For Larry Mestel, founder and CEO of Primary Wave Music, the company's latest acquisition resonates deeply. The New York-based company purchased the publisher's share of the eight songs on Boston's self-titled debut, which has sold over 25 million copies since its 1976 release, fueled by such classic rock staples as "More Than a Feeling," "Long Time" and "Peace of Mind." "It's a special catalog because Boston was one of my favorite artists growing up and I think Tom Scholz is a genius," says Mestel.
It's the latest in a string of publishing catalogs that Primary Wave has purchased since Mestel, a former executive at Virgin, Arista and Island Entertainment Group, founded the company in 2006. Primary Wave's 15,000-song catalog includes copyrights from Smokey Robinson, Aerosmith, Def Leppard, Hall & Oates, Boy George & Culture Club and Steve Cropper. Its recent high-profile deals include 2018's $50 million pact with Island Records founder and Mestel's mentor Chris Blackwell for 80% of Blackwell's share of Bob Marley's publishing catalog and an agreement to buy 50% of the intellectual property assets of Whitney Houston's estate this May.
Given Primary Wave's deep pockets, expect more deals to come. In addition to Mestel and some other executives, seven large institutional investors make up the bulk of Primary Wave's backers, giving the company over $1 billion in cash and assets under management. "We've got all the financing we need for the foreseeable future," says Mestel. (A 2013 strategic alliance with BMG, which included BMG buying significant rights to Primary Wave's publishing assets, has ended.)
It also has some high-profile management clients, such as Melissa Etheridge, Cee Lo Green, Brandy and Eric Benét. "The management and publishing companies are separate, but we do publish a lot of the artists we manage because there's a big synergy there," says the Brooklyn-born Mestel.
Is the Boston catalog the smallest number of songs you've ever bought?
Believe it or not, we have bought single songs [like Shirley Goodman's "Let the Good Times Roll"]. But I'd say, pound for pound, it's one of the best purchases we've made.
Paying huge multiples of 20 times net publishing share, or gross revenue, for individual songwriter catalogs isn't uncommon these days. Do you see multiples continuing to rise?
I think right now is a fantastic time for creators to sell because there certainly is a lot of money in the marketplace and, frankly, I think there's not a lot of smart money. Creators should absolutely take advantage now because there are so many factors that could affect multiples and the amount of cash available. But it's so important for creators to not just sell to a faceless company or a company that might go public — it's important for their legacy that they sell to a company that understands iconic and legendary artists.
Have you ever paid too much for a deal?
None that I regret, because everything that we've bought is spectacular music that I think any publisher would want. It didn't hurt us, but there may be a deal or two that I probably spent a little bit more than maybe we should have when I first started out. Now I know better.
You purchase assets from legacy songwriters and producers as opposed to newer creators. Why?
We're in the business of icons and legends. We've been successful taking [these] catalogs and introducing them to new youth culture and making the creators who have deals with us happy. We're not focusing on the new writers and producer catalogs because that's not our business. We're letting other people waste their money on that because those values and those earnings are only going to come down. I'm not saying the vision's wrong, I'm saying it's just not our vision.
You talk a lot about being a branding and marketing company as opposed to just a publishing company. What do you mean by that?
Almost every music publisher says they market and brand. And most of them are full of shit. There's a big distinction between synchronization — which is licensing — and real marketing. Marketing is creating a holiday [Father-Daughter Day] for Smokey Robinson. Marketing is doing a deal with a major beer company that's going to create a One Love One Heart beer for Bob Marley. It's developing a Whitney Houston Broadway musical.
Speaking of Houston, it has been nine months since you made that deal. What else is in the works?
They're putting the finishing touches on the hologram. Pat Houston, executor of the estate, has been very involved in that. That hologram tour is going to begin in Europe in February. That's being done in conjunction with hologram producer BASE Entertainment. The Broadway musical, we're going to make a very big announcement in the next two or three months. The estate and Primary Wave have teamed up with a writer who is an extraordinary success, as well as a producer that has had enormous success.
We've seen a rise of biopics like Bohemian Rhapsody and Rocketman, as well as films like Yesterday and Blinded by the Light. Are you planning similar projects?
We're developing in-house a script that we've almost finished on Glenn Gould, one of the greatest classical pianists ever. We're developing a hologram tour with Glenn. We're in the process of creating the Whitney bio-film in conjunction with Clive Davis and the estate. There will be a Smokey Robinson bio-film.
How will the rise of the music business in emerging markets like China and India affect your business?
Emerging markets are going to be a very big source of income for songs like those we've acquired. Bob Marley is heard in every crevice of the world. As the industry gets better at collecting in emerging markets, copyright protection continues to be enforced, and streaming continues to proliferate, that's going to benefit the types of catalogs we buy. That's why you're seeing prices where they are.
More and more publishing acquisitions now also include master recordings. Are you looking for those kinds of deals, too?
Absolutely. We have included masters and, in many cases, master royalty streams. We bought Count Basie's masters income stream. The Whitney Houston deal included the master royalties. Boy George & Culture Club included a master royalty stream. Pure masters are very difficult to come by, but for us having the master royalty is an add-on to our publishing, so it's a very easy transaction for us to make.
What catalog would you love to get your hands on?
Lennon/McCartney, 100%. To be honest, before we bought Bob Marley's music publishing, his would have been No. 1.