WEBVTT - This ETF Will Be Music to Your Ears 0:00:05.920 --> 0:00:06.640 Welcome to trains. 0:00:06.640 --> 0:00:08.920 I'm Joel Webber and I'm Eric Belchernas. 0:00:13.400 --> 0:00:18.080 Eric, you love music, I love music. Everyone loves music. 0:00:18.160 --> 0:00:22.159 And it turns out there is a music ETF. I 0:00:22.200 --> 0:00:22.840 did not know that. 0:00:24.120 --> 0:00:29.800 Yeah, there's a history to this. Famously, Quincy Jones filed 0:00:29.800 --> 0:00:32.840 for a music ETF I don't know, ten twelve years ago. 0:00:33.280 --> 0:00:35.840 It was going to be called QJ and it really 0:00:35.920 --> 0:00:38.519 just never launched. I think the issue I might have 0:00:38.560 --> 0:00:41.000 got held up in the SEC because you can't really 0:00:41.040 --> 0:00:44.880 advertise using a celebrity like that. But remember we actually 0:00:44.880 --> 0:00:48.360 interviewed them inside ETFs and asked them about the music industry. 0:00:48.760 --> 0:00:50.720 I mean, you'd think it was going to launch anyway. 0:00:50.720 --> 0:00:53.320 It never launched, so there was never really a music ETF. 0:00:53.360 --> 0:00:56.440 Then the k Pop ETF launched, but that's more just 0:00:56.560 --> 0:00:59.440 South Korean stocks and the entertainment industry there, which is 0:00:59.480 --> 0:01:01.520 a whole section of music for sure, but not the 0:01:01.520 --> 0:01:04.880 whole industry. And then boom, we finally got the first 0:01:05.080 --> 0:01:09.839 music ETF launched recently, and it's been a long time coming, 0:01:10.000 --> 0:01:13.560 and it's into a world of thematic investing, which is 0:01:13.680 --> 0:01:16.000 very popular, and that's sort of where we're at with 0:01:16.040 --> 0:01:17.920 this and it's going to be fun to explore because 0:01:18.480 --> 0:01:22.200 I met the person behind it at Exchange and I 0:01:22.319 --> 0:01:23.959 was blown away by some of the stats that I 0:01:23.959 --> 0:01:26.160 didn't realize. I'm into music, but I didn't know a 0:01:26.160 --> 0:01:28.160 lot of the background in this, and I thought it 0:01:28.200 --> 0:01:28.680 was interesting. 0:01:28.800 --> 0:01:32.720 The person behind the ETF David Schulhoff. He's the founder 0:01:32.720 --> 0:01:37.240 and CEO of Music Global Music Industry UTF ticker in 0:01:37.800 --> 0:01:45.800 USQ this time on Trillions the Music ETF. David, Welcome 0:01:45.840 --> 0:01:49.440 to Trillions, Thanks Jill, Thanks Eric. So I want to 0:01:49.480 --> 0:01:53.760 ask where this idea came from for you personally. Eric 0:01:53.840 --> 0:01:56.720 mentioned a little bit of the backstory. It seems so 0:01:57.120 --> 0:02:01.120 obvious music's a thing. There are companies these who are 0:02:01.120 --> 0:02:03.680 big on this, there are record labels, There's been so 0:02:03.760 --> 0:02:06.640 much disruption over the past few decades. Why did it 0:02:06.680 --> 0:02:08.480 take so long to put this into an ETF. 0:02:08.800 --> 0:02:11.440 Well, first, there really weren't a lot of companies until 0:02:11.440 --> 0:02:14.040 the last ten years that could be publicly traded. So 0:02:14.080 --> 0:02:16.320 in the last ten years you saw the evolution of 0:02:16.360 --> 0:02:19.840 tons of K pop companies, companies around the world, in Taiwan, 0:02:20.040 --> 0:02:23.079 in Japan, yet obviously in the US he had Universal 0:02:23.200 --> 0:02:28.320 Music Group, Live Nations Spotify, went public, Sphere, Madison Square Garden. 0:02:28.840 --> 0:02:31.200 So about two years ago, I was going to do 0:02:31.240 --> 0:02:33.480 another publishing company because if you recall, I had a 0:02:33.480 --> 0:02:38.120 company called Evergreen. We owned all the rights to MC hammer, jjkle, Bill. 0:02:38.000 --> 0:02:39.160 Monroe, death Row. 0:02:39.360 --> 0:02:41.720 I was going to do another music publishing company, like 0:02:41.720 --> 0:02:45.120 two years ago. I'm like, wait, Blackstone, KKR, Apollo, Providence 0:02:45.160 --> 0:02:48.760 Equity Partners, everyone's like buying all these rights like twenty times. 