Fair Pay for Every Play, Ep 13: Dario De Wet, State of MusicTech from an Investor point of view

The latest episode of Fair Pay For Every Play sees host, Kristian Luoma, in conversation with Dario De Wet.
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Dario is the Investment Principal at Anthemis Group, focused on investing in opportunities at the intersection of media and financial services. He has always been interested in the relationship between music, technology and finance and how the three industries can support one another.

“I’m an investment principal at Anthemis, which is an early stage venture capital firm. We specialise in Fintech investment, with a portfolio of 150+ across the US and Europe. I’m really focused on investing in businesses at the intersection of financial services and the media industry.”

“My passion [for the music industry] evolved as the industry changed and streaming took preference… it really piqued my interest as I grew into my professional career with the opportunities to tap into as the landscape progressed.”

In addition, Dario is the co-host of the MDLSKL (pronounced “middle school”) podcast. The podcast features Dario and his co-host, Farhan Lalji discussing their favourite music and it was born out of a shared passion to create something that is part of the music industry.

“He’s old school. I’m new school. So let’s meet in the middle! We both share common interests, so why don’t we talk about it?”

Kristian and Dario discuss music, technology and finance and the future of the three industries.

Timeline -

00:00: Introduction to Fair Pay for Every Play and guest, Dario De Wet

01:00: Dario discusses his current role at Anthemis Group and what they do

02:00: The root of Dario’s passion for the music industry

03:01: The growth of the MDLSKL podcast

04:30: How to build your knowledge of the music industry

05:20: Democratisation of royalties and streaming

09:04: How you can invest in music

11:20: Benefits of artists selling their catalogue

14:40: The most exciting changes coming in the music industry

Here’s the notes on how music creators and fans alike can develop an investment portfolio of music and capitalise on their creativity.

Build knowledge through conversations

In order to gain a wider understanding of the music industry, Dario says that you must talk to as many people as possible about as many different areas as possible. This collaboration between music creators, investors and fans will allow gaps and opportunities to be identified.

He also suggests observing strategies through analysing release campaigns and artist interactions, sharing literature or news articles and joining conversations on social media or forums.

“I think it’s just about having conversations with people and it’s not always necessarily conversations with people in the music industry, but people who look at these industries through different lenses.”

Understand financial streams

Dario enthuses about how artists can financially empower themselves both through royalty collection and alternative means. Unfortunately, as a consequence of the pandemic, touring essentially ceased and physical music sales have declined over the years, eliminating a previously weighty financial income.

In addition, digital service platforms like Spotify do not have completely successful models for artists to calculate and receive capital as that was not its original purpose.

“Spotify was created to solve a piracy and distribution problem. It wasn’t necessarily created to solve a money problem.”

In order to sustain itself, and in an attempt to pay music creators, Spotify has recently introduced a paid-for service where artists can make their music appear more and be discovered by users. However, this has its own challenges.

“You’ve got this real problem. The DSPs are working with labels to help with distribution, to get artists out, but almost 90% plus of revenue or royalties are going through the top 1% and everyone else has left scrounging around for the scraps.”

Consider an investment in music portfolio

At the moment, the music industry market is a hot one to invest in with music creators and performers auctioning their stakes in musical works.

“Music royalty investment can be perceived in multiple ways. I think the traditional way that people have looked at it is in terms of buying publishing catalogs, but I think that traditionally or historically revolves around the private equity space…

“Then there’s the B2C side which is really providing access opportunities for people like you and I or high net worth individuals to purchase specific stakes in specific songs. The reason why people are doing that is because we’re in a low-interest rate environment and looking for alternative opportunities to maximise return.”

While there are now fewer barriers to investing in music royalties, the jury is still out on whether sufficient financial return can be generated or if it is nothing more than a vanity investment for some.

One benefit is that the music industry is very much data-driven so investors can analyse their purchase. This data can also track how this market evolves.

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