Music platforms remain immune to Covid-19 as investments intensify

Shamrock Capital, a private equity firm, has acquired the Taylor Swift master recordings from Carlyle Group and manager Scooter Braun for $300 million

Taylor Swift is, in a sense, immune to Covid-19.

Not literally, of course. But as an investment prospect, her work sits alongside assets whose values have stayed strong, but which won’t suffer if we get a working vaccine and consumers’ lives start to return to normal. If you’re in the market for steady returns, regardless of the coronavirus situation, there are worse places to look.

Just last year private equity giant Carlyle Group partnered with Scooter Braun, the manager of artists like Justin Bieber and Ariana Grande, to acquire Big Machine Records, Taylor Swift’s label, for $300 million. That group has now sold Swift’s back catalogue alone for the same amount, while retaining the rest of the label’s inventory.

In this file photo, Taylor Swift, left, winner of the artist of the year award, and Shania Twain are seen at the conclusion of the American Music Awards, at the Microsoft Theater in Los Angeles

The value is partly a function of the Covid-19 induced lockdowns. On one side sits a pile of industries that have proven vulnerable to the outbreak’s vicissitudes. On the other side are those that have benefitted hugely. But in the middle, there’s a third category that has profited more modestly from the pandemic, and which is unlikely to see business negatively affected when it’s over.

Investment in such firms has intensified as shareholders look for the best way to play the next stage of the pandemic. Take Spotify, the biggest music streaming platform. Its stock has climbed 65 per cent this year, even though subscriber numbers are growing at much the same pace as they did before lockdowns. Doing more podcasts has helped.

Shamrock Capital, the private equity firm that has acquired the Swift master recordings from Carlyle and Braun, closed a $400 million fund in June dedicated to acquiring film, television, music and gaming content. It’s targeting annual returns of 8 per cent. Given that the Swift deal, which comprises her first six albums, might reasonably generate $20 million a year in earnings, such returns seem achievable.