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The activity across the audio sector in Q1 2021 continues to reinforce our view of the two powerful and fundamental investment themes in the category: we are at the start of a 10+ year investment cycle in music, broadly; and, the re-platforming of the industry to the digital tier that is well underway will introduce greater monetization opportunities on a truly global scale for creators, artists, fans, indie labels, majors, and investors

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Good Times. These are the Good Times- Recap of Q1 2021

Contact: John F Lambros

EXECUTIVE SUMMARY
Q1 2021 Audio Sector Wrap-Up

  • The activity across the audio sector in Q1 2021 continues to reinforce our view of the two powerful and fundamental investment themes in the category: we are at the start of a 10+ year investment cycle in music, broadly; and, the re-platforming of the industry to the digital tier that is well underway will introduce greater monetization opportunities on a truly global scale for creators, artists, fans, indie labels, majors, and investors
  • The quarter’s M&A activity has been robust and across all categories in the music landscape, from creator tools to DSPs to indie publishers and technology companies, highlighted by:
    • Square’s acquisition of Tidal (DSP, artist economy)
    • Sony’s acquisition of AWAL (distribution)
    • Francisco Partners’ investment in and acquisition of Native Instruments and Izotope in the same quarter (creator tools)
    • Spotify’s acquisition of Locker Room (artist economy)
  • Not to be outdone by M&A, the pace of financing and investment in the category has continued unabated with strategics and financial sponsors making some very big bets:
    • Apple’s $50MM investment in UnitedMaster (distribution)
    • TME’s $57MM investment in PEX (technology)
    • Blackstone’s $450MM investment in Epidemic Sound (distribution)
    • Goldman Sachs’s $55MM investment in Splice (creator tools)
  • And “the song as an asset class” theme that we have also been tracking for some time has continued to see momentum, the highlight of the quarter being KKR’s announced partnership with BMG to pursue acquisition of music copyrights. The heavy-hitters are in the arena and the competition is only elevating, but the investment conviction underscores the tremendous opportunity and belief that the TAM in the industry is growing quickly and that technology is unlocking greater monetization opportunities than ever before
  • And then there is the NFT – a relatively new entrant – making a lot of noise this quarter. We are extremely excited about this development and believe in many ways that it is a perfect solution for artists and rights holders to monetize rights and engage passionate fans with collectable, unique tokens created around songs or recordings. More to come!
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