Good Morning, it’s Wednesday, August 12th, and today there are three articles addressing the same fundamental issue: what is actually worth owning. Back in 1985, Michael Jackson solved the question by spending $47.5 million to acquire the Beatles’ catalog while all the other people in the room were still counting record sales, and the private equity funds that have poured into music rights over the past four years represent a very costly way of agreeing with him four decades later. Tencent Music answered the question this morning by releasing its results for the quarter, showing that attendance at concerts and sales of merchandise had increased twice as fast as subscriptions, before refusing to say how many subscribers it has. Intel dealt with it by selling $15 billion in shares in order to gain the ability to manufacture other people’s chips, a move which is a bet that the factory will outlast the product. Below is the catalog thesis that Wall Street took four decades to arrive at: a Chinese streaming giant that has stopped showing its results, and a chipmaker raising, in a single offering, what its main rival raises in a month.
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The version of events that is commonly given regarding Michael Jackson purchasing the Beatles’ catalog is essentially a tale of audacity, being the pop star who outbid Paul McCartney for his own songs. The more insightful story, however, is one concerning classification. In 1985, Jackson paid $47.5 million for ATV Music, and having been inside the company as its main product, he realized that a recording career and a publishing catalog are two completely separate asset classes that happen to look the same. A recording career is based on hits and eventually fades away; even the earnings from Thriller would diminish as the formats changed. Publishing is the opposite; it is diversified and generates a perpetual stream of royalties each time a song is pressed, played, licensed, or covered by anyone indefinitely. Having seen vinyl give way to cassette and then to CD, he reached the right conclusion that the songs themselves were the constant element while everything else was just packaging. That is why he shifted his capital to the songs at a time when the only other person who appeared to fully understand the situation was McCartney, who had explained it to him over dinner but then refused to act on it on the same scale.
What turns it into a case study rather than just an interesting example is the way the asset performed afterward. In 1995, he merged ATV into Sony’s publishing division, turning a personal holding into an institutional one and taking over half of a much bigger company a kind of merger that only succeeds when you possess the one asset that the other party cannot copy, and in this instance that asset was the Beatles. Unlike his own health and his recording career, the catalog was able to withstand the tests of time; it held on through the financial difficulties, the canceled tours, the decline in his commercial reputation, and throughout all this the ATV share always remained available as collateral when nothing else in his life could be used as security. Seven years after his death, in 2016, his estate sold the remaining Sony/ATV stake back to Sony for $750 million, one investment, originally worth about one-sixteenth of that amount, having been held for thirty-one years despite the most turbulent and unpredictable ownership history imaginable. And the final point for our readers is the timing: KKR, Blackstone, and Apollo have since invested more than $10 billion in music rights on exactly the same principle that Jackson pursued in 1985, treating songs as durable, uncorrelated, license-forever assets. Wall Street only reached the same conclusion four decades later and then labeled it an asset class. In the end, vision doesn’t mean predicting the future; it means pricing the present correctly when no one else in the room is ready to do so.
Sources: Digital Flashlight
Tencent Music reported a second-quarter revenue of 8.93 billion yuan ($1.32 billion), which represents an increase of 5.8 percent compared to the previous year. Revenue from music-related services rose by 11 percent to 7.61 billion yuan ($1.12 billion), with membership services increasing by 8.1 percent to 4.79 billion yuan ($706 million) and marketing and consumption services those covering advertising, concerts, and merchandise—going up by 16.2 percent to 2.81 billion yuan ($415 million). Adjusted EBITDA amounted to 3.25 billion yuan ($480 million), a 5.2 percent rise. The company attributed this growth to the expansion in concert activities and the integration of the audio platform Ximalaya, and took the opportunity to highlight its AI initiatives, such as the integration with Tencent’s Weixin XiaoWei assistant that enables users to search for songs and create playlists, as well as the upgraded in-app agents on QQ Music and Kugou that act as personalized DJs.
The most important point is that the filing omits certain details. For the second quarter in a row, TME has given no figure for the number of subscribers, no data on monthly active users, and no average revenue per paying user, having stopped publishing these figures following its full-year results for 2025 in March. The last time it provided such figures, the Super VIP tier had exceeded 20 million subscribers, an increase from 15 million at the end of Q2 2025 and 10 million in Q3 2024; SVIP customers pay approximately RMB 40 a month compared to RMB 8 for standard customers. This tier has been responsible for the growth. Since neither the volume of subscribers nor the average revenue per paying user is disclosed, the 8.1 percent growth in membership revenue cannot be broken down into terms of upgrades, net new payers, or price increases. Management has described the change as indicating a more diversified business, and the current quarter does lend support to that view, since the non-membership side has been growing at twice the rate of subscriptions. It also eliminates the possibility of assessing whether the subscription business is still attracting new users.
