Notes on Financialization: May-July 2026

Welcome back! It’s been a few months since the last edition of Notes on Financialization, and we’re now well into the summer slowdown in major financial transactions in music. But don’t fret (see what I did there?🎸), plenty happened from May to the present to keep us on our toes. Let’s dive in!

Despite plenty of ongoing litigation, the generative music AI field continues to attract enormous amounts of institutional capital. In early June Suno raised over $400 million in Series D funding, led by Bond Capital, a firm that’s heavily invested in the emerging AI landscape. This brings Suno’s overall valuation to $5.4 billion, which to give some context for comparison, is higher than the full value of Recognition Music Group (fka the entire Hipgnosis group of companies).

The gen AI x music field continues to be defined by unresolved legal battles and the considerable risks facing investors in companies confronting major copyright claims. Suno’s latest funding round, then, is also a wager by capital providers that its legal exposure can ultimately be managed through litigation, licensing agreements, settlements, or some combination of the three.

Many major shifts in how music is distributed and consumed have followed a similar sequence. New platforms take on a ‘move fast and break things’ approach, where they build audiences and generate commercial revenue, often without securing the required licenses or establishing meaningful systems for compensating artists. Payment structures tend to emerge only later, usually after sustained legal, political, and collective pressure. By that point, however, the negotiating landscape has already shifted. Platforms that may have begun operating without licences accumulate large user bases and attract institutional capital. This scale gives them considerable leverage when compensation systems and licensing terms are finally negotiated, often leaving creators to bargain within a path dependent system that has already been shaped by platform power.

This arguably unethical approach to building companies on the backs of artists has been played over and over, and if I’m being honest, leaves me a little depressed about the state of the political economy of music. However, as Maarten has pointed out, some optimism may be warranted. There is a long history of collective pressure and of artists, workers, advocates, and rightsholders organizing collectively to challenge those seeking to profit from creative labour without fairly compensating the folks who actually produce it. Radio broadcasters played recorded music commercially for years before songwriters and composers pushed back to establish appropriate legal protections and licensing frameworks. The Music Performance Trust Fund—a collectively bargained fund that creates paid work for musicians through free public performances—grew out of the AFM’s 1940s recording strikes, when musicians withheld their labour until labels agreed to contribute a levy on record sales.1 Likewise, streaming compensation has been repeatedly contested through negotiations, litigation, and legislation. The 2018 Music Modernization Act reformed the licensing and payment of mechanical royalties, while independent artists and smaller labels continue to bring legal actions arguing that streaming economics remain inadequate.

This process of contestation is now playing out around generative music AI. On the one side, gen-music AI platforms have been penning post-infringement licensing deals. Over the past year, Udio has made deals with Universal, Warner, Merlin, Kobalt, and Believe, covering two of three major labels and a substantial portion of the ‘independent’ sector. Warner has also signed a deal with Suno.

At the same time, litigation against the generative AI companies continues. Sony Music remains involved in lawsuits against both Suno and Udio, while Universal Music Group is also a plaintiff in the case against Suno. Independent songwriters and session musicians are also pushing forward class-action lawsuits against multiple generative AI companies including Suno, Udio, and Google, alleging large scale copyright infringement.

Labels and other rightsholders are pursuing a dual strategy by negotiating with some AI platforms while continuing to litigate against others, effectively playing both sides for their own advantage. Meanwhile, major labels are also moving to set the terms of how attribution and compensation will work in practice on generative AI platforms.

Warner’s acquisition of the AI-attribution startup Sureel AI in June is one example of this effort. As I‘ve argued in the past, these systems are not neutral technical tools. They are political in the way they determine whose creative contributions are recognized and who gets paid when an AI-generated song is produced. I examined this dynamic in detail through Udio’s Starstruck platform, which employs an attribution model that directs compensation only to rights holders whose work a user explicitly names in a prompt. Countless works that may have shaped a model’s underlying weights (often illegally), but weren’t explicitly invoked—the vast and diffuse influence of smaller artists, regional traditions, and historically marginalized genres, for example—are excluded from compensation by design.

