$27 million investment was led by Big Pi Ventures,with participation from other undisclosed investors In January 2023,Orfium acquired Soundmouse,a music cue shee
189、t reporting platform,that will allow it to scale its product offering in the music rights management space(3)Orfium Press ReleaseStem Receives Funding From QED and BlockBringing in technology to improve the artist experienceOrfium Receives Funding From Big Pi VenturesImproving the user experience fo
190、r music platformsTransaction HighlightsTransaction HighlightsPE Increasingly Acquiring At-Scale Assets Across the Music Landscape32Leading Global PE Funds Investing Across the SectorSources:S&P Global Capital IQ,PitchBook,451 Research,Mergermarket,Music Business Worldwide,WallStreet Research.Publish
191、ingRights AdministrationTalent/PublishingIthaca HoldingsRights and CollectionAudio Hardware and SoftwareAudio SoftwareInstrumentsDistributionDistributionAudio Retail DSPDistributionIn-VenuePublishingIn-VenueIn-VenueIn-VenueQ2 19Q3 19Q4 19Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q4 21Q1 22Q2 22With Notable
192、 Growth Investing Activity in Past Three Years33July 2019:Glade Brook and CFV invested$60M in Series D fundingVal:$600MOct.2019:NEA invested$30M in development capitalVal:$200MMar.2020:Blisceinvested$56M in Series B fundingVal:$522MAug.2020:St.Baker Family Office invested$30M in Series C fundingSt.B
193、aker Family OfficeVal:$165MOct.2020:Summit Partners invested$375M in Series A fundingVal:$135MNov.2020:Carlyle invested$165M in development capital Val:n/aFeb.2021:Goldman Sachs invested$55M in Series D fundingVal:n/aApr.2021:Tiger Global invested$155M in Series F fundingVal:$4.3BMar.2021:EQT and Bl
194、ackstone invested$450M in development capital Val:$1.4BApr.2021:Park West and Sony invested$1B in venture funding Val:$28.7BJune 2021:Oaktree Capital invested$375M in development capital Val:n/aJune 2021:Argo and Perennial invested$50M in Series D funding Val:$300MOct.2021:Andreessen Horowitz invest
195、ed$50Min Series C fundingVal:$4.3BNov.2021:Andreessen Horowitz invested$55M in Series A fundingVal:$335MSources:S&P Global Capital IQ,PitchBook,451 Research,Mergermarket,Music Business Worldwide,WallStreet Research.June 2020:KKR invested$48M in development capitalVal:n/aMar.2021:Andreessen Horowitz
196、and Apple invested$50M in Series B fundingVal:n/aNov.2019:East Bridge invested$30M in venture funding Val:n/aOct.2020:Next Wave Partners invested development capitalVal:n/aMar.2022:GoDigitalMedia Group invested$100M in Series D funding Val:n/aSept.2019:Alibaba invested$700M in venture fundingVal:n/a
197、Mar.2022:Goodwater Capital and Naverinvested$65M in Series C Venture fundingVal:n/aSept.2022:83North,Highland Europe,and Saban Ventures invested$58.7M in venture fundingVal:n/aRepresentative Strategic Buyer M&A and Investments34Sources:S&P Global Capital IQ,PitchBook,451 Research,Mergermarket,Music
198、Business Worldwide,WallStreet Research.CompanyHeadquartersNumber of DealsInvestments and M&ANew York,NY34New York,NY28Santa Monica,CA23Stockholm,Sweden16Shenzhen,China16Cupertino,CA8New York,NY8Seattle,WA8Beverly Hills,CA8New York,NY7Beijing,China6XimalayaPublic Market Performance35RadioCreator Tool
199、sLabels and PublishersDTC Audio StreamingEventsSource:S&P Capital IQ as of February 10,2023.Recent Share Price Performance-24.7%-15.5%-36.0%-22.9%-13.9%-9.4%-50%-40%-30%-20%-10%0%10%Feb-22Mar-22Apr-22May-22Jun-22Jul-22Aug-22Sep-22Oct-22Nov-22Dec-22Jan-23Feb-23DTC Audio StreamingLabels/PublishersRadi
200、oEventsCreator ToolsS&P 500Public Market Performance(Cont.)36TEV/NTM Revenue MultiplesSource:S&P Capital IQ as of January 29,2023.Note:Please refer to previous slide for comp set.Please note that audio streamers excludes Apple,Amazon and Alphabet.TEV/NTM EBITDA Multiples2.23x1.5x1.7x1.9x2.1x2.3x2.5x
201、2.7x2.9x3.1x3.3x17.66x10.0 x15.0 x20.0 x25.0 x7.94x7.0 x7.5x8.0 x8.5x9.0 x22.79x10.0 x15.0 x20.0 x25.0 x30.0 x35.0 x40.0 x4.98x3.0 x3.5x4.0 x4.5x5.0 x5.5x6.0 x6.5xDTC Audio StreamersCreator ToolsLabels and PublishersRadioEventsPublic Market Performance(Cont.)37Source:S&P Capital IQ as of January 13,
202、2023.EVEN T S(EV/CY 2023E EBITDA)R AD I O (EV/CY 2023E EBITDA)Mean:16.3xLABELS AND PUBLISHERS(EV/CY 2023E EBITDA)Mean:8.1xMean:21.7xC R EAT O R T O O L S(EV/CY 2023E Revenue)Mean:3.9xSpoken AudioD T C AU D I O ST R EAM I N G (EV/CY 2023E Revenue)Mean:1.9xTEV/CY 2023E RevenueTEV/CY 2023E RevenueTEV/C
