The 23 Capital consultant talks ahead of her appearance at NY:LON Connect – the global music-industry summit taking place in London this week
What brings you to NY:LON Connect this year?
NY:LON and Music Ally always produce great, intimate events and as the music sector is growing again, investment and finance are hot topics. I’m taking part in a panel discussion on the investment landscape, along with Jeff Bronikowski from Warner Music, John Acquaviva from Plus Eight Equity Partners, Milana Rabkin Lewis from Stem and Gregor Pryor from Reed Smith. We’ll be discussing finance trends, opportunities and gaps in the marketplace – ranging from the finance needs of startups to M&As and artists.
Where does 23 Capital fit in?
We specialise in creative finance solutions for the evolving music industry – as well as having sector-specific knowledge in sports and entertainment. For artists, an important trend is the desire to retain rights and guide their own destiny. Thanks to streaming services there is now more predictability regarding revenues, and we can help optimise royalties, move revenues forward or consolidate revenue streams. For companies looking to make acquisitions, we can bring sizeable financing to the table. 23 Capital is a modern alternative to banks and other sources of capital, with the added benefit of having a deep understanding of this complex industry.
Who do you work with?
In music, a major focus for us is established artists with catalogues that are generating income. Once we can see that income stream, we can put a value on it and help the artist take on a new initiative, pay off an unrecouped advance, provide an advance on future royalties, buy back the rights to their catalogue or consolidate income streams. Furthermore, we can provide facilities to labels or platforms to advance to artists. We also see a significant opportunity in the established indie sector – the growth is phenomenal, with nearly 40 per cent global-market share according to a recent study. Established indie labels are often limited to bootstrapping their business or selling a stake to a major label, but we can help them grow and maintain independence. Again, the streaming of data allows us to collaborate with indies and provide solutions.
Why now? What has changed in the music industry for artists?
First, artists today have a lot more choice about how to release their music and drive their own destiny; some take a traditional label route while others choose a different path using self-release platforms and artist services. That’s an opportunity for us because whichever route they go, artists always need capital to fund their work and pay their teams. When you scratch the surface, even things that look totally selfreleased often have significant resources and teams behind them.
Another huge trend in music is the growth in digital-streaming services. Streaming has completely changed the consumption patterns of music – and it’s still in its infancy. Streaming adoption is huge in North America and Western Europe, but it’s just getting started in Asia, Africa and South America. As streaming proliferates, it opens up a global audience for artists who never had access to those fans before. That can transform the value of their catalogue – and that’s why the indie sector is becoming so strong: artists can reach niche and passionate audiences all over the world. Streaming can also breathe new life into legacy artists’ music and give them a new generation of fans. 23 Capital understands these nuances and can help provide the financial solutions needed.
How does access to all this streaming data change the game for artists?
Data is incredibly powerful if you know how to use it. Streaming data shows the artist’s usage trends, which parts of a catalogue are lighting up and where they’re reaching new audiences. We’re still in the very early days of understanding what it takes to break an artist through streaming, what the patterns are with playlists and how one song on a playlist can lead the fan to explore an artist’s entire body of work. For 23 Capital, streaming data means our team can analyse and project the performance of catalogues in a way we’ve never been able to before.
And that means you have all the pieces you need to provide financing solutions?
Right. The opportunity for artists to reach a global audience and find a path to finance their own destiny is real and it’s happening. This is something everyone’s been talking about for 10-15 years. Now it’s finally here.
Vickie Nauman has expertise across all aspects of digital music - licensing, products, music-tech, strategy and international. Her experience spans the earliest days of disruption at RealNetworks/MusicNet to KEXP Seattle, global platform 7digital, and connected device pioneer Sonos. She founded and manages CrossBorderWorks, a consulting and advisory firm, where she works with a portfolio of streaming services, finance providers, device manufacturers, start-ups and industry consortiums.