With this in mind, Warner’s acquisition of Sureel appears to be an effort to control the technical infrastructure through which attribution and compensation will be determined. By owning that infrastructure, Warner can effectively shape how these systems are designed and implemented in ways that advance its own interests. As an example, Warner could make its licensing agreements with generative AI companies conditional on the adoption of its newly purchased in-house attribution system, including its preferred compensation rules programmed into it. These licensing agreements might then serve as frameworks for others when negotiating licenses with gen AI companies. Of course, standards must emerge from *somewhere*, but when dominant companies establish them, we risk producing path dependent systems that favour the already powerful.2

Warner says its goal with the purchase is to “ensure that artists, songwriters, and rightsholders benefit wherever and whenever their work is referenced in AI-generated works or in the training of AI models.” But its efforts to control the infrastructure of attribution and compensation suggest a broader ambition to set the terms of the emerging political economy of AI.3

These essential questions around who holds the power to negotiate new, AI-related uses of music are at the core of a recently launched lawsuit against Warner and Universal, brought by the American Federation of Musicians (AFM). This is where the kind of collective pressure Maarten described becomes essential to securing structural change.

The union alleges that Warner and Universal have negotiated AI licensing deals with Suno and Udio without adequately involving or compensating the musicians whose performances are included in the catalogs they licensed.4 Unlike the label-led copyright cases targeting the AI platforms themselves, this is a collective bargaining dispute. It invokes the “new use” provisions of the union’s existing agreements with the labels, which the AFM argues entitle musicians to additional compensation when previously recorded performances are put to new commercial uses.

The complaint further alleges that UMG and Warner have “refused to provide information to the AFM about which recordings and whose work is being licensed”, which hardly seems like the behaviour of companies interested in “ensuring that artists, songwriters, and rightsholders benefit from generative AI.”

The case exposes the limits of treating licensing, attribution, and compensation as purely technical problems, while also underscoring the need for artists to build and deploy collective power. Even a system capable of identifying every recording used in training or generation—a technically ‘perfect’ attribution algorithm—would not, by itself, determine who can authorize the use of a recording, how revenue should be divided, or whether the musicians who performed on it have any meaningful say. Those are questions of bargaining power and governance. This is why collective leverage-building is so important. As AI companies and labels rapidly establish licensing agreements, the standards governing AI’s emerging political economy are already taking shape. Artists must act now if they are to influence them.

If you follow my writing about financialization in music, you’ll see that a recurring theme is the question of ‘who has the power to shape the future of music?’. The struggle over who gets to establish the rules governing generative AI is part of this broader contest running through the contemporary music economy. Meanwhile, the same struggle is playing out in artist development, where structural shifts in music and tech ecosystems, along with unequal access to capital, shapes who has the resources to influence what music gets made and heard.

Independent music businesses face a fundamental, structural disadvantage in accessing the capital needed to compete for and invest in emerging artists. Early-stage artist development requires companies to absorb substantial risk before an artist has generated predictable revenue or built a catalog that can serve as collateral. Major labels are, by their nature as large companies, able to finance artist development through the income and borrowing power of their enormous existing catalogs, which, as discussed below, is increasingly reinforced by partnerships with institutional capital. In contrast, smaller labels, distributors, and artist-services companies generally lack comparable assets and access to capital, making it far harder for them to compete for and retain promising artists.

Stem Distribution’s experience with Chappell Roan illustrates this problem. As co-CEO Milana Lewis explained to Billboard in June—following the company’s acquisition by Concord in March—Stem distributed Roan’s debut album, but lacked the financing to invest more substantially in her development. Without a sufficiently valuable catalog or other assets to help finance artist investments, Stem couldn’t compete once Roan began breaking through and Universal Music came calling. “We just always got outbid,” Lewis said, “and the majors always were able to poach.”

This imbalance isn’t new; indeed, it is a structural feature of capitalism itself. Independent labels have long sought out and developed artists who later moved to majors in search of larger budgets and international infrastructure. However, in that traditional model, indies would retain valuable rights in the recordings they helped create. Beggars Group’s continued ownership of Adele’s first three albums offers a particularly successful example of this model. By moving to UMG’s Columbia Records, Adele gained access to the resources needed to continue growing her career, while Beggars retained a valuable catalog capable of financing further artist development.