203、Y 2023E EBITDASEC T O R SU M M AR Y21.9x18.8x18.3x17.4x16.2x16.0 x13.6x8.2x11.8x10.8x8.7x8.0 x6.9x6.9x6.0 x6.0 x38.8x13.2x13.1xNM8.2x6.7x5.0 x4.9x3.7x3.2x2.6x0.8x1.9x16.3x8.1x21.7x3.9xDTC Audio StreamingMusic Labels and PublishersRadioEventsCreator Tools5.1x3.6x3.6x3.1x2.0 x1.2x1.1x0.8x0.6xNM1.4x0.7
204、x0.3xRecent Sector M&A Detail38Sources:S&P Global Capital IQ,PitchBook,451 Research,Mergermarket,Music Business Worldwide,WallStreet Research.($in millions)TargetAnnouncedTargetAcquirerTarget DescriptionTEVJan-23SoundmouseOrfiumSoundmouse provides music cue sheet reporting and monitoring for the bro
205、adcast and entertainment production spaces-Dec-22AMI EntertmentCoral Tree PartnersProvides music and music video entertainment,as well as advanced digital advertising capabilities,to bars and restaurants through its digital jukebox offering$175.0 Nov-22PIASUniversal Music GroupPIAS operates as a mus
206、ic label and distributor.Its label segment oversees the companys various label interests,while the distribution segment provides support to its own in-house labels and 100 independent partners-Oct-22SoundHouse Acquisitions,LLCHarbourView EquitySoundHouse acquires music royalty income streams primari
207、ly from distressed music labels$325.0 Oct-22SupertoneHybeSupertones AI technology offers voice synthesis and cloning for singing and speaking,enabling users to create artificial voices that sound like real humans$32.0 Oct-22KinzenSpotifyContent moderation tech company that uses machine learning to p
208、rotect online communities from disinformation campaigns and other harmful content-Sep-22AudiotekaGrupa Wirtualna PolskaDeveloper of a mobile application designed to offer audiobooks from various publishers.The companys application offers unlimited free online storage for audiobooks,online bookmarks
209、synchronization,and cross-platform access,enabling users to get entertainment on the go$20.0 Sep-22Kobalt Music GroupFrancisco PartnersKobalt Music Group is a tech-enabled music rights manager and services over 700k songs for 30k songwriters$750.0 Aug-22HitCoConcordHitCo represents close to 900,000
210、songs and trades in recorded music,music publishing,theatrical and original productions-Aug-22Native TongueConcordNative Tongue is an Australian music publisher and is home to writers including Courtney Barnett,Stuart Crichton(Backstreet Boys,Kesha,Kygo),Sophie Curtis(Cosmos Midnight,Jessica Mauboy,
211、aespa),etc.-Aug-22TelamoBMGGerman music label known for its schlager music(upbeat,electronic music).The 29-employee company has a 15%market share in Germany-Jul-22PodchaserAcastOperator of a podcast database platform designed to facilitate browsing and coverage of podcasts$27.2 Jul-22Transmitter Med
212、iaPushkin IndustriesTransmitter Media is a Peabody nominated creative podcast company specializing in highly edited and beautifully sound designed work that has reached millions of listeners worldwide-Jul-22PodcastOneLiveOnePodcastOne is an advertiser-supported podcast network$60.0 Jul-22SonanticSpo
213、tifySonatic utilizes machine learning to create believable human voices on-demand in an easy and accessible photoshop for a voice platform,enabling creative experts to edit,sculpt,and direct performances in real-time for efficient workflows$93.0 Jun-22Alliance EntertainmentAdara Acquisition CorpDist
214、ributor and wholesaler of home entertainment products and consumer electronics across Florida$480.0 Jun-22FindawaySpotifyDeveloper of audiobooks committed to expanding the audiobook marketplace for content creators globally$143.0 Recent Sector M&A Detail(cont.)39Sources:S&P Global Capital IQ,PitchBo
215、ok,451 Research,Mergermarket,Music Business Worldwide,WallStreet Research.($in millions)TargetAnnouncedTargetAcquirerTarget DescriptionTEVJun-22MusicubeSongtradrMusicube develops music search technology that uses AI to tag songs into categories and builds personalized playlists according to mood,gen
216、re and artist preferences-May-22ImagesoundLivingBridge EPProvider of in store audio/visual solutions to large customers in retail environments-Apr-22DeezerI2PO SADeveloper and operator of an online music streaming platform headquartered in France$1,130.0 Mar-22TouchTunes MusicTA AssociatesProvides e
