A $1 Billion Competitor for Music Rights Says ‘Content Is Queen’
It has long been a stock slogan in the media business: “Content is king.”
The idea is that intellectual property is vital to distribution systems like cable TV or streaming music, so owning and controlling it can be powerful leverage and a valuable investment.
But one investor, Sherrese Clarke Soares, has a twist on the old chestnut: “Content is queen.”
To Clarke Soares, the founder and chief executive of HarbourView Equity Partners, a new firm looking to invest in music copyrights and other media assets, the proof is on the chessboard, where “the queen is the most powerful piece,” she said. With technology enabling new entertainment platforms all the time — think social media and gaming platforms like TikTok, Twitch and Roblox — the true ruler of the game must act nimbly and decisively, zooming in any direction as needed.
The queen “can move in multiple different directions and control the board,” Clarke Soares, 45, said in an interview, “whereas the king can’t actually move that much.”
HarbourView is the latest player in what has become a high-stakes contest in the music business: the ownership and control of catalogs of songs, which streaming outlets like Spotify and Apple Music, along with a growing flank of social-media and gaming platforms, need to keep their users engaged.
The last couple of years have seen a flurry of deals for music copyrights, and the royalties associated with them, and investors have poured billions of dollars into the hunt. Bob Dylan sold his songwriting catalog to Universal Music late last year for more than $300 million, for example, and other recent blockbuster deals have involved Paul Simon and multiple members of Fleetwood Mac.
HarbourView is backed by up to $1 billion from Apollo Global Management, the finance giant, which will instantly put the new competitor in the league of major buyers like Hipgnosis Songs Fund, a British company that has already spent about $2 billion on catalogs of artists like Shakira and Neil Young; and BMG, which recently allied with KKR to spend $1 billion on music copyrights.
Although Apollo, like KKR, is known as a major private equity player, its investment in HarbourView is being made through its credit arm. Bret Leas, Apollo’s global head of structured credit, said its investment is long-term and strategic, and not beholden to the tight investment time frame of a typical private equity deal.
For Clarke Soares, the daughter of Jamaican immigrants, who grew up playing the piano, the idea that “content is queen” — a phrase she has trademarked — has a special resonance. She is a rare example of a Black woman leading a financial firm, and acknowledges that the slogan is partly in reference to herself.
Speaking via video conference from a sparsely decorated home office in Newark, she explained that investing in music, and focusing on minority artists, has been a focus of her life for decades. Her application to the Harvard Business School, she said, included a proposal for an investment platform to support artists of color.
“I wanted to impact how the world saw people like me,” she said, “and the fastest way to do that is through content, because it travels to places you and I can’t go with our hands and our feet.”
The music world, too, has very few Black women in high-ranking roles. A study this year by the Annenberg Inclusion Initiative at the University of Southern California found that, among 4,060 top executives at record companies, streaming services and other firms at the core of the music business, there were 17.7 white male executives for every Black female one.
Clarke Soares, a former managing director at Morgan Stanley who was most recently the chief executive of Tempo Music Investments, another private equity-backed investment firm, declined to say what deals she was going after with her new company.
But she suggested that she may be looking at sectors that have attracted less attention or been undervalued. While there have been no shortage of deals for the work of artists of color — just this week, BMG announced an agreement for Tina Turner’s music rights — the biggest splashes have been made over iconic white artists like Dylan, Simon and the band Aerosmith. Catalogs outside that mainstream can be valued at lower financial levels by investors.
“We want to invest differently, not colored by preconceived notions,” Clarke Soares said. “Just because something is in the R&B sector, or in the Latin sector, we don’t believe that it should have a discount.”
Buying music copyrights can also involve delicate diplomacy with artists. Clarke Soares said that last year, while at Tempo, she was approached about investing in the master recordings of Taylor Swift, who had objected loudly because her work was being shopped without her approval. Clarke Soares said she declined, not wanting to be in an adversarial position with an artist.
Still, HarbourView may face challenges as a new entrant in an extremely competitive market, one where there is a constant debate about whether prices are untenably high. Clarke Soares and Leas, of Apollo, argue that there is still value to be found, and that HarbourView has the freedom to take a patient approach in deploying its capital.
The connection to Apollo came about in part through Reggie Love, who was an aide to former President Barack Obama, who is now an Apollo senior adviser. They discussed ways to help diversify the world of finance and private equity, and Love said that, in addition to the financial success they see in HarbourView’s model, Clarke Soares can serve as an example for the next generation.
“There are going to be aspiring, talented young women of color who will see themselves in her,” Love said, “and this will give then the vision, and hopefully the courage, to try to be the next Sherrese.”