Increasingly, however, artists are beginning their careers by releasing music independently through digital distributors. Labels then use the massive amount of data available to them these days to identify momentum and compete for artists, often before an independent label or indie distributor has spent years developing them. A distributor or artist-services company such as Stem may help an artist build an audience without retaining an equivalent asset once the relationship ends. The threat, then, isn’t simply that majors have more money than independents. It is ever thus! Rather, it’s that data-driven scouting, alongside catalog-backed financing and growing partnerships with institutional capital allow larger companies to enter the competition earlier, giving smaller music businesses less opportunity to turn their investments in emerging artists into the durable assets needed to finance the next generation of artist development.

Darius Van Arman, the co-founder of Secretly Group, recently described the financial bind underlying this shift from the perspective of an independent label group. In his simplified account, a small creative company earns $100, pays $50 to artists and another $45 to staff and overhead, then hopes to retain the remaining $5 as profit. A few unsuccessful releases, rising debt costs, or an economic downturn can quickly erase that margin, reducing a company’s ability to absorb risk and invest patiently in new artists.

The consequences of the shift extend beyond the financial health of individual businesses. Independent labels have historically played an important cultural role by investing in artists, scenes, and sounds whose commercial potential was not yet obvious. A development system increasingly organized around measurable early momentum instead favours artists already performing well within established platform, genre, and audience categories. As independent companies lose the time and resources to make patient investments in left field artists, the result isn’t only a more consolidated artist development pipeline, but a narrower one.

This isn’t meant to romanticize independent music companies or suggest that every major-label deal is bad for artists. The structural problem is that, as data-driven scouting and better-capitalized competitors move earlier into the development cycle, the businesses taking patient risks on unfamiliar artists are increasingly less able to retain the returns needed to absorb losses and make those investments again and again. This tension was central to the first two ORCA reports, which documented the value independent labels create by developing artists, supporting specialized communities, and reinvesting profits from successful releases into riskier work. When those businesses can’t retain enough of the value they help create, the wider independent ecosystem loses the resources needed to sustain that work. Stem’s sale to Concord provides a good illustration of the outcomes of this shift, where limited access to capital dampened its ability to compete, and ultimately pushed it into the hands of Concord (which has now merged with BMG) and the continuing cycle of upwards consolidation we are seeing across music.

i.

Sony Music Publishing’s acquisition of Recognition Music Group, which was announced in May and completed in July, brings the former Hipgnosis catalog fully under Sony’s control.5 Completed through Sony Music Group’s catalog investment partnership with Singapore’s sovereign wealth fund GIC, the transaction covers more than 45,000 songs including stone cold jams by Fleetwood Mac, Lady Gaga, Bon Jovi, and Rihanna, as well as a part of the rights to the perennial money-printing machine that is Mariah Carey’s ‘All I Want for Christmas Is You.’ The sale was reportedly valued at between $3.5 billion and $4 billion.

Recognition combines the publicly listed Hipgnosis Songs Fund—which Blackstone took private in 2024 following dividend cuts and governance problems—with Hipgnosis’ existing private catalog assets. The sale closes a major chapter in the catalog boom that Hipgnosis helped create, as well as a long period of journalists needing to keep straight which wonkily named Hipgnosis company—Songs Assets, Songs Fund, or Songs Management—is which.

I was going to write in more detail about this deal and what it means for the current catalog market, but Philippe Astor beat me to the punch with his excellent seven-part investigation for Music Zone. The series goes deep on everything from contemporary catalog valuation frameworks and buyer archetypes to emerging markets and the catalog market’s broader evolution across time.

Across the series Astor argues that institutional investment in music catalogs is moving away from standalone funds and publicly listed companies toward privately held partnerships—such as Sony and GIC, Warner and Bain Capital, and UMG’s Chord Music—that combine institutional capital with the acquisition, administration, and marketing capabilities of major music companies. These structures also allow publicly traded music companies like UMG and WMG to pursue catalog acquisitions without placing the full cost directly on their own balance sheets and exposing their share prices directly to the performance of those investments.

