Downtown Music Holdings has had a busy year.
Downtown subsequently revealed that, going forward, it would be centering its operations exclusively on the music services sector, with the launch of Downtown Music Services.
At the time, Downtown forecast $600 million revenues from its music services businesses, across both records and publishing this year alone.
More big news came from Downtown in August, in the form of a leadership shakeup that saw Downtown founder, Justin Kalifowitz, vacate his role as CEO to take up a new position as DMH’s Executive Chairman.
Kalifowitz was succeeded as CEO by DMH’s former COO, Andrew Bergman, who assumed all day-to-day responsibilities as CEO, effective September 1.
Commenting on his goals for DMH in the new role, Bergman tells MBW that “we have an aggressive growth plan”.
Last month, Downtown announced its first additional leadership changes under Bergman as the firm’s new CEO, including Andrew Sparkler’s appointment as Chief Business Officer (CBO), Brad Yuan’s promotion to Chief Operating Officer (COO) and Loredana Cacciotti ‘s appointment as Senior Vice President, Digital Licensing & Business Affairs.
Downtown stated that the new appointments are part of its ongoing efforts to drive what it calls “operational and strategic alignment” following its shift to focus exclusively on music services earlier in the year.
Here, Justin Kalifowitz and Andrew Bergman give MBW an exclusive insight into Downtown Music Holdings following the catalog sale to Concord, and tell us what the firm’s objectives are for the future…
Tell us about the timing around Downtown’s decision to sell its owned catalog and focus on the music services sector. Why this year?
Andrew Bergman: With all the focus on catalog acquisition this year, we thought it was an opportune time to review our business strategy. While catalog acquisition has always been a part of our business, our true strength has long been as a service provider in the management of music content.
“With all the focus on catalog acquisition this year, we thought it was an opportune time to review our business strategy.”
We see a unique opportunity to partner with creators and content owners of all sizes and help them on their journey to create valuable evergreen assets. It’s a driving passion across the entire organization.
Tell us about the opportunities you see for growth in the independent music economy?
Justin Kalifowitz: Honestly, we don’t subscribe to the notion of an “independent music economy.” It feels passe.
What we see is a singular global music economy where growing revenues are flowing to an increasingly diverse group of creators and entrepreneurs.
“We don’t subscribe to the notion of an “independent music economy. What we see is a singular global music economy.”
And for us, that presents a huge opportunity to provide a broad scope of services to the entire industry, recognizing the unique needs of different client types. As Andrew said, this is especially the case with so much of the world’s current focus and attention on asset ownership.
Tell us about Downtown Music Holdings current positioning in the market and looking to the future, how do you want Downtown to be positioned in the market?
AB: There are a lot of smart people trying to solve for a number of obstacles facing creators and businesses in our industry.
Where we differ is that we have established a modular service approach where any client can use our platforms for any and all aspects based on their particular needs.
We are equally able to provide an end-to-end solution for one client while simultaneously solving a very specific missing element for a global competitor that may not have the needed capabilities and/or inclination to invest into that area themselves.
It’s important to remember that our client base is effectively the microcosm of the modern music industry.
What are the biggest challenges in the market for Downtown?
JK: It’s not unique to us, but the music industry is rapidly expanding. The volume of music being released around the world and the number of new revenue streams emerging are nothing short of transformational.
At Downtown we continue to be very focused on providing a full range of essential music services at scale to an increasing number of creators and rights holders.
“The scale of our business seems to shock people, but it’s directly correlated to the broader shifts in the industry at large.”
Doing this work and doing it really well – which for us means being committed to delivering high-quality services and investing in innovation to keep pace with the changing music economy – is not a small task.
The scale of our business seems to shock people, but it’s directly correlated to the broader shifts in the industry at large. Today, we manage over 23 million music assets on behalf of over 1 million creators and 2,500 enterprise clients from 145 countries.
This includes everyone from multinational music companies, film studios and institutional investment firms to emerging singer-songwriters, legendary estates, and global stars.
What are the biggest challenges for independent music creators today and how is Downtown placed to help them overcome those challenges?
AB: Production tools have never been better or more accessible to independent creators, but they also need ways to distinguish themselves in an ever more crowded playing field.
That can come in the form of innovative marketing and services but it’s also making sure they are paid properly regardless of their level of exposure to a broader community of fans. Our platforms are uniquely designed to level the playing field for creators and entrepreneurs at all levels.
Justin, tell us about the reasoning behind the decision for you to take up the new position as Executive Chairman at this time, and for Andrew to succeed you as CEO?
JK: This simply formalized the way in which Andrew and I have been working for the past few years.
I have traditionally taken the lead on long-term vision and big picture strategy, while Andrew leads on ensuring we are best positioned to execute on all of our initiatives across an increasingly complex and global enterprise, but we have long partnered on every aspect of Downtown’s development and are a great compliment to each other.
Justin, you mentioned at the time of the announcement that a) Andrew’s knowledge of the business and b) his operational excellence make him the perfect choice as the next CEO. Could you please shed some more light on these two points?
JK: Simply put, what we’re building at Downtown has never been done before. When considering the scale of the opportunity, the quality of our team and the enthusiasm for our mission, the best choice for the next CEO of Downtown was without question the person who has been shoulder to shoulder alongside me building this business for over 14 years.
Andrew, now that you are managing day-to-day operations for Downtown, what are your objectives for the rest of 2021 and 2022?
AB: We have an aggressive growth plan. A lot of that growth will be organic as we have built a unique platform run by amazing, entrepreneurial teams.
“We continue to see a lot of opportunities to strengthen and expand our services through acquisition.”
But we also continue to see a lot of opportunities to strengthen and expand our services through acquisition. Whether through strategic six- or seven-figure investments in early stage companies as an initial entry point or the outright acquisition of companies with whom we have existing business relationships, we’ve been a consistent and serial investor in music tech and continue to be excited by the potential in that arena.
Ultimately, focusing on operational excellence, delivering the best services, and helping to drive value for the creative works with which we are entrusted remains a constant objective, regardless of the year.
Andrew, your work with Justin at Downtown goes back 14 years – could you give us some insight into how you’ll be working together going forward in your new roles?
AB: We spoke at least 10 times a day before our title changes and still do now. We see the industry and the opportunity through the same lens and we continue to work in close partnership.
Is there anything else you’d like us to mention in the story that we haven’t asked?
JK: Just to build on Andrew’s previous comments regarding acquisitions, we have an extraordinary track record of investing in, developing, and acquiring businesses that span a broad range of music services and related technologies.
What clearly distinguishes our approach is that we view M&A as a means to partner with extraordinary entrepreneurs to create more opportunities for our clients and the music ecosystem at large. We’re extremely excited about our current pipeline and look forward to announcing several of these soon.
AB: Additionally, we’re looking to expand our financing capabilities into a more formal service offering. And as we continue to round out our senior executive team, I’m looking forward to announcing some additional leadership appointments in the very near future.
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