Downtown Music Holdings has established a fund to invest over $200 million in support of independent artists and entrepreneurs, the company announced Wednesday (March 9). The fund, which is supported by a new credit facility with Bank of America, will be spread across Downtown’s distribution, publishing administration and artist and label services operations.
In a statement, Downtown Music Holdings CEO Andrew Bergman said the financing from Bank of America “enables us to expand our music services business by giving creators and business owners the ability to finance projects in an environment where the options are often unpalatable.” Downtown chief investment officer Alan Goodstadt added, “We are immensely gratified that Bank of America shares our vision of building financial solutions for creators in our industry. This credit facility enables us to empower the thousands of artists who use our services.”
Downtown manages over 23 million music assets representing more than 1 million artists and enterprise clients from 145 countries. In a press release announcing the fund, the company cites an analysis by former Spotify chief economist Will Page that showed indie artists out-released major labels by a ratio of 8 to 1 in 2020. In December, MIDiA Research reported that global independent recorded music revenue in fiscal year 2020 was worth $9.84 billion on an ownership basis (including artists direct), representing over 43% of the total market.
“Downtown Music Holdings has built a company that is well positioned to serve the fast-growing independent sector of the music industry,” said Randy Hua, head of the entertainment industries group at Bank of America. “Downtown’s new fund is a powerful resource, empowering music creators all over the world. Bank of America is pleased to help finance this innovative sector of the artistic economy.”
The announcement of the fund marks the latest step in Downtown’s shift toward establishing itself as a multi-faceted music services organization for unsigned artists and songwriters following the company’s sale of its 145,000-song publishing copyrights to Concord in April 2021. It also comes on the heels of Downtown’s January announcement that Goodstadt, the company’s then-CFO, would move to the role of chief investment officer to lead its mergers and acquisitions (M&A), direct investment and corporate development activities and continue to foster its relationships with institutional financial partners and advisors.
“Downtown’s robust M&A strategy as well as our development of additional financial solutions for our creator and enterprise clients are core to our mission as the world’s leading music services provider,” said Goodstadt at the time.
Downtown began signaling its shift in direction when it acquired AVL Digital Group — the parent company of indie distributor, publisher and artist services platform CD Baby — in March 2019. Through AVL, in March 2020, Downtown also acquired business-to-business music technology and services company FUGA, which provides content management, workflow and distribution services to over 500 distributors, record labels, artist services companies and other rights holders.
The Downtown fund arrives amid an unprecedented wave of investment in the independent music market. In July 2021, Shamrock Capital — known for purchasing Taylor Swift’s Big Machine-era catalog from Scooter Braun’s SB Projects — announced it had raised nearly $200 million for its very first Debt Opportunities Fund, designed to provide loans to creators in music as well as film, TV, games and sports.
Other independent music distributors have benefitted from this surge of interest from big capital. In October 2021, Steve Stoute’s UnitedMasters raised $50 million at a $550 million valuation in a Series C round led by Andreessen Horowitz, which followed a $50 million Series B round led by Apple that March. Last June, independent artist and label services company Believe raised $365 million in an IPO on the Euronext Paris stock exchange.
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Tagged: Bank of America, business, Business news, Downtown Music Holdings, entertainment blog, Finance, music blog