Bringing it back to the transaction at hand, Sony is set up to absorb the Recognition portfolio into its existing, tech-optimized global publishing operation, and hold the rights without the quarterly dividend pressures that destabilized the public Hipgnosis fund. Major labels also benefit, as I have written, from vertical integration across the recorded music value chain, with interests that span production, rights management, distribution, and even partial ownership in streaming platforms. As a result, they have considerable influence over the terms on which music is monetized and consumed, and in turn, over the value they can extract from their own catalog assets. In effect, this makes major labels attractive catalog partners for institutional investors because they combine the expertise to administer and monetize music rights with the market power to shape the conditions under which those rights generate revenue.

ii.

The proposed merger between BMG and Concord, which we covered in the previous edition, has moved closer to completion. On June 17, the transaction received unconditional competition clearance from authorities in both the United States and Germany. Several jurisdictions remain outstanding in terms of regulatory approval, but the deal is nonetheless expected to close in Q4.

The German regulator concluded that the combined company “would not significantly impede effective competition,” pointing to the massive scale of the three major music groups, Universal, Sony, and Warner. In effect, the merger was deemed acceptable because even the combined BMG–Concord entity would remain significantly smaller than the dominant three.

That reasoning, however, evaluates competition primarily at the level of the largest music companies. It gives less attention to how the emergence of a fourth major-scale company could affect smaller independent labels, and particularly, as discussed above, their ability to compete for artist signings against companies with far greater access to capital and substantially larger balance sheets.

iii.

CVC Capital Partners has agreed to acquire a majority stake in DistroKid at a reported valuation of approximately $2 billion. DistroKid provides distribution services to approximately four million artists and claims responsibility for around 40% of all new music released globally. Unlike catalog investments, its business isn’t built primarily around acquiring royalty streams. Instead, it generates recurring subscription revenue by charging independent artists annual fees to distribute their music, while allowing them to retain their royalties. This is a business model that relies on scale, and also one that is well positioned to benefit from the massive volume of AI generated tracks that are now being fed to distributors and onward to streaming platforms.

The deal comes amid a wider rush to acquire distribution companies and related infrastructure. The major labels, in particular, have invested heavily in distribution businesses, giving them access to a growing source of revenue while extending their influence over a part of the value chain on which an increasing number of artists and labels depend. Control over distribution also provides greater leverage in negotiations with streaming platforms and, as AI reshapes the industry, over increasingly strategic systems for catalog access, attribution, and payment. Just as Warner’s acquisition of Sureel gives it leverage to set the terms of generative AI attribution and compensation, owning distribution businesses provides groups with greater influence over the terms on which music reaches digital platforms and artists and labels are paid.

The purchase also raises familiar questions about how private equity ownership may shape the long-term development of core music infrastructure. CVC Capital manages €209 billion in assets and has previously invested in music and live entertainment through major festival owner Superstruct, which has faced boycotts over its parent company KKR’s ties to Israeli technology and defence firms.

iv.

Bill Ackman’s short-running effort to reshape Universal Music Group’s ownership has come to a conclusion. On May 27, Cyrille Bolloré—whose family controls approximately 28% of UMG through Bolloré SE and Vivendi—urged the company’s board to reject Ackman’s proposed $64 billion takeover. Two days later, the board did just that. Then, just under a week later, UMG bought back €250 million worth of shares from Ackman’s Pershing Square, completing his exit from the company. Days after buying out Ackman’s remaining stake, UMG went and raised €1 billion through a new bond offering, largely to refinance existing debt. Finally, earlier this week Universal completed a $570 million share buyback, purchasing 26.7 million shares from investors and returning another substantial sum of capital to shareholders.

Taken together, these moves demonstrate the strength of Universal’s balance sheet—which is supported by low leverage, plenty of liquidity, and ownership of a whole lot of valuable music assets—and its willingness to use that strength to manage ownership challenges, keep shareholders happy, and preserve control of its business.

v.

On the catalog acquisition front:

• Primary Wave continued deploying its $2.225 billion fourth catalog fund, picking up rights from Pete Townshend, Donna Summer, and Intocable. It also purchased the Hipgnosis album-art collection from co-founder Aubrey “Po” Powell, including artwork associated with Pink Floyd, Led Zeppelin, and other classic acts.

• HarbourView Equity, which is backed by Apollo, acquired Stefflon Don’s pre-2024 catalog, as well as the publisher’s share of select songs from Wolf Cousins—the Max Martin and Shellback-led songwriting collective behind hits for Taylor Swift, Katy Perry, Britney Spears, and others. HarbourView also sealed a strategic partnership with Chaka Khan focused on “catalog development, global licensing, and the development of new creative ventures.”

