McCarty sees the value not just in Canadian songwriters that are chart-toppers like Justin Bieber, Drake, Shawn Mendes, The Weeknd and Alessia Cara, but the behind- the-scenes collaborators found in the small print of publishing credits.
Alongside producer-songwriter Gavin Brown and McCarty’s former SOCAN colleague Rodney Murphy, who are also based in Toronto, the intellectual property and rights management company has partnered with Toronto investment firm Barometer Capital Management Inc. to form the Barometer Global Music Royalty Fund, a limited partnership with a targeted size of $200 million, “that will invest primarily in the iconic catalogs and music rights of Canadian creators,” according to the press announcement.
McCarty, a 2019 Canadian Music & Broadcast Industry Hall of Fame inductee, spoke with Billboard about his new venture, and why Kilometre Music Group is going after Canadian copyrights.
The press release announcing Kilometre calls it “groundbreaking.” How so?
It's the mission to essentially repatriate, reclaim, reassemble the rights of the great Canadian songs. Nobody else is doing that.
That's the difference, that you're keeping it Canadian?
"Keeping it Canadian" sounds pretty limiting. There are two main differences between us and everybody else. We are focused on a particular group of songwriters and songs and when we assemble them all, it will be an utterly world-class portfolio that anybody in our business in the world would want to have, but it just happens to be that it's mostly, if not entirely, created by Canadians.
Other companies are going after Canadian songs. Neil Young just sold 50% of his publishing to Hipgnosis. But you're not going after the international ones?
We wouldn't not do a deal for a song that’s not Canadian. If catalogs come along that make sense as an investment, or are related to our strategy, where the primary piece is from one of our target Canadians or a catalog that was inspirational to our target group, we would absolutely look. We'd look at anything that's a good investment, but this is our focus. The other thing that’s different for us than most of the other new entries into this space is that we’re going to be investing in known writers and new songs by unknown writers.
What is the advantage for a writer to go with Kilometre versus Hipgnosis versus a global publishing company like Universal?
We've got a great track record at being great publishers, great developers of talent, great developers of valued songs. As a team, we have a world-class track record that way. We’re a small boutique and given the tight focus that we're going to have, we were going to build a community of people that will be helpful to all the new writers and songs.
Who’s on your wish list?
Just look at any of the international successful Canadian music the last five decades.
That’s a long list.
It's an incredibly long list. Canada has been punching above its weight on the world music scene. There's been a quiet Canadian invasion of the music world for the last five decades and it's reached a fever pitch in the last five years, to the point where it's kind of absurd that the whole world's not talking about it. But one of the reasons for that is people don't look beyond the artists. One of the things that I've always known but was really struck with when I was at SOCAN was the huge number of people having international success with their music that aren't the artists — the co-writers, the beat-makers, the producers. As big as the artist story is, with Justin Bieber and Drake, Shawn Mendes, Alessia Cara, Jessie Reyes, it's a way bigger story about their collaborators. Those people also collaborate with non-Canadian artists. So anytime you see a notable number of Canadian artists at the top of the world charts, I guarantee you there's a significant portion of the rest of the top of the chart that’s powered by Canadian writers, producers, and beat-makers. We think the Canadians are generating $600 million (USD $472 million) a year in royalties.
You arrive at that figure based on your knowledge from working at SOCAN?
That comes to my industry knowledge and our deep understanding of music royalties and the economics behind that. It’s a guesstimate, but I think it's a conservative guesstimate. I think that Canadians in the last four, five decades or so, have generated over $6 billion in worldwide royalties.
Did your time at ole (now Anthem), a Canadian independent which launched with financial backing from the Ontario Teachers’ Pension Plan, show you it was possible?
I've been impressed with Canadian talent and getting recognition for it and opportunities for Canadians and helping Canadians reach the world stage and cheering on Canadians who reach the world stage my entire career, if not my entire life.
But you’ve always had a boss.
For almost 20 years I was part of the problem -- when I ran EMI [we were] investing in Canadian artists on behalf of a foreign company. So an awful lot of copyrights from that era, they don't belong to or aren’t owned in Canada because of the deals that I did. I’m out to get them back. [laughs]
So during your time at SOCAN you had this idea of buying back Canadian copyrights. Did you meet with various investors?
No. The catalyst for it all coming together with Gavin Brown. He is a producer/writer that I signed to EMI like 20 years ago. We had a tremendous amount of success together developing Three Days Grace and Billy Talent, and Gavin's had a lot of success beyond that. He's very entrepreneurial and he's always known about my interest in doing this type of thing. He happened to be golfing with Greg Guichon, who is the chairman and founder of Barometer Capital. I've known Greg for 25 years and we've had these kinds of conversations for a while, but never seemed to click on a mutual understanding of what the vision and opportunity could be. On the golf course, Gavin started speaking to him and they realized, "Hey, you're in the music business," or "Hey, you're in the financial world." And then Greg said, "I've got a music royalty fund and we're thinking of doing another one, only way bigger." And then he said to Gavin he tried to get Mike McCarty involved, but can't seem to come to a common ground with him. And Gavin said, "I’ll call him." Gavin called me up and I said the same thing. And then an hour later he called me back and said, "He's in."
And then you lured Rodney?
No, I didn't lure Rodney. Gavin lured Rodney. We started to talk about the strategy of whose music we wanted to acquire. A lot of it was the most successful music of the last 10 years. I kept talking about how instrumental Rodney was in our success at SOCAN and Gavin said, "Okay, I'm going to go get Rodney then." Barometer’s role is to raise the money and our role is to acquire the acquisitions and manage it all.
Are you autonomous? You can make the offer and can approve the purchase?
The Kilometer principles are the decision makers on the investments. We also have Kyle Mullen from Barometer’s first fund [Music Royalty Fund]. He was the [royalty] analyst for the value of the catalogs and was very involved in negotiating the deals. Their first fund has done very well. It's a small fund, a 10th the size of what this one's going to be. They bought very small catalogs, not particularly well-known, looking for under-the-radar type deals. They found some good ones. They had a really good return. But the focus of [Kilometre] is iconic songs. In my entire time I've been in the music publishing and copyright business, one of the things I learned was that quality matters and great songs that hook themselves to the culture last forever. Lightning strikes them over and over again, like the TikTok video at the end of last year that used “Dreams” by Fleetwood Mac. Those things happen all the time to great songs. There's more protection when the economy is bad. It's like owning Boardwalk and Park Place in Monopoly.
What would your pitch be to a legacy artist?
Let me equate that to one of the things that I already knew when I came to SOCAN. My job was to repatriate writers and their rights and their revenue and keep the upcoming generation, and that's what we did. We got back almost everybody that had ever left, and we kept all the new people that emerged when I was there. The pitch was very simple: "If we're competitive on the business side, wouldn't you like to work with people you know and trust, and wouldn't you like to contribute to the mission of supporting the Canadian institutions, Canadian economy, and the future of other Canadian writers?" And almost every single time they all said "Yes." We [Kilometre] are set up to be competitive on the business side and we already know from our early conversations with people that we'd like to deal with, that it matters to them, supporting where they come from and having the feeling of completing their circle.