0:02:48.840 --> 0:02:49.760 I have no edge anymore. 0:02:49.760 --> 0:02:52.040 Twenty years ago I did because there was no competition, 0:02:52.680 --> 0:02:54.320 and I'm like, what am I going to do next? 0:02:54.360 --> 0:02:56.880 I'm like, wait a second. All these LPs are all 0:02:56.919 --> 0:02:59.079 locked up at all these private equity firms, and they're 0:02:59.080 --> 0:03:02.119 all investing in music. I should be creating a completely 0:03:02.160 --> 0:03:06.360 portable and convenient way for both retail investors and sophisticated 0:03:06.400 --> 0:03:09.960 investors to invest across the music industry. So I designed 0:03:09.960 --> 0:03:12.840 an index and we launched an ETF that would allow 0:03:12.880 --> 0:03:15.560 investors to capture the growth of music worldwide. 0:03:15.600 --> 0:03:20.200 I have so many questions there because it's been amazing 0:03:20.280 --> 0:03:22.679 to watch the series of headlines over the past few 0:03:22.760 --> 0:03:27.440 years as artists basically sell their catalogs, and I even 0:03:27.480 --> 0:03:31.480 saw very recently. I think Kiss just today that the 0:03:31.480 --> 0:03:35.119 headline just moved right. Obviously, Bob Dylan was a big name. 0:03:35.560 --> 0:03:37.320 There's been a ton of artists who have been able 0:03:37.360 --> 0:03:40.960 to capitalize on this. Your industry veteran here, what did 0:03:41.000 --> 0:03:43.600 you witness and how did you have to wrestle with that? 0:03:43.920 --> 0:03:45.880 Yeah, so when I was cutting deals, I was buying 0:03:45.960 --> 0:03:47.480 them for like five to seven times. 0:03:47.560 --> 0:03:47.920 Okay. 0:03:48.000 --> 0:03:50.880 So in the last you know, ten years, Catalogs sold 0:03:50.920 --> 0:03:53.040 at twenty twenty five or has highest thirty time for 0:03:53.120 --> 0:03:56.360 Springs Springsteen sold at thirty and they got a lot 0:03:56.400 --> 0:03:59.080 of private equity money, and Sony did it smart deal. 0:03:59.080 --> 0:04:01.240 They got an outside nancying to put up the money. 0:04:02.320 --> 0:04:04.480 They got a guy named Todd Bowley who owns the 0:04:04.520 --> 0:04:07.800 Dodgers and you know Dick Clark Presents and the rights 0:04:07.800 --> 0:04:09.560 to like the Golden Globes anyway, so he put up 0:04:09.600 --> 0:04:12.920 some capital and look, people love music and they're struck 0:04:12.960 --> 0:04:16.159 by celebrity in an age of like cheap interest rates. 0:04:16.200 --> 0:04:18.880 That's basically what caused this, you know, flood of music 0:04:18.880 --> 0:04:20.760 publishing deals. And it didn't stop there. It was with 0:04:20.880 --> 0:04:23.000 Neil Young, it was Tom Petty, and you had all 0:04:23.000 --> 0:04:26.839 these companies out there, tons of royalty trusts like Hypnosis Reservoir. 0:04:27.279 --> 0:04:28.120 All the big. 0:04:27.920 --> 0:04:30.520 Public companies were all buying it, and all the private equities. 0:04:30.560 --> 0:04:32.760 So I said, look, there's got to be a way 0:04:32.800 --> 0:04:35.120 for a retail investory to get exposure to this, right, 0:04:35.240 --> 0:04:37.680 like somebody who was an e trate account, a Robinhood account, 0:04:37.880 --> 0:04:39.880 or just a family office that doesn't want to have 0:04:39.920 --> 0:04:42.480 to put their money into a fund. And so this 0:04:42.520 --> 0:04:45.880 is something that really got created to give exposure to 0:04:45.960 --> 0:04:50.880 investors across music publishing, across recorded music, across live music, 0:04:50.920 --> 0:04:54.800 across ticketing, really across the entire spectrum, domestic and globally. 0:04:54.880 --> 0:04:56.359 That's what this is designed to do. 0:04:56.520 --> 0:04:59.160 And when did you identify that the ETF was the 0:04:59.240 --> 0:04:59.960 right way to do this? 0:05:00.080 --> 0:05:02.640 So about two years ago, I'm in Corsica. Okay, I'm 0:05:02.680 --> 0:05:05.200 on a beach and I'm thinking about what to do next. 0:05:05.360 --> 0:05:07.159 By the way, that seems like a whites choice in general. 