Dan Runcie’s Post

Reuters recently published a report on ByteDance, TikTok, and its future plans. A few takeaways: •ByteDance would rather shut down TikTok than sell to a U.S. buyer • The U.S. accounts for 25% of TikTok’s revenue, while TikTok’s daily active users in the U.S. account for 5% of ByteDance’s worldwide DAUs • Regardless of its future, ByteDance plans to keep TikTok's algorithm The last point makes any future deal difficult. TikTok is a much less attractive asset to acquire without its algorithm. ByteDance and TikTok negotiate with U.S. Congress one day and Universal Music Group the next day. Wild times.

KKR's investments in music over the past 15 years have been fascinating to follow. Here's a brief timeline: • 2009: acquired 51% stake in BMG • 2013: sold that stake to Bertelsmann for $1 billion • 2020: invested in Artlist, a royalty-free music platform • 2021: acquired stake in the catalog of Ryan Tedder (OneRepublic) • 2021: bought Kobalt Capital's Fund II (Chord Music) • 2022: created $1.1 billion music rights bond • 2023: hired Raine Group to explore a sale of Chord Music • 2024: sold Chord Music to UMG and Dundee Partners • 2024: invested $500M in HarbourView through debt financing I pictured The Weeknd in this photo because his publishing catalog was a big part of Chord Music. In our latest episode of Trapital, me and Anna Nicolaou discuss the PE firm's deals and investments in depth. Listen wherever you get podcasts. What are your thoughts on KKR's role in music?

Good example of how music catalogs have evolved in value: In 2007, Primary Wave bought a 50% stake in Nirvana’s catalog for $50 million. The deal was critiqued here in 2009 because it only brought in $2.3 million in two years. Spotify’s Loud & Clear report says 170 artist catalogs generated over $5 million on Spotify in 2023. Nirvana is the 159th most-followed artist on Spotify so let’s assume their in this tier that made over $5 million on the platform last year. Since Spotify accounts for ~20-25% of music revenue, that means over $20 million overall. That does include both masters and publishing revenue, but it’s still a huge jump. Plus, Nirvana has had some great sync placements recently in Succession and The Batman. A lot has changed in this space in 15 years. Nirvana’s catalog is worth a lot more today.

There’s a lesson here for music too. Some investments firms may overspend on music catalogs from artists from the 60s and 70s because the music is “timeless.” Every song has a decay curve and an aging fanbase.

New Trapital episode on T Swift, TikTok, and Universal Music Group. • why she put her music back on TikTok • why UMG offered her more money not to do it • UMG - TikTok negotiations. What’s next? Me and Tatiana Cirisano break it all down. https://lnkd.in/e5r2CFiQ

Why don’t Taylor Swift and her record label, Universal Music Group, see eye-to-eye on TikTok? They have competing incentives. Universal Music Group’s role is to maximize revenue from recorded music, publishing (via Universal Music Publishing Group), and merchandise. But Taylor, like most artists, have other focuses beyond album sales and don’t want to cut off a promotional opportunity to boost those. TikTok is a big reason why The Eras Tour became billion-dollar phenomenon. It was a promotional engine for her tour and concert film. I’m sure Taylor would welcome higher payouts from TikTok but not at the expense of not being able to use it when she releases a new album. According to Billboard data, Taylor’s recorded music, publishing, and merch combined accounted for 37% of the $1.82 billion that she generated in 2023. Plus, Universal Music Group shares a stake in Swift’s recorded music revenue with Shamrock Capital, which currently owns the original versions of Taylor’s first six albums. Nearly 50% of Taylor’s 2023 generated revenue came from The Eras Tour. Yes, touring has higher expenses than recorded music, but Taylor also generated another 14% of her revenue from The Eras Tour’s concert film. This dynamic isn’t unique to Taylor. Most artists today generate more revenue from live performances than from royalties. It creates tension in situations like Universal’s dispute with TikTok. We covered this topic in our new Trapital episode “What Taylor Swift’s Return to TikTok Means for Universal Music Group.” Listen to Tatiana Cirisano and I break it all down wherever you get podcasts! What are your thoughts on this move?

Tomorrow’s Trapital episode is a deep dive on Taylor Swift’s move to put her music back on TikTok despite her label Universal Music Group keeping its music off of TikTok. What really went down between Taylor Swift and UMG? What does this mean for UMG-TikTok? We have some answers! New episode with me and Tatiana Cirisano comes out tomorrow!

What does the future hold for Ciroc, Revolt, Sean John, and Bad Boy Entertainment after the Diddy allegations? Zack O'Malley Greenburg and I discuss on the latest Trapital episode https://lnkd.in/eNt24PS4

The story of Coachella’s rise could be a movie. In 1999, it sold just 25,000 tickets, lost $1M+, and almost went out of business. It’s now an institution in music culture. This year’s festival will likely gross well over $100 million with more than 125,000 fans attending per day. Today’s festival may easily generate 100x the revenue that it did in its first event in 1999. Coachella has evolved from an alternative rock meet-up to a mainstream pop ensemble. It’s followed the common societal trend in the internet age: nerd culture became mainstream culture. This tracks with the rise in mainstream popularity of things like fantasy football, Comic-Con, video games, Formula 1, and even retail investing. But unlike other trends and even other festivals, Coachella has developed a brand that can sell itself. The festival could sell out tickets before announcing a lineup if it wanted to. In the early 2010s, the festival became a who’s who for celebrity attendance. Attending is a flex. We see influencers, fashion, and activations there regardless of who performs on stage. Now, in a post-pandemic environment, the biggest stars make more money than ever on their own tours. It may harder to attract Beyonce - Taylor Swift level stars, but the next level of stars have taken the helm. If you like breakdowns like this, check out Trapital! It's our free newsletter that keeps you up on the business of music and entertainment. Sign up here and I'll send you our next memo: https://lnkd.in/dqbqnWr8 If you have been to Coachella, what do you enjoy most about the festival?