VIEL – SMG International Catalog – At Auction

VIEL - SMG International Catalog - At Auction

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Description

    SMG International is a mixed diverse catalog of covers of Latin Hits and Classic Songs. The revenue has been flat over the last 12 months even with the continued downward trend in downloads because of the increase in streaming and additional albums.  Because most of these are re-recordings of hits and classic songs, you will not see the normal spike and then accelerated decline of an artist's normal release of a new song.  This equates to revenue that is much flatter and has a longer more predictable tail.  This is a great opportunity for long-term revenue generation and includes the commitment to add an additional 3 albums a year.

    Although this is at auction, we are looking for offers to close this before the auction ends, or it will go to auction.  It does have a reserve price so if the auction closes without a winner we will look to close this privately.

    Auction Information

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      TERM:

      LIFE OF COPYRIGHT

      CATALOG

      SMG INTERNATIONAL: A GROUP OF 8 LABELS INCLUDING BACKING TRACKS AND RE-RECORDINGS OF INTERNATIONAL HITS IN THE LABEL LEGACY RECORDS, PLUS FOREIGN MUSIC FROM ITALY, CHINA, AND REVERSIONS OF NEW LATIN HITS. (List of Titles)

      RIGHTS INCLUDED:

      SMG INTERNATIONAL:

      • 50% OF THE SELLERS INTEREST
      • DISTRIBUTED BY BELIEVE DIGITAL AND CONTROLLED BY ROYALTY EXCHANGE

      TYPE OF ASSETS:

      SOUND RECORDINGS: INSTRUMENTAL PLAYBACKS, COVER SONGS, AND RINGTONES OF LATIN, ITALIAN AND INTERNATIONAL MUSIC.

      REVENUE IN THE REPORTED LAST TWELVE MONTHS:

      $ 30,736

      ADDITIONAL COMMITMENT:

      UPLOAD OF AT LEAST 3 NEW ALBUMS WITH 10 TRACKS PER LABEL PER YEAR.

      Analysis of Revenue and Streams/Downloads:

      Because of the changes in exchange rates and countries, we will look at both revenue, actual streaming and download data.

      Revenue – For revenue we will just look at the last 15 months of data with a set exchange rate from Euro’s at 1.18. Revenue should be used to look at past income generation and a guidepost for future revenue. But, to do a complete forecast you must really look at the underlying streaming and download data to better understand the trends that are driving revenue.

      Streaming and Downloads – To better and more accurately forecast future revenue, it is best to view the underlying streaming and download data. You will see this broken down into certain areas, by song, by year of release, by source. We will identify any outliers, for example, how and when these numbers are reported and how that can cause spikes or depressions. This data is more key than revenue to evaluate and predict future revenue.

      Anomalies and Trends:

      Before we get started with any analysis, we need to understand that there are anomalies in the data that will affect revenue, streaming and download data.

      Music download data is still continuing its decline and will continue to decline into the future.

      When looking at streaming and downloads you have to look at least 3 months before the last revenue report because in this example of the March revenue report it is actually still reporting data 3 – 4 months earlier. Each month will have this same lagging data because different countries and entities report information differently.
      In the streaming example below, we see a revenue report from March 1, 2018. If you look at the sales data that is generating the revenue, you can see that the main sales data being reported is from December and January 2 – 3 months lagging.

      In addition, you can see an even clearer picture in this chart where you can see how different providers pay on lagging data. Google and Spotify, for example, pay with almost one month behind in lag, Deezer and UMA are two months and Kbox and Yandex are three months.

      You can also see how some providers don’t register their data monthly Kbox and Yandex. This is why we must really look at sales data and not just revenue.

      Anomalies – specific to the chart below we look at how two anomalies impact spikes in revenue and sales numbers. We have a spike in Amazon Premium downloads that has been removed from the chart and sales data to provide a better representation of sales data.

      We also have a huge Yandex sales influx of downloads that has also been removed for reporting. We are working to see why this happened but sometimes there are no explanations, only the ability to not count on these figures when forecasting future revenue.

      UPDATED – Revenue:

      We will focus our revenue analysis on the last 15 months of data. We will look at the revenue split between streaming, which is still increasing, and downloads, which are still in decline, and some additional analysis of the mix of what songs are producing the revenue and how all of this affects the risk in the catalog.

      Overall the revenue is flat which on the outset looks great. But we have to look deeper to understand what makes up this revenue and how it might impact the future revenue. UPDATE – The last three months of additional revenue have actually increased the forecast to an upward trend.

      First, we will look at the split between streaming and downloads to make sure that the decreasing downloads will not continue to drag down revenue. See the chart below and we have great news, download revenue represents only 16% of total revenue based the last three months average.

      UPDATE – With the last three months of data we see streaming continuing to increase and downloads remaining flat.

       

      Next, we can review the top albums and see if there is anything we need to be aware of. In the chart below we can see that the top 8 albums represent 50% of the revenue and the top two albums are 16% and 12% respectively of the last 3 months average revenue.

      You want to see two things here, that a catalog has a wide range of albums that reduce risk and that no one or two albums have the majority of the revenue. In this catalog it great that 50% of the revenue is from the majority of the albums and that the top two albums are not over 16%. UPDATE – With the last three months of data, the Rest of the albums are now at 55% which is a better metric and the top two staying at a combined 18%. So the growth is in the underlying larger pool of songs which is great news.

