From Hardcore to Hardcore MUSIC Investor: Q’s With Matt Pincus

There may be no better person on the planet to talk about the business of music in 2023 than Matt Pincus. Over the last two decades, he’s become a music business impresario, (and maybe the only one to have played in a hardcore band). Starting SONGS Music Publishing in 2004, when most major publishers weren’t investing in up-and-coming acts, he was able to build a major independent publishing powerhouse signing huge acts like Diplo, DJ Mustard, Lorde and The Weeknd before selling it in 2017 to Kobalt for a reported $170 million.

Pincus’ new venture, MUSIC, as the name suggests, is a long-term holding company that invests in music businesses. MUSIC was capitalized with $200m in May 2022 by Pincus and partners LionTree, Schusterman Family Investments and J.S. Capital Management. Since then, MUSIC has invested $105M of equity capital in a number of different music businesses, including music tech company Splice, Atlanta-based music company LVRN (Love Renaissance), ticketing company DICE, Soundtrack Your Brand, a provider of rights inclusive on-demand music to enterprise and HiFi and fintech business. Alongside Francisco Partners, MUSIC now holds a controlling stake in Kobalt, the music publishing platform that purchased SONGS.

Here, Pincus gives us his take on today’s music business environment, building teams, investment strategies and how his hardcore band Judge helped transform his life.

Pollstar: Let’s start with the fact that you may be one of the only major financial investors in the music business who’s played in a hardcore band.
Matt Pincus: I got in a lot of trouble when I was really young, and hardcore saved my life. Funny to say, but super unlistenable punk rock music made by total misfits got me better grades, got me off drugs, got me to quit smoking, become a vegetarian, live my life with purpose and eventually led to my career. I joined Judge when I was 17 years old and every good thing in my life came out of that. They were guys from Youth of Today who started the band. If I hadn’t met those guys, I would be in a different place today for sure.

How did that lead to getting into the music business?
We did two U.S. tours and were getting ready to go to Europe when the band broke up. I wasn’t a great musician, but I was really interested in the business. When we did our record deal, I made sure I understood it and dealt with some of the business aspects. I was like, I could be a bad musician, or I could be a good business guy—it was no contest.

How did you start SONGS?
I realized at EMI (after getting an MBA from Columbia, he worked for EMI CFO Roger Faxon), they were totally bailing on contemporary writers and they were in a financial trouble. This was at the bottom of the barrel before Apple iTunes and they were completely cutting bait on signing younger writers, like a 45% drop. I filed that information away. I was like, “If they’re getting out, I wonder what the other guys are doing?” It turned out all three majors were just not interested. They wanted to buy catalogs with a lot of cash flow.

I started looking at how many writers I thought I could get on the publishing side that
I had some connection to. It was all loud stuff in the beginning. I came up with a list of 80 and this model: If you had some capital, and could do life of copyright deals where you have a value at the end of the whole period and how many you would need based on looking at SoundScan to get them paying for the business. I came up with 30 a year I would need to build a little engine. I started doing a little on the side. Then I left in April 2004 and started SONGS.

You built an incredible team with Ron Perry, now head of Columbia Records, and Carianne Marshall, COO at Warner/Chappell, how important is spotting talent and building your team?
I could not have done it alone. If there’s one thing I got right, it was hiring great people and keeping them together for 12 years. If there’s one thing that really worked at SONGS, it was that. Look, the music business is all about people and relationships. At any given time, like any cohort or the class of people of a similar time in the music business, there’s probably like 1,500 per class that kind of know each other and come up together and evolve together. I still know a lot of those people from the early part of my career that are still in the business and in really interesting places. It’s all about people and relationships. Ron, Carianne and I went through the fire together.

There’s some stress in the current market, interest rates are through the roof, less liquidity, real estate slow down, layoffs and bank collapses. You’ve been through hard times in 2008 and 1999, what’s your take on current market conditions?
I don’t think we’re at 2008 or 1999 times, which were really bad times. But the good times are definitely over. Now is a moment for people who really understand music and the
people that make it, and can discern the outperformers from the also-rans. The financial people who buy copyrights, like to say music is an uncorrelated asset class. I don’t totally buy that, but it’s not totally correlated either. We tend to not do as well as technology companies do when times are good. And we tend to do not as poorly as other businesses when times are bad. In 2002, the record business was just getting hammered, and you couldn’t buy a dollar in the (recorded) music business. The last 5 years, it’s gone on a tear. And similarly live now, coming out of COVID, is doing great because of what’s going on in the business. So it’s not correlated with the overall economy, except in certain areas like interest, leverage and debt, but that only affects certain parts of the market.

Now that you sold SONGS and started MUSIC and are investing in music businesses, what are some of your investments?
I have five core investments: music tech/creator economy, which is Splice; I have DICE, which is really my bet on the live space; I have publishing and copyright, which is Kobalt; independent music which is LVRN; and B2B enterprise which is Soundtrack. Five areas that I think are going to transform over the next cycle in music.

Can you talk about DICE, ticketing is such a seemingly crowded and messy market?
The interesting thing about DICE’s business is that it’s about the live music consumer. At the end of the day, it’s the humans that I’m interested in, not just the transaction. The people that go to 11,000-cap and below shows around the world are the most passionate music consumers in the world. They are irreplaceable and distinct. So, rather than shaving off pennies as somebody else’s transaction, DICE is interacting with those people every day. And showgoers do a lot of things. They buy tickets, they’re interested in digital assets, they’re interested in merchandise and how it evolves. They’re interested in connecting. If you’re a DICE user from New York, you go to Mumbai, open up DICE, and go to Who’s Playing Tonight to see what’s up in a new city. So it goes well beyond the depersonalized transaction. To me, that’s what’s interesting about it.

How do you decide who to invest in?
The people I back are able who go into an undefined situation and figure out where the business is on the street in their pocket of the business. The music business is a long history of people finding where the bucks were in the room and how they could get $5 at a time. This goes back to some of the original people, the Ahmet Erteguns, the Clive Calders, people like the Lyor (Cohen), Kevin Liles and Jonathan Poneman who went on to build multibillion-dollar global companies. It’s a business of impresarios with commercial instincts.

As you look at these different verticals and decide to invest in them, what’s your inner voice telling you when you’re actually throwing down on these companies?
There’s a couple of definite themes. One of them is, what can you do today because your company exists that you couldn’t do yesterday because your company did not exist? And if you don’t have a good answer for that, then I should be with the guy or girl who does, because technology is really all about innovation.