0:05:07.320 --> 0:05:09.640 Well, I was like looking at the blue ocean and 0:05:09.680 --> 0:05:12.440 I wanted something completely different. I was looking literally, I'm 0:05:12.480 --> 0:05:14.960 like I need blue ocean in my mind. And I 0:05:15.000 --> 0:05:16.760 pulled out a piece of paper and I wrote down 0:05:16.800 --> 0:05:18.920 something that I wanted to invest in. So I wrote 0:05:18.960 --> 0:05:21.240 down all these companies that I would want to own, 0:05:21.560 --> 0:05:22.040 and I'm like. 0:05:22.000 --> 0:05:23.080 Wait, wit was the first one? 0:05:23.240 --> 0:05:25.320 Well, first one was like Universal Music Group, right, the 0:05:25.360 --> 0:05:28.600 biggest music company, and then probably univers Universal and Warners 0:05:28.600 --> 0:05:32.040 and Sony and companies like Madison, Square Garden and Sonos 0:05:32.120 --> 0:05:35.520 and Technology, obviously Live Nation, obviously Spotify. I wanted a 0:05:35.560 --> 0:05:38.360 category killer in streaming. And I'm like, wait a second. 0:05:38.760 --> 0:05:40.920 As I'm writing all these companies down, I'm like, there 0:05:40.920 --> 0:05:43.800 are five verticals here in this fund. You have streaming, 0:05:44.360 --> 0:05:47.840 you have content and distribution, you have live music events 0:05:47.839 --> 0:05:51.680 and ticketing, you have equipment and technology, and you have 0:05:51.760 --> 0:05:52.840 satellite and radio. 0:05:53.400 --> 0:05:54.320 How great is this? 0:05:54.640 --> 0:05:57.120 And I'm like, Okay, now I need to figure out 0:05:57.520 --> 0:06:00.400 what makes these companies eligible into the fund and what 0:06:00.480 --> 0:06:04.240 are the determinant factors. And I put together an index 0:06:04.680 --> 0:06:09.520 which scraped the universe of music companies and we created MUSQ. 0:06:10.640 --> 0:06:10.920 Love that. 0:06:11.880 --> 0:06:13.919 So I want to go into the companies in the 0:06:14.000 --> 0:06:16.120 fund first though, I just want to ask about the 0:06:16.200 --> 0:06:20.640 music industry and the revenue. When I wrote my last book, 0:06:21.120 --> 0:06:24.800 I was trying to compare the mutual fund industry to 0:06:24.920 --> 0:06:28.560 the compact disc and basically how ETFs played the role 0:06:28.600 --> 0:06:31.839 of the MP three. They came along and totally disrupted 0:06:31.920 --> 0:06:32.960 mutual funds which were like. 0:06:32.920 --> 0:06:33.680 The compact disc. 0:06:34.200 --> 0:06:36.600 And I have a chart showing how music revenue got 0:06:36.600 --> 0:06:40.080 cut in half after the MP three, like from Napster. 0:06:39.839 --> 0:06:40.880 For the next seven years. 0:06:41.320 --> 0:06:42.960 Then it started to come up a little bit in 0:06:42.960 --> 0:06:47.320 the past couple at least the chart I had, I 0:06:47.320 --> 0:06:49.560 think I might have ended twenty twenty one or something 0:06:49.600 --> 0:06:52.599 like that. So it's three years old. But when I 0:06:52.640 --> 0:06:55.719 met you, you said the revenues is actually really good. 0:06:55.800 --> 0:06:58.400 And I had thought music might just have to live 0:06:58.400 --> 0:07:01.080 in a new normal of get half the revenue at 0:07:01.080 --> 0:07:03.760 once got because everybody was paying seventeen bucks for a 0:07:03.839 --> 0:07:06.680 CD and only half the songs were good. This new 0:07:06.720 --> 0:07:09.440 normal meant less money. But you say, that's not the case. 0:07:09.640 --> 0:07:11.560 They figured out how to make money. So just as 0:07:11.600 --> 0:07:15.440 go into this sort of macro revenue case for music 0:07:15.720 --> 0:07:17.080 and how much money is there? 0:07:17.680 --> 0:07:20.880 Sure, Eric, So in the mid nineties, the recorded industry 0:07:20.960 --> 0:07:22.960 peaked at about eighteen billion dollars. 0:07:23.040 --> 0:07:24.520 Okay, you are correct. 