217、ntertainment media experiences for brands via its digital jukebox offering-Mar-22Dag en Nacht MediaPodimoOperator of a podcast platform based out of Amsterdam,Netherlands-Mar-22Music World EntertainmentAPX Capital GroupOperator of a media management company and record label home located in Houston,T
218、exas-Mar-22AmplifyChapel(UK)Amplify uses web3 innovation to connect artists and creators,and give them the ability to create long lasting income from live gigs-after the gigs are over,using DeFi-Mar-22BandcampEpic GamesArtists/listener centric music publishing platform for the discovery and purchase
219、 of music-Feb-22Latina Podcasters NetworkPod Digital MediaOperator of a global podcast network based out of Houston,Texas focused on Latina and Latinx women-Feb-22Absolute Label ServicesUtopia MusicProvider of music label services intended to help artists take their music to market-Feb-22PodsightsSp
220、otifyDeveloper of cross-platform analytics and attribution tool designed to help advertisers better track the impact of their podcasts-Feb-22ChartableSpotifyDeveloper of podcast analytics and marketing tools designed to assist creators to understand,grow and monetize their audiences-Feb-22Death Row
221、RecordsCalvin Broadus(Snoop Dogg)Manufacturer and wholesaler of music records intended to offer music albums and videos-Feb-22AI MusicApple AI Music uses artificial intelligence to generate tailor-made music,and adapts existing tracks in to new forms-Jan-22Ultra RecordsSony Music EntertainmentOperat
222、or of a global music label company with a focus on electronic music-Jan-22Vistas Media AcquisitionAnghamiA digital music entertainment technology platform in the Middle East and North Africa featuring licensed content from leading Arabic labels,independent artists,and distributors$220.0 Recent Secto
223、r Financing Detail40Sources:S&P Global Capital IQ,PitchBook,451 Research,Mergermarket,Music Business Worldwide,WallStreet Research.($in millions)InvestmentAnnouncedTargetInvestorTarget DescriptionAmountFeb-23FeverGoldman SachsLive entertainment tech company that runs exclusive events and directs its
224、 users to restaurents,concerts,nightlight,sports events fashion shows,pop-ups and more.$110.0 Dec-22Audio UpBen Lurie,othersPodcast content creator focused on the development and ownership of premium audio IP$10.0 Nov-22VamprDowntown MusicVampr,launched in 2016,is dubbed as the LinkedIn for Creative
225、s-Nov-22OrfiumBig Pi VenturesOrfium is a music management platform that identifies online copyright violations and monetizes content for producers,publishers,record companies and other IP owners$27.0 Nov-22Wonder InventionsIVPThe companys platform automatically composes tracks that synchronize preci
226、sely with their source video,allowing creators to forego stock music$30.0 Oct-22Stability AICoatue,Lightspeed,OShaughnessy VenturesDeveloper of an open AI tool that allows users to create images and audio based on text imputs$101.0 Oct-22Primary WaveBrookfield Asset Management&CAAAn independent musi
227、c publisher with a portfolio that includes songs by Stevie Nicks,Whitney Houston,etc.Primary Wave also raises and manages funds that are used to acquire music rights$1,700.0 Sep-22Kuku FMFundamentum,Paramark,existing investorsKuku FM is Indias leading audio content platform that creates,produces,mar
228、kets and distributes exclusive premium audio contents in the form of audiobooks,stories,summaries,courses and more categories via its mobile app and website available on android and iOS$21.8 Sep-22Podimo83North,Headline,Heartcore,Highland Europe,Saban,othersPodimo is a podcast and short-form audio p
229、latform that offers personalized recommendations for users and supports the podcast creators through a revenue share model,driven by their subscription-based service$57.0 Aug-22ProofAndreessen Horowitz,BR Capital,Flamingo DAO,othersOperator of a media,podcast and in-person event company intended for
230、 NFT members$50.0 Aug-22SongfinchValor Equity PartnersDeveloper of an online music platform intended to let users buy personalized songs from musicians$17.0 Jul-22StationheadButtonwood Group AdvisorsStationhead is a social music platform for artists and fans to connect,livestream,and create&share cu
231、rated playlists.The platform has 5 million users with 30k stations across 200 countries$12.0 Jul-22AssemblyAIInsight Partners,Accel,Y Combinator,othersDeveloper of a speech recognition system that uses AI to automate audio transcriptions$30.0 Jul-22Blue WirePirate Entrepreneurship Fund,Dot Capital,E