• Seeker Music continued to deploy the $267 million in asset-backed security capital that it raised in March with the acquisition of the publishing catalog of Simon Raymonde, the co-founder of the Cocteau Twins.

• Warner Music Group acquired the Red Hot Chili Peppers’ recorded music catalog for more than $300 million through Beethoven JV 1, its catalog investment partnership with Bain Capital. The deal covers 13 studio albums released between 1984 and 2022, while the band’s publishing rights are moving to Sony through its acquisition of Recognition Music Group.

• Influence Media Partners, a fund backed by BlackRock and Warner Music Group, picked up the music assets of Canadian company Anthem Entertainment, paying more than $650 million. Anthem’s portfolio includes rights from Canadian prog-legends Rush, among others.

• Shamrock Capital closed its fourth ‘Content Strategy Fund’ in late May. The fund was oversubscribed and raised $813 million to be put towards “entertainment rights including music, film, television, sports, video games, and creator economy opportunities.”

• Firebird Music launched a $750 million catalog fund backed by institutional capital, comprising $350 million in equity from Ares and The Raine Group, and $400 million in debt financing from Pinnacle.

• Former Blackstone executive Vlado Spasov launched “alternative investments” firm Trimontium in June, with $1.5 billion in assets under management. The firm includes music rights among its identified investment targets.

• Garth Brooks is looking for friends in high places as he explores a catalog sale, looking for as much as $2 billion.

vi.

Elsewhere:

• Cantilever, a curated streaming app focused on independent music, closed a $250,000 pre-seed funding round in early June, backed by multiple indie labels, including Domino, Ninja Tune, Sub Pop, and others. All are members of the Organization for Recorded Culture and Arts (ORCA), a group of 14 independent labels working to “increase music’s economic, social, and cultural value”. A wee disclosure: I developed and authored ORCA’s first two reports, which examined how indies contribute to these forms of value. Though I’m no longer contracted with them, I still very much support their mission. It’s truly exciting to see labels with artist-first values pooling their capital to invest in values-aligned companies like Cantilever.

• Back in April, Live Nation was soundly defeated in the US courts, losing the antitrust case brought against it by a coalition of state attorneys general. The case has now moved to the remedies phase, where the court could order structural changes, including, potentially, the breakup of Live Nation and Ticketmaster. In the meantime, the losses piling up don’t seem to be impacting the company’s bottom line. Live Nation’s share price hit an all-time high in mid-June, briefly pushing past a $40 billion market cap on the NYSE. Live Nation also continues to expand across Latin America. In June, they picked up concert promoter Dale Play Live, along with a majority stake in the Movistar Arena Buenos Aires. These deals follow similar moves in the region late last year, including the acquisition of a majority position in Movistar Arena Chile and an increased ownership position in Mexican promoter OCESA.

• Virgin Music Group (UMG) has agreed to sell Curve Royalty Systems to Matt Spetzler’s Jamen Capital, along with Merlin, the digital licensing organization which represents many independent music companies. The sale was required by the European Commission as a condition of approving UMG’s acquisition of Downtown Music. That Curve is now partially owned by Merlin is a huge coup. Royalty and accounting infrastructure in music is highly specialized, and Curve serves a huge variety of independent labels. Bringing it back under independent ownership, particularly with Merlin, which represents independent music companies around the world, should help preserve its neutrality and ensure that its development remains responsive to the needs of the labels, artists, and wider community it serves.

• A May report from credit rating agency KBRA points to a slowdown in the music royalty securitization trend that we examined in the last edition of NoF. The agency has rated $12.9 billion in music royalty-backed securities since 2020, but expects annual issuance to fall by roughly 25% in 2026, from about $3.3 billion to $2.5 billion. The decline doesn’t necessarily indicate that investor interest in music rights is collapsing. Rather, it reflects the trend discussed above and illustrated by Sony’s acquisition of Recognition Music Group. Catalogs are increasingly consolidating within partnerships that pair major music companies with institutional capital and can finance acquisitions through their partners’ balance sheets or broader capital commitments, reducing the need to securitize royalty streams.