0:07:24.520 --> 0:07:27.040 In two thousand and three, two thousand and four, Napster 0:07:27.160 --> 0:07:29.200 hit and the MP three, and it was like opening 0:07:29.200 --> 0:07:33.000 Pandora's box. Everyone was stealing and ripping files and through 0:07:33.080 --> 0:07:35.600 that got was the birth of Spotify and all the 0:07:35.640 --> 0:07:39.480 streaming companies, and that began to take off. If you 0:07:39.520 --> 0:07:42.240 read the IFPI report, which was published last week. The 0:07:42.280 --> 0:07:47.760 ifpis International Phonograph Report, music today is at twenty eight 0:07:47.800 --> 0:07:52.080 billion dollars recorded music, okay, and it's ten growing at 0:07:52.120 --> 0:07:55.000 ten to twelve percent, right, so it's twelve billion dollars 0:07:55.080 --> 0:07:57.760 more than the peak of the industry which Eric alluded 0:07:57.800 --> 0:08:00.640 to in the mid nineties. Streaming today in the United 0:08:00.640 --> 0:08:05.240 States is eighty four percent of all music consumption, okay, 0:08:05.360 --> 0:08:09.240 and it's fifty percent of all music consumption worldwide. Streaming 0:08:09.320 --> 0:08:12.200 is growing at eleven to thirteen percent according to both 0:08:12.240 --> 0:08:15.760 of those reports. So what's happening is that we've entered 0:08:15.800 --> 0:08:20.240 into the digitization of the music industry, and the entire 0:08:20.320 --> 0:08:25.560 business today is now being streamed. Content and distribution is 0:08:25.600 --> 0:08:28.040 being streamed. You also have, by the way, vinyl is 0:08:28.080 --> 0:08:30.480 a growing business, growing at eight to ten percent. And 0:08:30.520 --> 0:08:33.239 the last statistic, because I could just go on about statistics, 0:08:34.400 --> 0:08:38.040 consumers today are paying forty percent less than what they 0:08:38.080 --> 0:08:40.200 paid in the mid nineties, so they're actually used to 0:08:40.240 --> 0:08:43.439 paying more. So that just goes back to the overall 0:08:43.480 --> 0:08:47.679 investment thesis here that music today is undervalued and undermonetized 0:08:47.720 --> 0:08:50.880 and under hyped. Music is cheap compared to what people 0:08:51.200 --> 0:08:54.800 are used to paying for CDs, for vinyl, for physical goods. 0:08:55.320 --> 0:08:59.000 And so what's happening is all the streaming companies are 0:08:59.040 --> 0:09:02.800 now starting to raise rates. Spotify raised rates two quarters ago, 0:09:02.880 --> 0:09:05.720 they crushed earnings two hundred and thirty six million paid 0:09:05.720 --> 0:09:10.679 subscribers or subscribers grew by fifteen percent, and recently Spotify 0:09:10.720 --> 0:09:13.040 announced that they were raising rates a second time by 0:09:13.120 --> 0:09:16.480 another ten percent. So now you'll pay twelve dollars and 0:09:16.760 --> 0:09:20.560 that will not stop because that's still fifty percent of 0:09:20.600 --> 0:09:23.280 what people are paying for Hululu, for Netflix, for Disney, 0:09:23.280 --> 0:09:24.000 for HBO Go. 0:09:24.640 --> 0:09:29.360 So music overall is just cheap. Streaming is growing, and. 0:09:29.400 --> 0:09:32.400 Yet it's hard for these companies make money. Spotify has 0:09:32.440 --> 0:09:36.160 been a dog for a long time. Audio books, the 0:09:36.400 --> 0:09:40.360 podcast initiatives all really not music, right, And so I'm 0:09:40.360 --> 0:09:42.880 curious when you want to talk about what's in the portfolio, 0:09:42.880 --> 0:09:44.840 but when you think about what you put in the portfolio, 0:09:45.280 --> 0:09:48.240 Sure you could have a pure play audio company like 0:09:48.280 --> 0:09:51.760 a Spotify, but you know, an Apple so much more 0:09:51.800 --> 0:09:54.080 than just music, even though music is part of what 0:09:54.120 --> 0:09:56.040 they do, right, So how do you think about how 0:09:56.080 --> 0:09:58.800 you bring those companies into your portfolio? 