Industry Profile: Golnar Khosrowshahi
By Larry LeBlanc (CelebrityAccess MediaWire)
This week In the Hot Seat with Larry LeBlanc: Golnar Khosrowshahi, president Reservoir Media Management.
Reservoir Media Management is now geared up to really strut.
A New York City-based boutique music publisher headed by Golnar Khosrowshahi, Reservoir Media now has enough critical mass in its catalog to become a global player in the independent music publishing world.
The company was founded in 2007 after acquiring the music catalogs of John Rich, "Big Kenny" Alphin, Vicky McGehee, and Bruce Roberts.
Overnight in Sept. 2012, on acquiring UK publisher Reverb Music, Reservoir Media became a significant publishing force. The deal included a catalog of over 30,000 copyrights, and agreements with more than 100 songwriters.
As well, Reservoir Media recently purchased the Black Fountain Music and Blackground catalogs, which includes 500 songs including the publishing and master rights for recordings by Aaliyah, Timbaland, Magoo, JoJo, Tank and Static Major.
Reservoir Media also recently signed 2 Chainz to an exclusive worldwide publishing deal, which covers his album "Based On a T.R.U. Story," as well as a catalog of about 200 songs.
Finally, last month (Oct. 2012) Reservoir Media signed Toronto-based songwriter, producer, and musician Slakah the Beatchild (aka Byram Joseph). Reservoir will publish the catalogs of Slakah and his musical alter egos, the Slakadeliqs and The Art of Fresh.
Last year, Reservoir Media turned heads by making an exclusive publishing agreement with Nate “Danjahandz” Hills who has written and produced for several top pop and R&B artists, including Britney Spears, Chris Brown, Nelly Furtado, M.I.A., Jennifer Lopez, and Keri Hilson.
Reservoir Media got noticed as a potential publishing player in 2010 when it acquired the music publishing assets of TVT Music Enterprises, which brought to its roster producer Scott Storch, Nyceboy, the Cinematics, the Holloways, Devo Springsteen and Big Reese.
The TVT Music Enterprises catalog was sold by Fortress Investment Group which had obtained its stake in TVT after it took over the assets owned by D.B. Zwirn, which was forced to liquidate its investment funds in 2009.
This year Reservoir became one of the first independent music publishers to strike a content management deal with YouTube which allows it to claim revenue from original material and covers. The deal also allows for Reservoir to administer master and synch licenses.
Born into a prominent industrial and mercantile family in Iran, Khosrowshahi is a managing director at DRI Capital, a subsidiary of the Inwest Group of Companies that oversees Reservoir Media.
In 1978, Khosrowshahi left Iran for the UK, and then settled with her family in Vancouver, Canada. She has a BA from Bryn Mawr College in Bryn Mawr, Pennsylvania, and a Master of Business Administration (MBA) from Columbia University in New York.
Golnar’s parents, Hassan and Nezhat Khosrowshahi, co-founded the Inwest Group of Companies. Inwest founded the Future Shop chain of Canadian consumer electronic stores. Inwest sold Future shop to the American retailer Best Buy in 2001.
Prior to re-locating to Toronto in 2003, Golnar Khosrowshahi spent a decade in New York City. She began her career working in advertising at MVBMS/Euro RSCG, and was later head of account services and business development at Imagination NYC, an experiential design firm.
What initially appealed to you about music publishing?
Do you know how we got into this business?
Well, I know you are also managing director at DRI Capital, a pharmaceutical royalty investment firm in Toronto.
Yes. Our parent organization Inwest Group (Inwest Group of Companies) purchased a company in 2002 called Drug Royalty. It is now called DRI Capital which manages about $1 billion (in assets). Its expertise is in acquiring royalties on pharmaceutical drugs and devices that are in-market and FDA approved.
About five years ago, we started looking at how the DRI business model could be applied to other areas of intellectual property. We started looking quite extensively at entertainment, particularly music. We liked the fact that royalty rates are regulated by the government. We also liked the fact that there is financial sophistication in this area; in that people had done these types of transactions before. That is how we got into this business.
[Founded in 1992, Toronto-based DRI Capital is a private equity arm of Inwest Investments Ltd. focused on the healthcare industry, with over $1 billion under management. It provides financing for product acquisitions and launches, licensing, and general working capital purposes to companies within the healthcare industry. After close to 15 years, Drug Royalty Corporation became officially known as DRI Capital in 2007.]
You weren’t born in Canada?
No, no. I am Iranian. From Tehran. I left when I was six for London. I came to Canada when I was 12. I went to high school in Vancouver.
You began your career in advertising at MVBMS/Euro RSCG?
Yes. I was in New York. I went there right after undergrad (school). I started in the account group. I had the benefit of working in a company that was hugely understaffed. I got to do things at the age of 21 that were just incomprehensible. By six months into this job, I was managing some pretty important details on productions and budgets, and participating in strategy sessions. I worked in a company that was pretty laterally organized. So, on daily basis I was interacting with the named partners. It was amazing. I couldn’t have asked for a more rewarding entry level job. It was 16 to 18 hour work days but I didn’t care.
What was your major at Bryn Mawr College?
Political science. I had the luxury to go to a liberal arts college, and you can study what you want there. It’s the luxury of the four year college.
You have a MBA from Columbia University in New York.
Well, I was the youngest in my class at Columbia. The trend at the time--which is continuing--was that the average age at Columbia when I started was 28. I was much, much younger. I was 23. Having different jobs, and different professional experiences, I can tell you that a MBA is a program that you can definitely benefit from. Or some people could get out of it. So there was definitely that intimidation factor.
After I got my MBA, I went back to the agency. That’s when I did the work for Phillips and supervisory work for MCI. Then I moved to Imagination New York for two years (as dir. of client service and new business).
