Welcome to this week’s edition of Cape May Wealth Weekly. If you’re new here, subscribe to ensure you receive my next piece in your inbox. If you want to read more of my posts, check out my archive. This week's piece comes again from our analyst Svea, who covers the business of sports and entertainment on her Substack and on LinkedIn. A few weeks ago, she wrote about sports as an asset class. This time, she turns her attention to music.

You have probably seen it in the news or on social media before that a famous musician sold his music catalog. Bruce Springsteen sold his entire catalogue, masters and publishing, to Sony for a reported $500 million in 2021. Bob Dylan sold his songwriting catalogue to Universal Music Group for a figure believed to exceed $300 million. Justin Bieber sold his music assets to Hipgnosis for $200 million. Shakira, Neil Young, Britney Spears – the list of artists who have cashed out in recent years is long, and the sums have grown larger. An artist, usually (but definitely not always) somewhere past the peak of their commercial career, decides to monetize what they have spent decades building, collects a life-changing sum, and releases a statement about legacy and financial security.

What gets less coverage is what some artists are choosing to do instead. In late 2025, The Weeknd, one of the most-streamed musicians alive with over 120 million monthly Spotify listeners, closed a deal valued at roughly $1 billion involving his music catalogue (I wrote in more detail about it in this article). He did not sell it, he raised capital against it, retained creative control, and remained a co-owner of his own work. The structure he used, a Royalty-Backed Note (I explain it in greater detail below) provided by the Swiss private markets firm Partners Group, is where the more sophisticated end of this market has moved. 

Overall, the music industry is growing every year. Global recorded music revenues crossed $31.7 billion in 2025. It is the first time the industry surpassed $30 billion, and the eleventh consecutive year of growth. Streaming accounts for nearly 70% of that figure, with subscription revenues growing 8.8% last year and 837 million paid accounts now active globally.

In the following, we will look at how royalties became an ‘asset class', what the different rights are, how institutional capital accesses the market today (both on the equity and the debt side) and where music fits in a portfolio.

For most of the recorded music era, a songwriter's royalty stream was an illiquid, niche asset. There was no standardized way to value it, no obvious market for it, and most of the relevant data was held by rights administrators and collecting societies. The most famous catalogue transaction of the 20th century, Michael Jackson's acquisition of the ATV Music Publishing catalogue in 1985, which included a large portion of the Beatles' songwriting rights, was a one-off. Jackson paid $47.5 million. Sony eventually bought a 50% stake for $95 million, and the full catalogue was later valued in the billions. But deals of that kind happened once a decade.

What turned royalties into something institutional investors could underwrite was streaming. Unlike the physical or download era, streaming generates small but highly predictable per-stream payments across an enormous catalogue on a continuous basis. A large, diversified pool of songs each generating modest, recurring cash flows looked, to a certain kind of investor, a lot like a portfolio of consumer loans or infrastructure toll revenues. 

Depending on catalogue quality and structure, current market commentary suggests effective yields on music-rights acquisitions often sit in the mid-single digits to low single digits, while selected platform products and deal structures target roughly 8% to 15% annual returns or low-teens IRRs over multi-year holds. Underwriting horizons are commonly 5 to 10 years, even though the underlying copyrights can generate cash flows for much longer. It’s diversified, contractually structured, and forecastable in a way physical album sales never were. 

A royalty owner collects a share of revenue without bearing any of the operating costs. The streaming platforms handle the infrastructure, the labels handle the marketing, and the collecting societies handle the administration. What flows to the rights holder is close to “pure” margin. It is one of the few assets where the economic profile resembles software – recurring, scalable, and almost entirely decoupled from operational complexity. The IFPI’s 2026 Global Music Report confirms that the trend has held: global recorded music revenues rose 6.4% in 2025 to US$31.7 billion, the eleventh consecutive year of growth.

The years between roughly 2018 and 2022 were unusually active. Low interest rates pushed capital toward yield-generating alternatives, and music catalogues, offering cash yields of 5–10%, looked attractive in this environment. Streaming revenues were accelerating at the same time, and catalogue holders, often aging artists or their estates, were increasingly willing to sell. Hipgnosis Songs Fund, the London-listed vehicle founded by Merck Mercuriadis, who has managed artists including Beyoncé, Elton John, and Guns N' Roses, became the defining story of the era, acquiring catalogues of musicians. Primary Wave, Round Hill Music, and KKR-backed vehicles followed with similar strategies.

That era has, broadly speaking, passed. Rising interest rates from 2022 onwards changed the math. A royalty catalogue priced at a 4% yield looks reasonable when 10-year government bonds yield 1%. It looks less attractive when those same bonds yield 4.5%. Valuations compressed sharply. Hipgnosis’s portfolio was revalued down by about 26% in March 2024 by Shot Tower Capital, after the fund had spent more than $2.2 billion acquiring catalogs at premium multiples. It was eventually taken private by Blackstone later that year. 

Capital has stayed in the ‘asset class’, but the structures through which it flows have shifted.