0:09:58.920 --> 0:10:02.280 Well, first, Spotify is six hundred million subscribers worldwide, two 0:10:02.320 --> 0:10:05.199 hundred and thirty six million paid subscribers, and by raising 0:10:05.200 --> 0:10:07.120 it a dollar, that drops an incremental two and a 0:10:07.160 --> 0:10:09.679 half billion dollars to like the boys like three billion, 0:10:09.720 --> 0:10:12.760 you know, yeah, I mean, And it's really an inexpensive 0:10:12.800 --> 0:10:16.960 way to generate incremental revenue from existing users. And the 0:10:17.000 --> 0:10:19.360 podcasts and the audiobooks, by the way, are a carrot 0:10:19.360 --> 0:10:22.600 to get new users. And so look, they are spending 0:10:22.640 --> 0:10:24.200 a lot of money today. They spend a lot of 0:10:24.200 --> 0:10:27.199 money with Joe Rogan. They now control all the monetization 0:10:27.280 --> 0:10:31.480 and distribution with Joe Rogan. The audiobooks business has become 0:10:31.480 --> 0:10:36.200 incredibly successful, top sellers like Britney Spears and Prince Harry 0:10:36.280 --> 0:10:39.040 and these are all big titles. Podcasts are a huge 0:10:39.040 --> 0:10:41.400 part of that business, and so look, they're going to 0:10:41.440 --> 0:10:44.960 continue to spend money on content as they continue to grow. 0:10:45.000 --> 0:10:47.280 But they are a de facto leader and we have 0:10:47.360 --> 0:10:50.080 all the other streaming companies in our fund. Right, So 0:10:50.120 --> 0:10:54.040 we have obviously Apple, Amazon, Google, We have companies like 0:10:54.080 --> 0:10:57.320 Click digital companies like Genie corpor and Cacao. These are 0:10:57.360 --> 0:11:00.959 the two biggest streaming companies in South Korea, so we 0:11:01.000 --> 0:11:05.720 give exposure to streaming as a category around the world. 0:11:05.720 --> 0:11:08.480 We've I think twelve or fourteen streaming companies in our fund. 0:11:15.520 --> 0:11:18.640 Let's talk about portfolio construction here, because you open this 0:11:18.880 --> 0:11:22.360 thematic ETF up And I'll be honest, sometimes when I 0:11:22.400 --> 0:11:25.560 open a ETF's holdings, I like to not know any 0:11:25.600 --> 0:11:29.360 of the companies because I already own the popular companies 0:11:29.840 --> 0:11:33.160 in my S and P five hundred fund, so why 0:11:33.160 --> 0:11:35.400 do I need to own them again? So when I 0:11:35.400 --> 0:11:38.319 see companies I don't have never heard of, I actually 0:11:38.360 --> 0:11:41.040 kind of like that now in your fund, once you 0:11:41.080 --> 0:11:43.960 get past the top five, I've never heard of most 0:11:44.000 --> 0:11:49.000 of these. But the top five Amazon, Google, Apple, Spotify, 0:11:49.160 --> 0:11:52.840 courses in there, and Sony especially the top three, those 0:11:52.880 --> 0:11:55.480 are the magnificent seven stocks. It looks like you market 0:11:55.480 --> 0:11:58.040 cap weighted it, and those companies do many things that 0:11:58.040 --> 0:12:00.920 aren't music. So I guess when you just talk about 0:12:00.920 --> 0:12:03.280 the construction, the filtration process to get in the fund 0:12:03.320 --> 0:12:04.880 and then that weighting decision. 0:12:05.480 --> 0:12:07.800 Yeah, now, thanks for the question. That's probably the most 0:12:07.920 --> 0:12:11.880 frequent question I get asked. So, in terms of portfolio construction, 0:12:12.559 --> 0:12:14.480 all the companies in this fund have to generate more 0:12:14.520 --> 0:12:18.520 than fifty percent of their revenues from music, right or 0:12:18.559 --> 0:12:20.840 they have to be a top five player or control 0:12:20.880 --> 0:12:22.920 more than ten percent global market share in one of 0:12:22.920 --> 0:12:26.840 those five segments. So Spotify clearly controls it generates more 0:12:26.840 --> 0:12:30.040 than fifty percent of the revenue. But after Spotify and 0:12:30.080 --> 0:12:34.160 after ten Cent, you have Apple, Amazon, and Google that 0:12:34.280 --> 0:12:36.880 are the third, fourth, and fifth largest streaming companies in 0:12:36.920 --> 0:12:40.040 the world, So it would not be fair to exclude 0:12:40.040 --> 0:12:42.800 them from the fund. And so but what we've done 0:12:42.840 --> 0:12:46.320 is we've capped their weight at seven percent, and so 0:12:46.520 --> 0:12:48.880 all the companies in this fund are market cap weighted. 0:12:49.000 --> 0:12:52.200 The three big names you highlighted are capped at seven percent. 