By Bill Ebinger | ABF Global Search
Music royalties are moving from collector’s curiosity to institutional balance sheet, and asset-backed finance executive search now tracks the specialists who underwrite them.
Neuberger Berman’s Louay Mikdashi and Jonathan Shahrabani put a marker down this week. Music royalties, they argue, have crossed from niche market segment to institutional asset class. Brookfield’s credit leaders — Craig Noble, Robert O’Leary, and Armen Panossian — frame the same shift more broadly. Specialty finance is where specialization creates competitive advantage. That backdrop is why asset-backed finance executive search increasingly maps talent against royalties, life settlements, and other esoteric cash flows. Global recorded music revenue surpassed $30 billion for the first time over the past year. It was the 11th consecutive year of growth. Revenue climbed from $21.6 billion in 2020 to $31.7 billion, per the IFPI Global Music Report. That durability is the story institutional allocators are now reading closely.
Why Are Music Royalties Suddenly Investable?
Two developments changed the picture. Streaming turned music income into recurring, subscription-like cash flow. Platform reporting became transparent and auditable.
The second shift was infrastructure. Performing rights organizations and mechanical rights collectives now track usage across markets. Collection matured to the point where a catalog’s income can be modeled with confidence.
The result is a cash flow that behaves like the collateral ABF investors already understand. Royalty income is contractual, recurring, and auditable. Copyright lasts the life of the author plus 70 years. That gives these streams a long-lived, diversified profile with low economic sensitivity.
This is not a new idea in principle. Bowie Bonds raised $55 million in 1997 by securitizing David Bowie’s future royalties. What has changed is that the plumbing now exists at institutional scale. The revenue held up through a pandemic, a historic rate-hiking cycle, and significant geopolitical disruption.
How Does This Fit the Wider ABF Universe?
Music royalties sit inside a much larger frame. Asset-based finance underwrites against pools of underlying assets and their cash flows. It does not rely primarily on corporate creditworthiness.
That distinction matters. The global ABF universe is estimated at roughly $43.5 trillion, with $20.7 trillion in specialty finance alone. Royalties are one segment among many — aviation, fund finance, significant risk transfer, and life settlements share the neighborhood.
Each segment carries its own legal frameworks, servicing requirements, and collateral characteristics. That is precisely why dedicated expertise is difficult to replicate. Specialty finance accounted for roughly 20% of all private credit fundraising over the past year, up from 4% the year prior. The pace of that shift tells you where capital is concentrating.
The structural protections are familiar to anyone who underwrites securitized product. Collateral isolation runs through special-purpose vehicles. Excess reserves, concentration limits, and recovery rights layer on top. We think of royalties as the same discipline applied to intellectual property rather than hard assets.
What Do the Financing Markets Look Like?
Two financing markets have grown around music. Banks now lend against catalogs with senior secured facilities. A rated bond market has also emerged.
KBRA reports that rated issuance has grown rapidly since 2023, with an expanding number of issuers. That is the signature of an asset class institutionalizing. Rated paper draws insurance and pension capital that private facilities alone cannot reach.
Valuation carries real dispersion. Recent-vintage masters trade around low-teens multiples. Publishing and older masters reach the mid-to-high teens. The multiple is purchase price divided by annual net publisher share.
Several hundred catalogs changed hands over the past year, at an average of roughly $23 million each, per Citrin Cooperman. That is a functioning secondary market, not a handful of trophy deals. The most compelling opportunities cited include country and Christian music, master and soundtrack royalties, and smaller catalogs suited for aggregation. Christian and Gospel was the fastest-growing U.S. streaming genre over the past year, per Luminate data.
What Are the Risks Allocators Should Weigh?
No asset class is frictionless, and royalties carry specific considerations. Long-dated cash flows are sensitive to discount rate assumptions. A move in rates repriced these streams materially.
Concentration is another factor. Streaming platform revenue is concentrated among a few players. Less-seasoned catalogs carry uncertainty until their income curves settle.
Then there is AI. AI-generated music introduces potential dilution risk to catalog value over time. Liquidity is also limited relative to public credit. Neuberger Berman frames royalties as a complement to traditional private credit, not a substitute. The return drivers differ from corporate spread risk, which is exactly why they diversify a book.