Underlying any type of music royalties deal - whether more equity- or debt-focused - is a distinction that helps to understand the deals: the difference between master rights and publishing rights.

Master rights attach to a specific recording. The version of a song you hear on Spotify is the master. Whoever owns the master collects the majority of the streaming income generated by that recording. This is what labels have historically owned, and what artists like Springsteen, Dylan, and Bieber sold when they cashed out. 

Publishing rights, by contrast, attach to the underlying composition. The melody and lyrics, regardless of who records it. Every time any version of a song is performed, streamed, or licensed for a film or advertisement, the publishing rights generate income. The two can be owned separately, and often are.

That distinction is what made Taylor Swift's situation in 2019 both damaging and instructive. When Scooter Braun's Ithaca Holdings acquired Big Machine Records, he acquired the masters to her first six albums, the specific recordings she had made, while she retained the underlying compositions. She could not stop him from owning those recordings, but because she controlled the publishing rights, she could re-record the same songs. That is exactly what she did. The “Taylor's Version” releases were a legal and economic maneuver as much as anything else: create a competing copy of your own catalogue, redirect listener attention toward it, and devalue the originals. Braun sold the masters to Shamrock Capital, a US investment firm with roots in the Disney family, in 2020. Swift eventually bought them back directly from Shamrock in May 2025, bringing a six-year dispute to a close. It took years, cost a significant sum, and required re-recording four albums from scratch – all because she had signed away her masters early in her career without fully understanding what that meant.

The Weeknd looked at the same problem from the other side. Rather than selling and fighting to reclaim control later, he structured a deal that kept his ownership intact and preserved his creative control, while also getting capital today. Whether more artists follow that model depends on whether the financing infrastructure around RBNs matures enough to make it accessible below the superstar tier. 

Now that we have covered the basics, let’s look at the time when music experienced a rise of interest, especially from institutional investors, and how the equity and debt sides of music investing work.

Similar to sports, film, and fashion, investors can gain exposure to the music industry through public equities. However, owning shares in a listed music company is not the same as owning the underlying music royalties. The share price reflects the performance of the entire business, including management decisions, capital allocation, market sentiment, and broader equity market conditions, rather than just the cash flows generated by song catalogues. It's the same distinction that exists in private equity: buying shares of a listed manager is fundamentally different from investing in one of its private equity funds (read more about it here).

The listed music universe has become increasingly small. Today, the main pure music equities are Universal Music Group (UMG) and Warner Music Group (WMG), while Sony Music operates as a division of Sony Group rather than as a separately listed company. Other listed royalty vehicles, such as Round Hill Music Royalty Fund and Hipgnosis Songs Fund, have disappeared from the public markets altogether.

The track record of listed music investments has also been mixed. Universal Music Group has fallen roughly 43% since its 2021 spin-off from Vivendi despite delivering consistent revenue growth. Warner Music Group still trades well below its 2021 peak. Round Hill Music Royalty Fund, which listed in London in 2020, was wound up only three years later after persistent share price weakness and a strategic review concluded that remaining public was no longer viable. Hipgnosis Songs Fund, once the flagship listed royalty vehicle, lost more than a third of its market value within a year before ultimately being taken private.

The pattern is remarkably similar to what we have seen in listed sports investments (read it here). The underlying assets may perform well, but that does not necessarily translate into attractive returns for public shareholders. The factors that drive the long-term value of music catalogues are often very different from those that determine the share price of a listed entertainment company. Investors interested in music royalties therefore need to distinguish between exposure to the industry and exposure to the asset itself.

As with sports, music has a small number of dedicated private funds, though they are less visible than their sports equivalents and mostly target pension funds, endowments, and large family offices, which means information on them is limited. These funds typically pool publishing rights, master recordings, and royalty streams into a single vehicle, with minimum commitments usually starting at $5 million (in some cases a feeder structure exists).

A few recent closes give a sense of the market's scale: Primary Wave Music IP Fund 4 closed in April 2026 at $2.225 billion, Shamrock Capital Content Fund IV closed in May 2026 at $813 million, and Pophouse Fund I closed in May 2025 at over $1.2 billion. Beyond dedicated funds, firms like KKR, Blackstone, and Apollo tend to structure their music investments through SPVs, which is part of why the ABS and RBN transactions described below sit at the centre of how large private markets firms engage with the asset class.

For investors without access to institutional-grade funds, fractional royalty platforms (e.g. ANote Music, SongVest, Royalty Exchange, Musicow) offer a different entry point. These platforms allow smaller investors to buy fractional interests in individual catalogues or specific royalty streams. The ticket sizes are lower, but so is the diversification, and the secondary market for these interests is limited. 

The companies and funds mentioned above are provided for illustrative purposes only and should not be interpreted as investment advice or a recommendation to buy or sell any security.

Most coverage of music royalties focuses on outright catalogue acquisitions. Someone buys a catalogue, holds it, and collects the income. But two financing instruments have moved to the centre of how institutional investors now engage with music, and they work quite differently from each other.