0:12:52.480 --> 0:12:55.160 So what this winds up being is twenty one percent 0:12:55.200 --> 0:12:57.679 of those three companies and seventy nine percent of companies 0:12:57.679 --> 0:12:59.760 you've really never heard of or maybe only heard a 0:12:59.800 --> 0:13:03.200 few of them, but you have to include them because 0:13:03.200 --> 0:13:06.920 they're a huge part of the streaming economy today in 0:13:06.920 --> 0:13:10.240 the United States, Apple and Spotify really control the streaming market. 0:13:10.520 --> 0:13:12.840 Apple's doing a lot for the music industry. There's tons 0:13:12.880 --> 0:13:17.360 of curation, they're breaking new artists, they're doing just a 0:13:17.400 --> 0:13:20.520 lot for the industry today. Anybody who buys a mobile phone, 0:13:20.520 --> 0:13:23.240 that's like the quick service that they're offered and teed up. 0:13:23.520 --> 0:13:26.520 So they're doing a huge service to music publishers, to songwriters, 0:13:26.520 --> 0:13:30.800 to artists. So they're very much part of the music ecosystem. 0:13:31.040 --> 0:13:33.120 But for the most part, is Eric pointed out, Look, 0:13:33.160 --> 0:13:35.840 we have I think forty two or forty four companies 0:13:35.880 --> 0:13:37.880 in the fun today. These are many of them you 0:13:37.960 --> 0:13:40.880 haven't heard of. Sixty percent of them are international companies 0:13:40.920 --> 0:13:44.800 like Him in Taiwan, Avex in Japan, Believe in France, Ctsaventum, 0:13:45.200 --> 0:13:48.160 which is like the big live music company in Germany. 0:13:48.480 --> 0:13:50.400 And then we've got all the K pop companies, and 0:13:50.440 --> 0:13:53.280 we've got companies in China like Cloud Music, Intense, and 0:13:53.400 --> 0:13:57.160 so we're really giving investors broad exposure. And a lot 0:13:57.160 --> 0:13:59.000 of these companies are hard to trade. You can't just 0:13:59.040 --> 0:14:02.120 get exposure in music today by buying Universal and by 0:14:02.120 --> 0:14:06.000 buying Warner Music Group and maybe some of these streaming companies. 0:14:06.040 --> 0:14:08.480 You really need if you want exposure to music. This 0:14:08.559 --> 0:14:10.240 is what this fund is designed to do. 0:14:10.400 --> 0:14:13.240 What about the private We talked earlier about how big 0:14:13.280 --> 0:14:17.400 money private equity money has started to invest or buy portfolios. 0:14:18.040 --> 0:14:21.320 Does your filtering process filter out the private equity sense, 0:14:21.360 --> 0:14:23.400 I'm sure they do a lot more than music. 0:14:23.480 --> 0:14:25.200 Well, first of all, I got to say, like, we're 0:14:25.200 --> 0:14:28.040 a much better return than private equity. So they're paying 0:14:28.080 --> 0:14:31.880 twenty times, right, that's a five percent yield on a 0:14:31.920 --> 0:14:35.760 cash flow. That's before the private equity firm takes their fees, 0:14:36.040 --> 0:14:38.880 their management fee, their carry, So it's even worse than 0:14:38.920 --> 0:14:42.040 five percent. If you look at our index, we're performing 0:14:42.280 --> 0:14:44.840 substantially higher than that for the quarter. I think we're 0:14:44.920 --> 0:14:48.840 up eleven percent for the quarter. The index is performing 0:14:48.920 --> 0:14:51.280 really well when you put that up against the SMP 0:14:52.400 --> 0:14:53.840 and we have total liquidity. 0:14:54.320 --> 0:14:55.479 Right, you can buy. 0:14:55.240 --> 0:14:58.880 Our ETF, you can sell it the same day. You 0:14:58.920 --> 0:15:01.400 get exposure to all the these publishing companies, you get 0:15:01.440 --> 0:15:03.320 exposure to all the record companies. You don't have to 0:15:03.400 --> 0:15:04.560 have your money locked up. 0:15:04.960 --> 0:15:07.720 So you'd rather not have private equity, right, And. 0:15:07.720 --> 0:15:09.840 That's what I meant to say. Yeah, yeah, no, we'd 0:15:09.840 --> 0:15:12.320 want to not have private equity in the portfolio. The 0:15:12.440 --> 0:15:14.960 returns just aren't good when you're paying like that kind 0:15:15.000 --> 0:15:17.560 of multiple for the big marquee acts, and so I 0:15:17.680 --> 0:15:20.240 just think we're a much better solution for investors who 0:15:20.240 --> 0:15:23.640 want exposure to music. The returns are more enlightening, they're 0:15:23.640 --> 0:15:27.080 more favorable. You have liquidity, and you have total diversification. 