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Round Hill’s Latest Funding Went Almost Entirely to Rock Catalog

$86.5 million on Series C proceeds, plus some borrowings, went to about 5,600 compositions -- 90% of them from the rock genre.

Round Hill Music Royalty Fund focused almost exclusively on classic rock when spending the entirety of the $86.5 million of proceeds from a C share offering in July 2021. About 90% of the roughly 5,600 compositions acquired with C share funding was the rock genre, the company disclosed on Feb. 11. The round of acquisitions were also funded unspecified amount of debt drawn from revolving credit facilities.

If the saying “rock is dead” were indeed true, today’s music publishers would be burying money into a musical graveyard. But investors continue to chase consistent, predictable royalties of a genre that ages well. Round Hill paid an average of 17.9 times net publisher’s share to obtain the publishing rights, master royalty income and producer shares for music by the likes of Heart, Pearl Jam, Foreigner, Whitesnake and Alice In Chains.

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“Rock is a genre which we believe has among the most compelling fundamentals for successful long-term music royalty investing with a consistently more loyal fanbase, and music which is often more enduring than other genres,” Josh Gruss, chairman and CEO of the royalty fund’s investment manager, Round Hill, said in a statement. Over three quarters — 77% — of the income comes from compositions written between 1950 and 2010.

As Gruss explained to Billboard in 2021, Round Hill wants a diversified portfolio but finds it hard to invest in short-lived pop and hip-hop songs. Instead, “we are always looking for the safest, most consistent play,” he said. “We are not going to sacrifice the reliability of that cash flow for the sake of diversification.” Some of Round Hill’s bias stems from Gross himself, a guitarist for the rock band Rubikon. “Anyone who knows me knows how much I love hard rock and metal,” he said in 2020 when Round Hill’s record label division launched a rock-focused imprint called Black Hill Records.

Investors’ bets on the safety of classic music have looked prescient since the beginning of the pandemic. According to MRC Data, in 2021, catalog — titles older than 18 months — accounted for 74.5% of total album consumption, which covers album and track purchases as well as audio and video streams. That jump from 66.4% in 2020 is widely attributed to consumers seeking the comfort of familiar, comforting songs while stressed by COVID-19. Not only did current music — less than 18 months old — cede market share to catalog, its streaming volume actually decreased for the first time ever from 269.3 million to 228.1 million album consumption units.

Not that Round Hill doesn’t invest in other genres. This latest funding backed investments in the catalogs of reggae group Rebelution, R&B group The O’Jays and country singer-songwriter Niko Moon. Round Hill’s catalog already included country hitmaker Craig Wiseman and famed Motown songwriter Eddie Holland. But country and R&B represent just 10% and 6% of Round Hill’s catalog, respectively. Rock accounts for about 54%.

Now that the C share proceeds were spent, Round Hill will convert them to ordinary shares in May. Beyond that, Round Hill is eying a “near term pipeline” of publishing, master recordings and neighboring rights worth more than $120 million. “The [Round Hill] board is considering its options to take advantage of these strong opportunities, for the future benefit of shareholders,” the company stated.