Niche-focused funds are emerging as the next trend in music investment according to Billboard Magazine, largely due to the rising cost of capital. These funds specialize in acquiring rights to specific genres within the music industry, such as Latin, dance, film and TV, and even niche areas like Nickelodeon TV shows. Unlike major deals that make headlines, these funds offer more approachable investment opportunities at lower prices.
Several funds have launched in the past 18 months, including Armada Music’s BEAT (focused on dance), Jamar Chess’ Wahoo Music Fund One (Latin), Singapore’s blackx (Asian music market), and Multimedia Music (film and TV music). They have raised significant amounts of capital, ranging from $100 million to $200 million, from banks and investment firms. These funds differentiate themselves from institutional-backed funds like Primary Wave and Hipgnosis by providing a lower cost of entry and therefore reduced risk.
While each fund faces its own challenges, they represent the natural progression of the investment thesis in a market where streaming growth is slowing and high interest rates lead to greater investor scrutiny. The funds aim to outpace the cost of capital by focusing on genres with strong growth potential, such as Latin, dance, and EDM.
Multimedia Music, founded by Phil Hope and James Gibb, has acquired rights to numerous film and TV scores, including works by James Newton Howard and the STX music library catalog. They have secured $200 million in debt and investment to purchase the rights to music that is consistently played across various platforms.
Wahoo Music Fund One, led by Jamar Chess, focuses on Latin music. They educate investors about the long-term value of cultural artifacts and classic catalogs in the Latin genre. Despite the surging popularity of Latin American music, Chess acknowledges that investor interest in the sector still lags behind.
BEAT Music Fund, launched by Armada Music, concentrates on the dance music genre. The fund plans to invest $100 million in its first two years and aims to increase that amount to at least $500 million in the future. The global dance music industry experienced significant growth in 2022, and BEAT aims to capitalize on its expanding fan base and popularity on platforms like TikTok.
Overall, niche-focused funds provide a unique investment opportunity by leveraging specialized genre knowledge and industry connections to acquire rights to specific types of music. These funds offer a potential alternative for investors looking to enter the music investment market at a lower cost of entry and with reduced risk.