0:15:27.200 --> 0:15:30.280 You're not just on music publishing. It's like we're giving 0:15:30.320 --> 0:15:32.200 access to the whole ecosystem of music. 0:15:33.800 --> 0:15:35.960 Let's just talk about the state of music. I was 0:15:36.000 --> 0:15:39.280 talking to Joel about this earlier. This is probably me 0:15:39.520 --> 0:15:42.280 just being like old man on the lawn, but it 0:15:42.360 --> 0:15:44.640 just seems like a lot of the current stuff is 0:15:45.240 --> 0:15:49.160 just not that great, Like it doesn't have much depth. 0:15:49.640 --> 0:15:51.120 There's not much melody. 0:15:51.000 --> 0:15:51.920 Was his opinion, by the way. 0:15:51.960 --> 0:15:54.920 And I get Spotify taking off because you basically catalyzed 0:15:54.960 --> 0:15:57.400 all the old stuff too, which is to me, I 0:15:57.440 --> 0:15:59.720 just feel like the golden age of music is over. 0:16:00.400 --> 0:16:04.120 Yeah, I would have to respectfully cut you off and 0:16:04.120 --> 0:16:05.040 say I think you're wrong. 0:16:05.520 --> 0:16:06.480 Go back to your launcher. 0:16:06.920 --> 0:16:10.280 And everyone's entitled to look. Music is a universal connector, 0:16:10.320 --> 0:16:12.520 so everyone's entitled to it. But I don't know you 0:16:12.520 --> 0:16:16.000 have the CMT Awards on Sunday Night, Zach Bryan, Laney, Wilson, 0:16:16.120 --> 0:16:20.520 Jelly Roll, all amazing country artists performing. You got Billie Eilish. 0:16:20.600 --> 0:16:24.880 Today you've got just so many amazing talented writers. You 0:16:24.920 --> 0:16:27.160 know what I think is interesting, Eric, which I will 0:16:27.280 --> 0:16:29.200 kind of at a high level agree with you. The 0:16:29.280 --> 0:16:31.280 days of vinyl when you put on a record and 0:16:31.320 --> 0:16:34.120 you kind of embraced the whole album, like you listen 0:16:34.160 --> 0:16:36.560 to every song. And I think digitization today has made 0:16:36.560 --> 0:16:40.560 it easy for artists to promote singles and maybe they've 0:16:40.680 --> 0:16:42.360 found a quick way. That's why, by the way, a 0:16:42.360 --> 0:16:44.760 lot of the emerging artists are very unhappy right now 0:16:45.000 --> 0:16:48.200 when Universal pulled their catalog from TikTok, because TikTok is 0:16:48.240 --> 0:16:51.480 the most powerful marketing tool in the music industry today. 0:16:51.880 --> 0:16:54.160 But a lot's going on today right so people can 0:16:54.240 --> 0:16:58.160 generate music very quickly. AI is obviously a topic that's 0:16:58.400 --> 0:17:02.640 you know, hotly debated today. Artists can create fakes too 0:17:02.680 --> 0:17:04.960 from music, so there's a lot of concern around the 0:17:05.080 --> 0:17:08.359 quality of music, even whether it's authentic. Today you have 0:17:08.440 --> 0:17:12.080 no federal copyright protection in your voice, which is really interesting. 0:17:12.160 --> 0:17:15.760 Think about that you have protections for name, image, and likeness, 0:17:16.040 --> 0:17:18.040 but you can't protect your voice. And what's happening with 0:17:18.119 --> 0:17:21.800 AI is it's causing deep fakes. And so in Tennessee 0:17:22.040 --> 0:17:23.920 a couple of weeks ago they passed the Elvis Act, 0:17:23.920 --> 0:17:27.080 which makes it a crime to lift somebody's voice. 0:17:26.840 --> 0:17:29.080 And profit from it. It's a good name for an app, yeah, 0:17:29.200 --> 0:17:29.720 I'd say. 0:17:29.960 --> 0:17:34.400 So would you say there's an AI player that gets 0:17:34.400 --> 0:17:37.200 into the music business, are you going to run from 0:17:37.240 --> 0:17:40.320 it or filter it out? No, So we have included 0:17:40.400 --> 0:17:41.719 or filter it out, so we're neutral. 