      The next item to review here is when the top albums were released. Are these tops songs recently released and still climbing, or are they in steep decline or in flat line. Two of the albums were released in 2017 and as expected the Hit’s album is still increasing but at only 3% of revenue when that starts to decline it will not affect the overall so much.

      The Guardians of the Galaxy Mixtape is also still increasing and with the continued popularity of that movie franchise I would think the risk is lower for steep decline because we see the other Guardians Mixtape from 2014 is still doing great and these are all classic songs, not new releases.

      Looking at the chart below you can see all the top songs are trending up or in flatline and “The Rest” of the songs trending down. This is what is currently balancing the flat line of revenue. UPDATE – With the last three months of data, you can clearly see here that the Rest of the catalog has been increasing mainly because of increased streaming revenue.

      The conclusion here is that you could still see a continued slight decline in “The Rest” and either a continued increase in the top songs or at least a flat line, either way the future trend, without any more album additions, will see either flatline or decline in future revenue.

      The overall streaming market is still increasing, so you could get overall grown in the streaming market that could support higher revenue but that is not predictable.

      To follow on with the release year of the albums above, we can also look at overall revenue by release year to see how each years release of albums track from a revenue perspective.

      In the chart above we look at 2014, 2015, 2016, and 2017.

      2014 – basically flat
      2015 – basically flat, but saw a decline and then trended back up
      2016 – as expected, was trending down but has flattened out
      2017 – still trending up lead by Guardians of the Galaxy

      So the release by year follows the same logic as by album where it looks like 2016 is somewhat stable along with the earlier releases and 2017 is still increasing which could indicate that it will hit a decline to move into a more stable flatline in the future which could lower revenue.

      Downloads:

      Looking at download data we don’t see any anomalies that would have an adverse effect on the ongoing revenue except the continued ongoing slow decline of downloads.

      The spikes in downloads are because of new releases in 2017 and there is much more analysis on downloads in the Download Stream Sales SMG International spreadsheet if you want to look at downloads by release year and more.

      Because it represents such a small amount of revenue and it pretty predictable in the slow decline we will not spend more time on this. Also, there are two items I highlight in the spreadsheet where there are spikes from Amazon data and Yandex data that are just one time spikes in downloads to the upside.

      Streaming:

      Streaming shows the same tops songs with just a bit of difference in revenue because of this doesn’t include downloads which effects revenue.

      We see the same mix of % with 50% of streaming being in “The Rest” and the other 50% being in the top 5 songs with no song over 16%. See the chart below for how each album is tracking. No big nuggets here except for a bit of decline in the Swifty album which then flattens out.

      Overall streaming is continuing to increase overall as well as because of new releases. As mention in the beginning, I am not showing the last three months of data because of the lagging in reporting those streaming numbers.

      UPDATED – Overall Conclusion:

      This is a solid catalog with low risk based on these factors:

      • Only two albums in revenue and streaming are over 10% of the total (15% and 13%)
      • 55% of revenue and streaming come from the larger pool of albums Update – Last three months of data showed a stronger increase here
      • Three of the top albums are from famous movie brands Minions, and Guardians of the Galaxy which look to have long-lasting franchises
      • The songs on the albums above are all classic hits that should not go out of style
      • Streaming represents 84% of the revenue which is not declining like downloads Update – This has now increased to 87%, not because of decline in downloads, because they are flat but because of continued increase of streaming.
      • These are all karaoke songs and not by the original artist which means you don’t have the spike and drop that those artists normally see

      Areas of Risk:

      • Downloads are still decreasing overall in the market
      • Releases in 2017 could be propping up some of the overall declines
      • Two movie soundtracks could go out of style sooner than anticipated

      Data:

      There are three spreadsheets that you can review in Dropbox that contains all of this data.

      Updated – SMG International with revenue has been updated.  Because of the complexity of adding the new streaming and download data, only revenue numbers have been updated.

      SMG International – has all of the revenue summary information.
      Detailed Data SMG International – has all of the detailed data but it is broken into two sheets because of the size limitations by Excel.
      Download Stream Sales SMG International – has summary data by download and streams

      Here is a list of the top songs and their Spotify links.

      The Minion Movie https://open.spotify.com/album/1Lp9q0wzza7lKLY95Ctraj
      Guardians of the Galaxy Mixtape Vol. 2 (Covers) https://open.spotify.com/album/4gcOov9VDEHgLgEevkn9Ih
      #swifty vol. 3 https://open.spotify.com/album/5c7nhw3B8fUsa9l0OfEzTZ
      Exitos de Rbd https://open.spotify.com/album/1QBE0vBu2QTklxKAvQPVjQ
      All Time Hits, Vol. 15 https://open.spotify.com/album/3ogIHhbfg6wUarNpoAYljN
      It’s the Hits! 2017, Vol.17 https://open.spotify.com/album/6cTV7AmKFIob9WdcSxHDTt
      Mixtape: A Tribute to Guardians of the Galaxy https://open.spotify.com/user/129698701/playlist/47Ml9QsELoR3pvjkriYY3h
      Kisstory 2015 https://open.spotify.com/album/2IOj3pPn52LrOFDrkWURZW