In the latest blockbuster music-catalog deal, Downtown has sold its 145,000 owned and co-published copyrights to an affiliate of the Concord music company. Included in the deal are songs popularized by Beyoncé, Jay-Z, Lady Gaga, Marvin Gaye, Mötley Crüe, New Order, Stevie Wonder, The 1975 and others, such as “Green Onions,” “Dancing In the Streets,” “Home Sweet Home,” “Moves Like Jagger,” “Halo,” “Stay With Me” and “Shallow.” Also included in the deal were a substantial number of J-pop and K-pop songs, as well as French hits.
Downtown also said it is getting out of the ownership business to focus on music services exclusively, primarily publishing administration (including royalties, synch and licensing) as well as its label services division, DashGo.
Terms of the deal were not disclosed, but an industry source tells Variety the deal was in the mid-nine figures, in excess of $300 million and possibly significantly more. According to the announcement, proceeds from the catalog sale are being reinvested back into Downtown.
The deal brings Concord’s owned and controlled music assets to over 600,000 works. Since 2013, it has acquired the catalogs of Rounder Records, Vee-Jay Records, Razor & Tie, Kidz Bop, Rodgers & Hammerstein, Savoy, Varése Sarabande, Fania, Victory Records and Publishing, the publishing catalogs of Imagine Dragons and more. As part of the transaction, Downtown will continue to manage global royalty collection for the copyrights included in the sale through the end of 2021.
“Concord is an excellent home for this extraordinary catalog that we’ve had the unique privilege to build over the past 14 years,” said Downtown founder and CEO Justin Kalifowitz. “Not only does Concord recognize the value of these works, but this transaction further demonstrates the true strength of the modern independent music sector.”
Concord’s Chief Publishing Executive Jim Selby added, “The incredible catalog of songs is an excellent complement to the timeless and valuable copyrights upon which Concord has built a successful business. Our global publishing team is honored to now represent these songwriters and their works to the world.”
Considering the soaring prices of music catalogs, Downtown’s move may seem counterintuitive. But it also sees the company selling its copyrights at what may be top dollar — as many feel the gold rush is cresting — and answers a growing market need as creators become more aware of the value of their work and need a strong global administrator. It also positions Downtown as arguably the only independent company with a comparable reach, in light of Sony Music’s acquisitions of AWAL and the Orchard. In recent years, Downtown had been bolstering its infrastructure by acquiring multiple businesses, such as CD Baby distribution, DashGo label services and AdRev digital rights management; the objective for those acquisitions is now clear.
Kalifowitz said of the move, “Our [recent] strategic review confirmed a clear opportunity in the market for a truly neutral provider to meet the changing needs of creators and their partners. Divesting our owned intellectual property enables us to advance our position as the world’s leading music service provider, empower a rapidly expanding global creative class and, ultimately, is the most expedient way to help realize our vision of a more equitable music industry.”
The first phase will align Downtown Music Publishing with the distribution and marketing capabilities of DashGo to form Downtown Music Services, a new division. The division will be led by Mike Smith, who joined the company last year from Warner Chappell as president of its music publishing business. DashGo founder and president Ben Patterson will assume the role of Chief Operating Officer with continued oversight over distribution, marketing and promotion.
Downtown manages more than 23 million music assets on behalf of more than 1 million creators and 2,500 enterprise clients around the world; it also retains its complete roster of publishing administration clients, including the estate of George Gershwin, John Lennon & Yoko Ono, Miles Davis, John Prine, Wu-Tang Clan, Ryan Tedder/OneRepublic and others. Collectively, Downtown is projecting to generate over $600 million from its music services businesses in 2021.
The Raine Group acted as the exclusive financial advisor to Downtown on the transaction, with legal counsel from Wilson Chu, Joanna Lin, and Thaddeus Chase, Jr. of McDermott Will & Emery LLP, and Jeff Biederman and Beau Stapleton of Manatt, Phelps & Phillips LLP. Concord and its affiliates were advised by Steve Sessa and Chris Sheaffer of Reed Smith and Rob Sherman of DLA Piper. Lisbeth R. Barron and the team at Barron International Group, LLC acted as the exclusive financial advisor to Concord on the transaction.