• Willard Ahdritz, the founder of Kobalt, is leading a funding round in Madverse Music Group, an India-based AI music distribution company. Ahdritz stepped down as Kobalt’s chairman after Primary Wave completed its acquisition of the company in March.

What was David Turner writing about at Penny Fractions this time three years ago?

In June 2023, with the catalog market showing early signs of the re-orientation discussed above, Turner surveyed the state of music catalog sales and found them in a period of transition. After years of rapid growth, deals had started to slow by the end of 2022, both in number and size. Major catalogs were being withdrawn from the market when sellers could not secure premium valuations, while cracks were emerging in publicly traded catalog funds such as Hipgnosis and Round Hill (which would later be acquired by Concord, and was recently absorbed into BMG). Rising interest rates had sharply increased the cost of capital, squeezing margins and exposing the weaknesses of the highly leveraged catalog acquisition models.

David concluded that, while the slowdown could be read as a full-on market stall out, it was more likely a transition period. Investor confidence in the big public funds was becoming shaky, but the market was also beginning to diversify. Buyers were pursuing more niche-focused opportunities, including genre-focused catalogs in areas such as EDM and undervalued international repertoires, particularly in Asian markets.

As we know now, a complete stall never materialized. Instead, the market has continued to evolve, with capital reorganizing around different buyers, financing structures, and scales of acquisition.

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✊ A Modest Proposal (Damon Krukowski / Dada Drummer Almanach)

“This points to a simple solution for the chaos introduced by generative AI music: Pay human artists fairly. Let’s imagine that streaming platforms switch to user-centric accounting. All the generative AI tracks being uploaded could not generate any more income than its specific listeners’ provide. If no one listens to this crap, it earns nothing. And much of the incentive for uploading it disappears.”

✘ In this short but dense essay Damon points to one of the simplest ways to disincentivize AI slop: adopt user-centric accounting on streaming platforms. Under this model, each listener’s subscription revenue is divided among only the artists they listen to, rather than allocated according to each artist’s share of platform-wide listening. User-centric accounting has been proposed for years as a partial remedy for a much broader set of economic problems facing artists, and versions of it have already been adopted by platforms such as SoundCloud. As Damon notes, however, the major streaming platforms, distributors, and labels have little incentive to embrace it, because their business models benefit from the scale and concentration of listening rewarded by the existing pro-rata system.

♻️ Creative FLIP:Towards more resilient cultural and creative ecosystems (Goethe Institut / Else Christensen-Redžepović)

“Increasingly, resilience is framed as an expectation placed upon the [creative] sector, requiring it to continue contributing across multiple policy domains despite operating under structurally unstable conditions. Traditional understandings of resilience as recovery or “bouncing back” after disruption are therefore insufficient in a sector shaped by continuous technological, social, ecological and political change. Instead, resilience should be understood as a systemic and dynamic capacity to adapt and transform across interconnected levels of the ecosystem.”

✘ A very welcome intervention from Creative FLIP arguing that creative industries and cultural policy should be designed to support the long-term resilience of creative ecosystems. Particularly valuable is the report’s emphasis on structural measures, including support for sectoral coordination organizations, or “ecosystem builders,” programs that lower barriers to entry for smaller organizations, and mechanisms for sustained dialogue across policy areas.

🛠️ Your AI Is Not a Tool (L. M. Sacasas / The Convivial Society)

“I confess that I am astounded by how blithely some insist that it is all as simple as learning to use AI well, as if we had not just undergone a nearly 20-year, society-wide experiment showing that a so-called “tool,” say a smartphone or a social media platform, will (mal)form even the most vigilant and virtuous user into its own image and shape. This is the blindness at the heart of modern technological hubris. It is the firm but misguided conviction that our “tools” exist entirely outside of us and thus, if taken up with requisite skill, can be “safely” deployed.”

✘ The risks posed by new technologies have only become more apparent since the rise of social media, as technology companies and their investors have accumulated greater political power and influence over the economy. I don’t mean to be a complete Luddite, but we would do well to learn from the lessons of recent tech history as we work through how best to govern and regulate new, potentially dangerous technologies like AI.

Continuing with the theme of “music for biking” from the last edition of NoF, here are legendary Peterborough post-punks Lonely Parade with some perfect music for cruising around on two wheels after the show lets out!