An ABS is a bond backed by a pool of cash-flowing assets. In music, those assets are royalty streams. The logic is very similar to mortgage-backed securities or auto loan securitizations. A large, diversified portfolio of income-generating assets is bundled into a legal structure, and notes are issued against that pool. Investors receive regular coupon payments funded by the underlying cash flows. If one asset underperforms, the others absorb the shortfall.

One example in music is Concord, the Nashville-based independent music company that owns over one million songs from the Beatles and the Rolling Stones to Carrie Underwood and R.E.M.. Concord has used its catalogue as collateral for a series of ABS transactions structured with Apollo. In December 2022, it priced a $1.8 billion securitization backed by a catalogue valued at more than $4 billion, with the notes receiving an A+ rating from KBRA. It followed this with an $850 million ABS issuance in October 2024. In July 2025, Concord issued $1.765 billion of five-, seven-, and ten-year senior notes secured by more than 1.3 million music copyrights. The transaction, described as the company's fourth securitization offering, was backed by a catalogue valued at more than $5.1 billion, with the notes rated A+ by KBRA and A2 by Moody's.

A pool of one million songs spanning multiple genres, eras, and formats is about as diversified a royalty base as you can construct – no single artist, no single platform, no single cultural moment can move the aggregate in a way that threatens the debt service. That profile is what attracted the investment-grade ratings and the institutional fixed income buyers. Private investors cannot access these notes directly. They trade at ticket sizes and through distribution channels that are not built for private wealth clients. The oversubscription and the ratings are, however, a reasonable proxy for how institutional investors now assess the underlying collateral.

An RBN is a different instrument serving a different purpose. Rather than pooling many assets, it is a single debt instrument issued on behalf of one artist, secured against that artist's specific royalty streams. The artist receives capital today. Investors receive payments from the royalties over the life of the note and the artist does not sell their rights.

The simplest way to understand the structure is through an example. Imagine an artist with a catalogue of 100 songs generating a reliable €500,000 per year in streaming and sync licensing income. She wants €2 million today to finance her production company, fund new projects, or diversify her personal balance sheet, but has no interest in permanently selling what she has built. 

A Royalty-Backed Note solves that directly:

The artist receives €2 million upfront. For six years, €120,000 per year flows from her royalties to investors as interest. At the end of the term, she repays the €2 million principal, typically refinanced or covered by the catalogue's accumulated value, and retains all royalty income from that point forward. Three parties, three different interests served:

The concept has early precedent. “Bowie Bonds,” issued in 1997 and backed by David Bowie's pre-1990 catalogue, raised $55 million against his royalty streams over a 10-year term. What has changed is the scale at which the structure is now being used.

The Weeknd deal, introduced at the outset, is the most recent example of such a structure. Abel Tesfaye closed a roughly $1 billion partnership with Lyric Capital Group in late 2025, a joint venture in which Lyric invested in his masters and publishing while he and his team retained creative control and remained co-owners. The financing behind that deal was a Royalty-Backed Note from Partners Group, the Swiss private markets firm managing over $174 billion in assets globally. Partners Group launched a dedicated royalties strategy in 2024, targeting $30 billion in AUM by 2033, with music expected to represent $6 to $9 billion of that.

Why does the deal make sense for Partners Group? The Weeknd has 29 tracks with over one billion streams each, including Blinding Lights, his most-streamed song, and Timeless, the fastest song ever to reach one billion streams. His catalogue generates predictable royalty income with a decade-long track record behind it. An RBN secured against that income is, in the words of Partners Group's Head of Royalties Stephen Otter, “a low-risk, high upside potential way to be aligned with the artist.” The downside is anchored by contractual cash flows; the upside is any continued growth in streams.

One distinction I want to flag here: Lyric's representative was explicit that The Weeknd deal is not an ABS. An ABS pools many assets into a diversified structure and issues standardized notes. An RBN is issued against a single artist's income, priced and negotiated bilaterally. 

In many ways, I think investing in music is similar to investing in sports. Sports is getting far more attention today, whether it's private equity firms launching dedicated sports funds or headlines about FIFA exploring the sale of a stake in its commercial business. Music, by comparison, attracts less publicity, but the underlying investment case is just as compelling. Both asset classes offer exposure to cash flows that are driven by long-term consumer demand rather than the broader economic cycle, making them an interesting complement to traditional financial assets.

That said, I wouldn't view music royalties as a core portfolio holding in the same way as public equities, bonds or commodities. They make more sense as a diversifier within a well-constructed portfolio. For investors seeking stable distributions, music rights can offer recurring cash flows, with WIPO noting that catalogues may generate “stable, predictable, multi-decade income streams”. At the same time, returns are not high enough on their own to eliminate the trade-offs from illiquidity, transaction costs, and manager selection risk. A 2026 study of Royalty Exchange transactions found that life-of-rights assets delivered a 12.8% median annualized return, but with wide dispersion and meaningful transaction costs.  As with sports investments, music works best as a satellite allocation that enhances a portfolio, rather than as the foundation of one.

If you'd like to explore more examples of how investing intersects with the worlds of music, film, and sports, feel free to check out my weekly newsletter on Substack, where I share case studies and investment stories from these industries.