Navigating the New Era of Music: Insights from David Schulhof

The music is facing its most massive transformation since perhaps the Napster era on Wall Street.

Activist investors like Bill Ackman are pushing to restructure traditional powerhouses like Universal Music Group.

And in Washington, antitrust regulators are shaking up live events by cracking down on Live Nation and in Silicon Valley AI platforms like you know are generating chart topping hits from tax prompts and also sparking fierce IP battles and unprecedented settlements with some major labels.

Well joining me this morning to help us face the music is David Schulhof, the founder and CEO of the MUSQ Global Music Industry ETF.

David, good morning.

Thank you so much for joining me.

So you created the MUSQ global music industry ETF to help investors navigate this fragmented market.

So give us a quick recap of how this fund is actually constructed and how it provides broad exposure to the very vast music ecosystem.

So thank you Remy.

So MUSQ is the first pure play music exchange traded fund, giving investors exposure to the most important segments of the global music industry across streaming, content and distribution, live music events and ticketing and equipment and technology.

We give investors exposure to domestic equities and foreign equities across the universe.

It's a very compelling and convenient way to invest in this booming industry.

And I have to ask you about the role that artificial intelligence is playing in the music industry.

We know that AI platforms like Suno are causing massive disruption and facing some backlash over IP thefts.

So from an investment perspective, how exactly is AI impacting the music industry and will it ultimately dilute the royalty pool for human artists out there?

So if you read the, if you read the Goldman Sachs report Remy Music in the Air, AI and music piracy are having a very little impact on the industry today.

Something like 50,000 songs are being uploaded today to services like Spotify, but there's still no audience for it.

So Long Tail is still very much driven by compelling music from big labels like Universal Music Group, Warner Music Group, Sony.

So while AI is a threat, it's having very little impact.

And you can actually see the way investors are responding.

Bill Ackman made a $64 billion offer for Universal Music Group, 78% over the share price of Universal two years ago, two weeks.

Ago, look, he views Universal as being extremely undervalued.

It's currently trading on a European exchange.

He plans on bringing over, bringing it over to the New York Stock Exchange.

So, and that's going to be great for us because it's one of our top holdings in our fund.

It's going to free up a lot of liquidity.

And so, uh, so music today, Remy remains very undervalued, very under monetized, very cheap.

Compared to all of the other streaming services out there from Hulu to HBO Go, you know, it's only $11 a month on services like Spotify.

It should be double that, and that's why you see companies, you know, raising rates anywhere from 10% to 15%, you know, almost every quarter now.

So music is very much on steroids.

It's growing at a double digit clip, 10 to 15% in the US.

It's growing as high as 25 to 50%.

In the emerging markets, and you know, our fund really captures all the growth and innovation around, around the, around the music industry.

Yes, and David, when we pause and take a look at music, right, we as human beings, we like dancing to music, we love going to live events.

It's what inspires us as human beings.

So I do have to agree with you there that when it comes to the role of artificial intelligence.

We can tell the difference and the recent Live Nation monopoly verdict it did send shock waves through the sector, but what does this antitrust ruling actually mean when it comes to the future of the live music industry as well as touring economics and actual ticket pricing.

Yeah, well, first, I think it's hard to disagree that ticket prices have become very expensive, whether it's, you know, the Beyonce tour, the Era tour, you know, tickets are costing up to $1000 a ticket, so.

Look, around Live Nation and Ticketmaster, that was a landmark decision that was reached last week that's going to have chilling effects on their business.

This isn't something that just, you know, has been around for a year or two years.

Remember that the Department of Justice brought this lawsuit against Live Nation 25 years ago.

Eddie Vedder was kind of the crusader bringing that, and the issue is, you know, should a venue operator also control the ticketing company?

And look, you know, this was brought originally 2 years ago.

You know, 17 states settled in March, but 33 states decided to sue and they won the verdict.

And now, so that was the liability phase, and now we're entering into the damages phase and we'll see.

I think the court determined it was something like $1.73 per ticket of damages, so that could mean a few $100 million in potential damages to Live Nation.

But after appeals, you know, maybe they wind up settling close to what, you know, the 17 other states settled in, you know, back in March.

So what does it mean for consumers?

Probably nothing in the near term.

But what it does mean is that venue owners can now, you know, do commercial agreements with other ticketing companies other than Ticketmaster, whether it's, you know, Vivid Seats or StubHub, and from our perspective that's great because all these companies are in our fund.

We want these smaller companies like Venue, StubHub.

You know, vivid seats to actually have more commercial agreements with the venues.

You know, these venues shouldn't only have to work with Ticketmaster, and so I think it's going to ultimately wind up being more of a free market and ticket prices will come down in the long term.

So net net, I think the decision was the right one, and I think in the long term it's going to benefit consumers.

And David, finally we have a little over 60 seconds here so I do want to zoom in on a specific upcoming event which is the Amplify Music Investment Summit.

So tell us a little bit about this and also the conversations institutional investors are having behind closed doors right now.

So on May 8th we have the Amplified Music Investment Summit.

So when I launched the fund Remy, I always wanted to create a physical conference around it just like Baron Funds or Morgan Stanley or JPMorgan.

Now we have the first music industry conference.

We have Rob Kinsel, CEO of Warner Music Group, keynoting.

We have industry icon Clive Davis, who is giving a second conversation piece.

We have 30 speakers across 6 different panels.

One is on streaming.

One is on content.

One is on AI.

One is on catalog acquisitions.

One is on emerging markets.

One is on international, and we're having a closing cocktail that Warner Music Group is hosting.

So come on out, go to amplifyinvestmentsummit.com.

You can buy tickets to the Amplify Music Investment Summit.

It's going to be a great day.

The room is going to be packed with, you know, top CEOs from all of our different music.

Companies and we'll have tons of investors there, RIAs, family offices, institutional investors from Morgan Stanley, Merrill Lynch, JPMorgan, Ameritrade, LPL.

We are bringing the music industry to Wall Street on May 8th at the Amplify Music Investment Summit.

You definitely want to come out and see what's going on.

This is the hottest music industry conference on Wall Street today, and I hope to see you guys there.

Well, David, thank you so much for joining us on this Wednesday morning.

Always appreciate your insights into the music industry.

Thank you so much for joining us.

Thank you, Remy.