232、ast Carolina Angels Blue Wire is a sports podcasting network,with 150+podcasts that create high-quality,original audio content,and has partnered with world-class athletes that are looking to grow their audio platform and expand their influence$2.5 Jun-22NextoryAcacia Asset Management,Industrifonden,
233、LK FinansSweden-based subscription model audiobook platform allowing users to download and listen to a library of books and comics$10.0 Jun-22SoundstripeCraft Ventures,Escalate Capital Partners,Overline,othersDeveloper of music licensing and streaming platform that offers unlimited royalty-free musi
234、c and sound effects for creating video content by a subscription model$8.7 May-22VibenomicsPanoramic VenturesVibenomics offers licensed background music playlists for businesses,as well as professional voice announcements and so-called targeted“audio out-of-home”advertisements$12.3 Recent Sector Fin
235、ancing Detail(cont.)41Sources:S&P Global Capital IQ,PitchBook,451 Research,Mergermarket,Music Business Worldwide,WallStreet Research.($in millions)InvestmentAnnouncedTargetInvestorTarget DescriptionAmountMay-22ColorcastCapital Factory,Connetic Ventures,eonCapital,othersThe companys platform connects
236、 streaming commentators to audiences of sports fanatics and event consumers,enabling users to add a take on the latest sports games,political episodes,live awards shows,or any other engaging events$6.8 May-22MUSICLiontree,Matt Pincus,JS Capital Management,othersMUSIC is a new holding company focused
237、 on long-term investments in music technology,music publishers,and record labels$200.0 Apr-22RiversideOren Zeev,Lachy Groomand Seven Seven SixDeveloper of a recording software offering audio,live stream,video downloading,remote podcast recording,and other related services$35.0 Apr-22SoundfulIndividu
238、alsSoundfuls platform gives creators the ability to generate royalty free tracks made using AI$3.8 Apr-22Cinq Music GroupGoDigital Media GroupDeveloper of a global music distribution and rights management platform designed to reach music fans via hundreds of digital,physical and mobile retailers$100
239、.0 Apr-22Stem DisintermediaQED Investors,Block,Slow Ventures,Quality ControlStem is the developer of a platform that provides distribution and payment solutions for Artists,Labels and Managers that works to improve efficiency and transparency.$20.0 Apr-22EndelTrue Ventures,Waverley CapitalDeveloper
240、of a personalized soundscape platform intended to generate adaptive sound environments$15.0 Mar-22TrebelMNC Media InvestmentDeveloper of a music application designed to download music at no cost and listen to that music on-demand and offline$25.0 Mar-22Kuku FMKrafton,India Quotient,3one4 Capital,Ver
241、tex Ventures,othersKuku FM is Indias leading audio content platform that creates,produces,markets and distributes exclusive premium audio contents in the form of audiobooks,stories,summaries,courses and more categories via its mobile app and website available on android and iOS$19.5 Mar-22LifeScoreO
242、ctopus Ventures,Warner Music GroupUsing AI and building blocks supplied by real-world musicians,LifeScore delivers an ever-evolving score$14.5 Mar-22Pocket FMGoodwater Capital,Naver,Tanglin Venture PartnersThe companys open Audiobook platform offering a selection of audiobooks in English as well as
243、7 local Indian languages$65.0 Mar-22LuminaryDave Chappelle(through Pilot Boy Productions),NEAPodcast app offering a premium subscription tier to access exclusive content from popular/established podcasters-Feb-22EncoreBattery VenturesDeveloper of live music application designed to help more artists
244、make a living from their music and to provide new experiences for them and their fans$9.0 Feb-22VurblGFR FundAudio platform that allows users to create,upload and share content(including podcasts,audiobooks,sleep sounds,ASMR,speeches,binaural beats,etc.)$6.0 Jan-22SoundOnTaiwan MobileSoundOn is a Ta
245、iwan-based podcast company-Jan-22Lemonada MediaBertelsmann,Greycroft,Intuition Capital,MWMLemonada Media is a podcast network that shares the unfiltered version of the human experience$8.0 Jan-22AmazeVRMurex Partners,Partners InvestmentDeveloper of VR concert platform intended to bring artists close
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