Sources: MBW, TME Investor Relations
On Monday, Intel announced a public offering of common stock underwritten at a value of $15 billion, including an option for the underwriters to purchase an additional $2.25 billion. The funds will be used for general corporate purposes such as capital expenditures and working capital, the company highlighting physical AI, purpose-built silicon, advanced packaging, and external wafer production as the areas that are attracting customer demand. J.P. Morgan, Goldman Sachs, Morgan Stanley, and Citigroup are acting as joint bookrunners. The share price dropped by more than three per cent in premarket trading as a result of the dilution, a reaction that is modest given the scale of the offering and one that is consistent with the stock’s current level. Intel has more than doubled its year-to-date performance on the basis of its turnaround momentum, and it is precisely this factor that makes it the right time to raise equity rather than debt.
The article focuses on Intel’s aim in terms of its future direction. Since advanced packaging and external wafer manufacturing are foundry business activities, Intel wants to start making chips for other companies, thereby putting it in direct competition with TSMC. This comparison is not currently favorable. In July, TSMC reported revenue of NT$467.58 billion, which is about $14.5 billion, a year-on-year increase of around 45 percent, and has raised its outlook for 2026 dollar revenue growth above 40 percent while at the same time expanding its CoWoS packaging capacity, which is now essential for AI accelerators. Intel is raising in one offering roughly the amount that its main rival achieves in a month. The funds provide it with room on its balance sheet to build up capacity while the AI infrastructure cycle is still taking in all that the supply chain can produce, and the issue remains whether customers will show up before the cycle reverses.
Sources: Reuters via TechStartups, Barron’s via TechStartups
Business & Legal
Global Music Rights sued Music Choice in June, alleging the company kept performing songs from its catalog after their license lapsed at the end of 2025. Global Music Rights and Music Choice have quietly settled the case, closing it before it ever reached a real ruling.” (Music Business Worldwide).
Still no ruling from Judge Subramanian on Live Nation’s motions to overturn the April verdict, twelve days after the July 31 hearing (TicketNews). The granular claim-by-claim review he signaled points to a carefully written opinion; silence favors the incumbent.
Technology & AI
Suno also announced watermarking and fingerprinting on generated tracks and integrated Musixmatch’s Sentinel detection system, six days after the GEMA ruling (Music Business Worldwide). Detection is being built into the tools themselves; provenance is becoming a feature rather than a lawsuit.
Spotify’s badge will tell listeners an artist’s identity “may be AI-generated and does not represent a real person,” which is a strange new sentence for a music service to have to write (Music Business Worldwide).
The AI persona Velvet Sundown pulled millions of streams before anyone was required to say it wasn’t human (Rolling Stone).
Suno’s free tier goes from 50 song credits a day to a lifetime cap of seven downloads, one of the sharper about-faces in recent product history (Music Business Worldwide).
Mark Zuckerberg said he’s surprised the discourse from AI companies “is so filled with doom,” which is a rich observation from inside the industry generating the doom (Variety).
Buck Owens born in Sherman, Texas (1929)
Mark Knopfler of Dire Straits born in Glasgow (1949)
Pat Metheny born (1954)
Sir Mix-A-Lot is born (1963)
The Beatles’ first film, A Hard Day’s Night, opens in US theaters, at the height of Beatlemania (1964)
Janis Joplin plays her final concert, at Harvard Stadium, closing with “Summertime” — she dies less than two months later (1970)
Metallica release “The Black Album,” which goes on to sell over 30 million copies worldwide (1991)
John Cage, composer and music theorist, dies at 79 (1992)
Backstreet Boys release their self-titled debut album in the US, going on to sell over 14 million copies (1997)
Les Paul, inventor of the solid-body electric guitar and pioneer of multitrack recording, dies at 94 (2009)
“"The machine already makes music. The only open question is who gets to decide it counts."”
— Flashlight
Behind the Name. Flashlight exists to point light at the mechanics underneath culture: the deals, the incentives, and the systems that decide what gets made and who gets paid. The value is in the thinking.
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