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Acquisition #10: Dire Straits - All Works


This Private Syndicate investment opportunity features access to the manager’s commission of sound recording royalties earned by the complete recording catalog of legendary British rock band Dire Straits, as well as certain solo releases from band members Mark Knopfler and John Illsley.

This includes all six studio albums (most notably, the smash Brothers In Arms), hits like “Sultans of Swing,” “Money For Nothing,” and “Walk of Life” (along with their music videos), live albums, and any existing or future best-of compilations.

It also includes solo work of frontman Mark Knopfler, which among other releases includes soundtracks to movies like the beloved classics “The Princess Bride,” “Local Hero,” "Wag the Dog," and others. Click here for a list of the full catalog

Like all iconic catalogs — Dire Straits is actually growing faster than the industry at large. We want to bring you assets like this, and that’s why we’re so excited to announce this offer. Popular songs come and go, but classics like those in the Dire Straits catalog have uncommon longevity. As you’ll see in the Financials section below, this catalog’s earnings are not only still growing, but are outperforming the growth of the broader music industry.

Buying units of this Syndicate entitles you to these growing earnings generated from an epic music collection that stands the test of time. We are projecting a 10-year annualized IRR between 12%-15%.*

Key Drivers

According to the IPFI, sound recording royalties industry-wide increased 8.1% in 2017, and 5.9% the year before. Driving this music business rebound are streaming revenues, which increased industry-wide 60.4% in 2016 and another 41.1% in 2017.

As noted earlier, the Dire Straits catalog is already outperforming these growth trends, and we expect it will continue to. That’s because this catalog benefits from the industry’s streaming growth trend in several ways.

Sound Recordings: The streaming format benefits sound recording royalties over composition royalties. For example: Spotify pays around 60-cents of every dollar it makes to sound recording rights holders (which labels share with artists based on their contract), but only 10 cents to composition rights holders.

Record labels are seeing significant benefits as a
result. According to an analysis of publicly-stated financial results by Music Business Worldwide, labels Universal, Sony and Warner jointly turned over just over $6 billion — approximately $1 billion a month — between them in the first half of 2018 on a global basis.

Streaming contributed over half this total, with over $3 billion in the same period.

As you can see in the distributor pie chart above, record labels sources alone contribute over 80% to this catalog’s earnings. This means you as an investor may benefit from the industry macro trend of rising label streaming royalties.

Catalog Music: Proven older hits, like that of the Dire Straits catalog, drive streaming activity.

According to a BuzzAngle Music report released last year, over half of the music streamed via services like Spotify is classified as Deep Catalog music... music released more than three years ago. When combining both audio-only and video streams, that percentage increases to 65.9%

While streaming platforms may be a great discovery vehicle for new music, their foundation remain timeless classics like this. This puts the owners in a powerful position to negotiate higher rates in the future (which as an investor you too would benefit from).

Continued Relevance: Any new activity from a classic act like Dire Straits tends to drive fans to streaming platforms to revisit old favorites, or learn more about the source of older music recently discovered. While Dire Straits broke up in 1995, and it is highly unlikely they’re getting back together, there are some known upcoming developments that should generate renewed interest in the band’s back catalog:

  • New Mark Knopfler album: Frontman Mark Knopfler is perhaps the most well-known member of Dire Straits, and he continues to release new music (and tour). He is expected
    to release a new album this fall. New music, even a solo effort from a former member like this, tends to drive interest in back catalog. And should he tour in support of the new music, only better.

  • Mark Knoplfer Tour: While tickets have not gone on sale yet, Knopfler is preparing to tour extensively through the UK, Europe, and North America next year in support of the new album. These performances will almost certainly include his older Dire Straits songs, breathing renewed interest among existing and new fans alike.

  • “Local Hero” Musical: Mark Knopfler wrote the soundtrack for the film “Local Hero.” It’s so popular that one of the tracks from that soundtrack “Going Home” is the walkout anthem for the Newcastle United soccer team. A musical stage adaptation of the movie is scheduled to debut in early 2019, which may drive renewed interest in both the soundtrack itself (as well as Knopfler’s work with Dire Straits).

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