The future looks bright in the streaming age, Wall Street experts say at AIMPsummit
of the Music Modernization Act, which creates a mechanical licensing collective that “hopefully will vaporize a ton of licensing friction.”
While there are some things that could derail the music asset valuation outlook -- say, if one of the major digital platforms blew up and fell apart; or if multiples continued to rise and became a runaway train; or interest rates were to rise suddenly and swiftly; or leverage discipline weakened and the amount of debt to equity in deals went out of whack -- the panelists said they don’t really see any of those things happening yet.
Addressing some of the specific things that have the potential to derail valuations, Massarsky Consulting partnersaid that while there's still lots of room for interest rates to rise, “right now we are not seeing any storm clouds” on the horizon. And if interest rates do rise or investment discipline breaks down, there are ways to hedge against those eventualities.
“You are seeing streaming driving cashflow,” which is driving valuations, Colletta agreed. Not only is streaming not yet slowing down, but the metadata that comes with it offers investors more transparency. Matsuura noted that streaming growth is further enhanced by the addition of more platforms like Netflix, which needs music, and growing acceptance in markets around the world.
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