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I.B. BAD: TRUE
OR FALSE?

HIT SONGS: Matt PincusSONGS is now definitely in play. The fact that an unidentified suitor offered $160m for the indie pubco in January indicates a significantly higher multiple than the standard 12 times NPS. Perhaps the offer was based on a 16 times multiple of $10m, splitting the difference between the company’s $8m 2016 NPS and its projected 2017 NPS of $12m. But a recent Bible story suggesting that Sony Music, WMG or anyone else, for that matter, would pay $160m as a means to hire SONGS principal and rumor magnet Ron Perry is patently absurd. What’s more, the major publishing companies put a premium on catalog, whereas SONGS is hits-driven and has no traditional deep catalog to speak of, meaning its value is determined by how hot it is at any particular moment—and SONGS has been hot, lodged in the Top 10 in publisher share for 14 straight quarters.

Founded in 2004 with $5m, SONGS has flourished in recent years with such signings as The Weeknd, Lorde, Diplo, X Ambassadors and recent breakout XXXtentacion—all of them hot properties in the streaming revolution. It’s worth pointing out that the company has The Weeknd for two more albums and Lorde for one under their current deals. It remains to be seen whether partners Pincus, Perry and Carianne Marshall—who oversees global sync and creative services and runs the West Coast office—will opt to move forward, but acquiring SONGS would more than double the marketshare slice of a comparably sized indie with the requisite deep pockets (its marketshare was 2.2% in the Q2 rankings but has averaged 3.5% over the last two years).

High-rolling, well-funded jazz label Concord Bicycle, led by former Album Network/indie-promo gunslinger Steve Smith, has been consistently dealing from multiples higher than 12, based on the $600m it paid for Imagem earlier this year, as well as previous acquisitions, making it the early favorite to write the biggest check. An acquisition by Marty Bandier’s Sony/ATV or Jody Gerson’s UMPG could impact the marketshare race either by distancing Sony from UMPG or theoretically vaulting UMPG into the #1 slot. But neither is making noises indicating a willingness to pay a 16-times multiple for the pubco. Are they playing poker or playing the part of disruptors?

Perry is said to be staying with the company through the process, which has led to speculation that he may move on to a high-paying label job when the transaction is completed. Some believe that the process is a way of establishing the company’s value in order for Pincus and Perry to arrive at a settlement for Perry’s piece of SONGS—but sources inside the pubco say this theory is way off-base. Others note that the buyer could require Perry to stay on as a condition of the purchase.

The bottom line is, if someone is going to pay close to $200m, nothing will be off the table for Pincus or Perry during these negotiations. Pincus controls the negotiations 100%, but the three partners are locked as one in their objectives here. The fate of RECORDS seems unclear, but they had been looking for a step up in funding from a partner beyond their current distribution deal.

This action is taking place against the backdrop of Goldman Sachs’ recently released projection of a massively prosperous music business, upping its 2030 estimates for recorded-music revenues to $41b, paid streaming to $28b and paid subscribers to nearly 850m. In short, the valuations of music properties are rising fast.

FAKE NEWS: Incoming WMG recorded-music chief Max Lousada is getting closer to landing a top executive. Negotiations are getting “heavy” with this individual, who could start sometime in 2018, according to one Warner insider. But Lousada’s target isn’t Perry—nor is Island President/CEO David Massey interested in the job,‚Ä®despite rampant rumors to the contrary, informed sources say.

Massey came to UMG as President of Mercury after 15 years at Sony. He’s been in his current job for nearly five years, the last three-and-a-half since Island was separated from Def Jam and moved inside the Lipman brothers’ Republic Label Group by Lucian Grainge and Michele Anthony following Barry Weiss’ exit as head of UMG East. Massey has done an admirable job of building a talented artist roster and has scored his share of hits from acts including Shawn Mendes (2.7m SPS over two albums), Demi Lovato (2m over two albums), Nick Jonas (1.3m over two albums), Fall Out Boy (3.6m over their last two albums) and Bishop Briggs, with a new LP from The Killers coming 9/22.

While the Massey-to-Warner speculation is certainly plausible, those intimately involved in the matter insist that it’s completely untrue, and no conversations have actually taken place. Massey’s deal is supposedly up in the latter half of 2018, but the oddsmakers have him staying at Uni, where he is thriving.

Does Mike Caren fit into Lousada’s master plan? A steady stream of hits has come out of Caren’s Artist Partners compound during the last few years. Will he be given an expanded role in the Maxwellian era? Caren’s most recent breakout is from Charlie Puth, who has the #1 single in the country. Puth is one of Caren’s most productive and versatile songsmiths, having written with artists ranging from Jason Derulo to Thomas Rhett, as well as scoring a string of hits under his own name. He’s also part of red-hot Ron Laffitte’s Patriot Management hitmaking triumvirate, along with Pharrell and OneRepublic’s Ryan Tedder.

THE REAL DEAL: Top Dawg first demonstrated his gift for locating and mentoring talent with the 2003 signing of teenage hip-hop prodigy Kendrick Lamar to his newly formed Top Dawg Entertainment in 2004, eight years prior to Kendrick’s breakthrough major-label debut, good kid, m.A.A.d city, on TDE/Aftermath/Interscope. It now appears that Top is about to hit it big again with 26-year-old alt-soul phenomenon SZA, who is on her way to becoming a massive brand following the June release of her acclaimed debut album, Ctrl, on TDE/RCA. Concurrently, Isaiah Rashad, one of TDE’s newer artists—who is featured on SZA’s album, along with Kendrick and Travis Scott—is reportedly drawing intense major-label interest, and based on Top’s scoring average, this one could turn out to be a playoff contender.

MARELLA, SPANGLER, RICCITELLI AT THE CONTROLS: ZAYN’s new RCA single is going big at radio at presstime, and industry observers are watching it closely to see if this one sticks, like the current hits from his former 1D bandmates Niall Horan (whose Capitol single is #2 on this week’s Mediabase Top 40 chart) and Liam Payne (Republic, #4). Both have a shot at #1 at radio. Meanwhile, the first leg of Harry Styles’ sold-out tour kicks off in relatively intimate venues including the Greek in L.A. All four could be factors as we hit the final run-up to the Grammys, but Harry, who has set off in a bold new stylistic direction with his solo career, has the makings of a Grammy darling.

Taylor Swift’s game plan has become more apparent with the release of “…Ready for It?,” the second single from her 11/10 album reputation. Lead single “Look What You Made Me Do” is #6 at Top 40 in its fourth week and is headed to #1. As of posting, the track has hit 1m SPS in the U.S., with 162m global streams.

The lead track from Sam Smith’s upcoming Capitol album is off to a great start, with big initial success at radio: The single went into rotation at 183 of the 187 Pop stations and 371 stations across six formats overall in its first week. It’s at 261k SPS in the U.S. and 67m global streams as of posting.

Sam's album doesn’t yet have an announced release date, but it’s safe to say it will drop before 11/10, when Taylor debuts at the top of the charts. How big will Smith’s album be amid the plethora of Q4 superstar releases, which will also include Eminem’s first album since 2013?

NAMES IN THE RUMOR MILL: Peter Edge, Scott Borchetta, Joel Klaiman, Jeffrey Azoff, Rick Sackheim, Joie Manda and Nick Raphael.

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