Downtown Music Will spend US$200m without buying a song

[NEW YORK] Downtown Music Holdings, a closely held player in the recording industry, has created a US$200 million fund it will use to advance artists money in exchange for a share of their future song royalties.

The company is providing some of the money from its own coffers, and has also raised debt financing through Bank of America, according to company executives.

The aim is to make financing a part of the portfolio of services that Downtown Music can offer to artists and independent labels, such as distribution.

While record labels and private equity firms have spent billions in recent years to buy music catalogues from artists like Bob Dylan and Bruce Springsteen, Downtown is going in the opposite direction. It won't take ownership in artists' work.

"It's not about acquiring rights, it's thinking about financing as a service at a scale others haven't done," Justin Kalifowitz, Downtown's chairman and founder, said in an interview.

Kalifowitz founded Downtown in 2007, and built the company into a major independent music business.

Until last year, Downtown had 2 different operations - a traditional music publisher that works with a select group of songwriters and owns copyrights, and a services business for musicians and labels.

A year ago, the company sold its publishing library to Concord Music Group for between US$300 million and US$400 million.

The catalogue included songs from Adele, Bruno Mars and Sam Smith. Kalifowitz named his deputy Andrew Bergman as chief executive officer a couple months later.

Based in New York, Downtown has since focused on the services side, collecting royalties and handling distribution for more than 23 million music assets on behalf of more than 1 million artists from 145 countries. BLOOMBERG