These risks are underwritable, not disqualifying. What they require is genuine specialist judgment. The teams that price discount rate sensitivity and screen for AI exposure are the ones with an edge here.
What Does This Mean for Asset-Backed Finance Executive Search?
The structural feature worth tracking is the “novelty premium.” Neuberger Berman argues that nascent asset classes not yet fully institutionalized may deliver durable cash flow with reduced economic sensitivity. Brookfield makes the parallel point that specialization itself is the competitive advantage in ABF.
Both observations point to the same talent question. As specialty finance climbs toward a fifth of private credit fundraising, the scarce input is not capital. It is people who can underwrite legal frameworks and servicing mechanics that are difficult to replicate.
This is where asset-backed finance executive search intersects with the royalty story directly. A catalog priced on net publisher share requires a different skill set than a corporate credit book. The performance driver is contractual usage income, not EBITDA or spread. For institutional credit teams evaluating royalty and esoteric ABF allocations, the metric worth watching is whether platforms can staff genuine segment expertise as origination scales. We see the same pattern across aviation, life settlements, and significant risk transfer. Each rewards dedicated specialists over generalists. The novelty premium is real, but it accrues to the teams equipped to capture it.
Frequently Asked Questions
What should allocators know about asset-backed finance executive search in royalty strategies?
The core signal is specialization. Royalty underwriting rests on contractual usage income, copyright duration, and net publisher share multiples that diverge sharply from corporate credit metrics. Asset-backed finance executive search in this space centers on people who can price long-dated cash flows and screen for concentration and AI dilution risk. With specialty finance at roughly 20% of private credit fundraising over the past year, up from 4% the prior year, demand for segment specialists is intensifying. Allocators should note that each ABF segment — royalties, aviation, life settlements — carries distinct legal and servicing requirements. The expertise is difficult to replicate. That scarcity is why platforms building royalty coverage compete for a narrow pool of practitioners who understand both the structuring discipline and the underlying rights economics.
How do music royalties compare to traditional ABF collateral?
Royalties share ABF’s defining feature: cash flow underwritten against assets rather than a single borrower’s creditworthiness. The structural protections are familiar — collateral isolation through special-purpose vehicles, excess reserves, and recovery rights. Where royalties differ is the collateral itself. Intellectual property has no salvage value in the way an aircraft or equipment pool does. Instead, value derives from a copyright that lasts the author’s life plus 70 years. Global recorded music revenue surpassed $30 billion over the past year, the 11th consecutive year of growth, which underpins the income durability. The rated bond market that KBRA tracks since 2023 gives royalties a securitization path comparable to more established ABF segments. The trade-off is limited liquidity and discount rate sensitivity on long-dated streams, which seasoned underwriters manage through structuring.
Why is specialty finance growing so fast within private credit?
The shift is structural, not cyclical. Specialty finance climbed from 4% of private credit fundraising to roughly 20% over a single year, per Brookfield’s credit team. The driver is the same bank retrenchment that reshaped credit markets since 2008. Regulatory capital constraints made asset-heavy origination less attractive for banks on a risk-adjusted basis. Non-bank managers stepped into that void. The global ABF universe now stands near $43.5 trillion, with $20.7 trillion in specialty finance alone. Within that expansion, esoteric segments like royalties, life settlements, and significant risk transfer offer return drivers distinct from corporate spread. Each requires dedicated expertise. That combination — durable structural demand plus hard-to-replicate skill — is why specialty finance is drawing both capital and talent at an accelerating pace across the market.
Bill Ebinger is the founder of ABF Global Search, a boutique executive search firm specializing in asset-based finance, CLOs, securitized products, private credit, direct lending, fund finance, and real estate debt. He brings over 20 years of executive search experience across structured credit and alternative credit markets.
Source:
https://www.nb.com/insights/article-music-royalties-explained-from-niche-market-segment-to-institutional-asset-class.
https://www.brookfield.com/views-news/insights/accessing-next-layer-private-credit#understanding-credit