0:17:41.760 --> 0:17:44.440 We actually have all the companies that are actually delivering 0:17:44.440 --> 0:17:46.800 the tools to artists to create AI. So if you 0:17:46.800 --> 0:17:52.119 look at our technology holdings, focus right Dolby Roland Yamaha, 0:17:52.160 --> 0:17:55.680 a lot of them are creating tools, audio tools, recording studios, 0:17:55.760 --> 0:17:59.119 giving artist tools to sample new music to create new songs. 0:17:59.160 --> 0:18:00.480 But you know, the deeper. 0:18:00.240 --> 0:18:02.360 Issue today that needs to get resolved right now, it's 0:18:02.400 --> 0:18:04.399 only handled at a state level, is really like, how 0:18:04.480 --> 0:18:07.280 do you protect artists from deep fakes from getting ripped off? 0:18:07.640 --> 0:18:09.920 You know, the estates of Bob Marley and Frank Sinatra 0:18:10.200 --> 0:18:13.480 are concerned. They joined in this artist coalition, this advocacy 0:18:13.520 --> 0:18:15.679 group a lot of interesting stuff today. But just to 0:18:15.720 --> 0:18:18.720 go back to Eric's point, look, music today is something 0:18:18.760 --> 0:18:20.680 like one hundred to one hundred and fifty thousand songs 0:18:20.720 --> 0:18:23.919 being uploaded today. I do think quality is something that 0:18:23.960 --> 0:18:25.480 needs to be looked at. There's a lot of like 0:18:25.520 --> 0:18:29.119 streaming fraud on some of these services. And yeah, it 0:18:29.160 --> 0:18:31.240 was just a lot more difficult back in the day 0:18:31.280 --> 0:18:32.880 to create a record, right you have to go into 0:18:32.880 --> 0:18:34.600 the studio and do it. Now you can rip it 0:18:34.640 --> 0:18:36.719 and create it from your bedroom, from your desk, And 0:18:36.800 --> 0:18:38.280 so that's what's going on today. 0:18:38.320 --> 0:18:40.440 Well, well, Eric's out in his front line with the 0:18:40.520 --> 0:18:43.480 lawn chair. We got a record player recently, and so 0:18:43.560 --> 0:18:47.240 I started buying vinyl and we have an eight year 0:18:47.240 --> 0:18:51.600 old and I actually, I think he really enjoys interacting 0:18:51.640 --> 0:18:55.000 with the record player. It's tactile, whereas before, you know, 0:18:55.080 --> 0:18:58.440 I'm playing music on my phone and I'm dictating the playlist, 0:18:58.520 --> 0:19:01.280 like he can go flip from side A to side 0:19:01.280 --> 0:19:05.280 be he's conscious of albums again. Like, I've just really 0:19:05.400 --> 0:19:08.360 enjoyed having something that's so tactile in our lives again. 0:19:08.400 --> 0:19:10.119 So I wanted to bring it back to vinyl and 0:19:10.400 --> 0:19:12.560 with the vinyl exposure in your portfolio. 0:19:12.840 --> 0:19:15.840 Yeah, so, well, we have all the companies that distribute 0:19:15.920 --> 0:19:18.680 music obviously through vinyl, so all the record companies. Vinyl 0:19:18.760 --> 0:19:20.919 is just another medium, right, so we tackle it on 0:19:21.000 --> 0:19:24.560 many levels. We have companies that manufacture vinyl players like 0:19:24.600 --> 0:19:26.560 the ones I mentioned. They manufact you can buy them 0:19:26.560 --> 0:19:29.080 on Amazon. I think Yamaha is a vinyl player, and 0:19:29.400 --> 0:19:32.520 Focus right does. And then obviously at the record company 0:19:32.600 --> 0:19:35.440 label they license their content on vinyl. But vinyl's growing 0:19:35.480 --> 0:19:38.760 at ten percent, okay, according to the IFPI report and 0:19:38.840 --> 0:19:41.920 the RIAA report. And by the way, it's a really 0:19:41.960 --> 0:19:44.960 promising statistic because it just shows like opportunity for the 0:19:45.000 --> 0:19:48.840 super fan. The swifties are devouring phono records, and then 0:19:48.840 --> 0:19:51.679 it's a great windfall for just heritage artists. Right for 0:19:51.760 --> 0:19:54.159 fans like Eric, you or myself, we're probably stuck in 0:19:54.200 --> 0:19:57.199 days of Steely Dan and Pink Floyd and we want to, 0:19:57.320 --> 0:19:59.720 you know, listen to these albums and maybe you know, 0:20:00.000 --> 0:20:01.880