You lived and worked in New York for a decade?
Yeah, at least.
Why the move to Toronto in 2003?
The DRI business was based there.
Did you join DRI Capital while in New York?
No, but that was something that was on the horizon. I had had two kids by then. It was an interesting proposition.
Today are you back-and-forth between Toronto and New York overseeing Reservoir Media?
Yes I am. I am very connected to that (New York) office. I’m there a couple of days a week. The DRI business is based in Toronto; so there’s that. So far, it’s manageable.
Are you involved in other DRI Capital investments?
I’m not involved in an operational sense, but we do learn from them and try to better what we are doing.
What size staff at Reservoir Media?
We have eight people.
You entered the music industry as many people were jumping out. I would have thought that equity investors would have been nervous about the music industry at the time.
I think that the data is misleading. I think that there are portions of the music industry that are in flux. That has to do with changing market trends and changes in how people are consuming music as a product. While mechanical sales have suffered--and there’s been a downturn on that front--and we are just looking at easing into a parity I suppose with digital sales compensating for that loss; I don’t think that owning music copyrights, and being in the music publishing business is an industry that people are jumping out of.
Publishing being one of the more stable sides of the music business.
Yes. More stable. Private equity firms like KKR and other private equity groups are getting involved in entertainment, and are getting into this business. (Music publishing) gets a vote of confidence from the investor community because of the attraction to uncorrelated assets. This is exactly what these are. So it is attractive in that sense.
You worked extensively in advertising. Did that include dealing with artists and music rights?
It did. I worked for HAVAS Advertising which is a French advertising company based in Paris, London and New York. HAVAS is the parent of Euro RSCG and MVBMS.
I was an expert in thriving in the time of very high telecommunication budgets, and overpaying for music and over paying for talent in general. Talent being on camera talent or music talent. When I worked in advertising, I was the head of the Philips Electronic global brand. The big learning project for me during that time was the negotiation and acquisition (in 1998) of the (branding) rights to the (Paul McCartney and John Lennon) Beatles song “Getting Better.” It was a very interesting time where advertising budgets were not what they are today. And having this kind of a global sort of resonating the mnemonic was extraordinarily valuable. That was a landmark (music licensing) transaction.
[Phillips’ 1998 marketing campaign, an evolution of the company's three-year old "Let's Make Things Better" branding effort, used extensive television, print, and online media. The TV spots included a cover version of Lennon/McCartney’s "Getting Better,” re-recorded by Gomez. The song's refrain, "It's getting better all the time," was heard at the conclusion of the spots as a musical tag followed by a visual of the Philips brand promise "Let's Make Things Better," and the Philips logo.]
In another role while also at HAVAS, I was running one of the divisions of MCI Telecommunications. For a period, it was the Friends & Family (division). And then, I focused on what was referred to as unbranded products. These included dial-around products (10-10 prefix dial arounds, collect calling products, directory assistance, etc.)
This was in the heyday of telecommunication competition. And we’d have celebrities and on camera talent every other week, ranging from Michael Jordan to Whoopi Goldberg to the entire cast of “Saturday Night Live.”
With all that we would also acquire the rights to music. We would do all kinds of work as far as (developing) covers and things like that. So I came into this (business) having experience from the other side, really; the marketing side and how music could be used and be profitable for an agency, and a client.
At the time, the music industry was making it somewhat difficult to acquire music sync rights. There wasn’t any standardization.
No. That has gotten a little bit more streamlined. You have to question why the process has become better. The reason why it has become better is because I think that publishers recognize that every income stream is important. Sync (licensing) should be considered an additional income stream, which I think that is being recognized now. From an artist standpoint, I think that opportunities that would have previously been declined are being accepted more because they are looking at their semi-annual royalty statements. Look at how those are changing.
We are in tougher economic times.
Well, we are in tougher economic times, but we are also in a business that is shifting. It’s a question of how nimble that you want to be in this business. If you are going to call us up to license something, we have to be helpful. If you are seeking to license the original version of something, then we have got to make sure to help facilitate the master side of that license as well as the publishing side of that license. Whether that means that we are giving you a phone or whatever. Facilitating licensing could take different shapes. But I do think that people are playing ball a lot more than they used to.
What were the first publishing assets you picked up?
We bought the John Rich catalog. We bought four catalogs right quickly after another. Big & Rich (John Rich and “Big Kenny” Alphin separately); another writer that they work with, Vicky McGehee, and we purchased the catalog of Bruce Roberts.
He’s a fantastic songwriter who wrote “No More Tears” (featuring Donna Summer), “I Don’t Break Easily,” “The Main Event” and other songs recorded by Barbra Streisand.
Yes, and it’s been a big week because Barbra has been performing so much. That’s been great. There’s also been a big commemoration of (the life of) Donna Summer.
Why were the Big & Rich catalogs the first purchased by Reservoir Media?
That was the deal that we found. We looked at other deals. If you recall, at the time there were people in the market paying 17 and 18 time multiples (for publishing catalogs). We weren’t going to be participating in those kinds of sales, and we had good information on country music. We knew the attorneys that were working on this. It wasn’t so much, “Let’s go down to Nashville, and do a deal.”
On our part, it wasn’t conscious of (working in) country or Nashville. I guess that the benefit of not coming into this business from a music (publishing) background was that we looked at these with a very different perspective. We may at times have asked questions that were intuitive; and, at other times, we may have asked questions that seemed to make sense. I think that we try to keep that kind of fresh outlook on everything that we look at today so that we are always keeping ourselves in check.
Music publishing is traditionally an old boys’ club. As a newbie and being a woman with two kids, were you initially considered a dilettante?
Nobody treated me that way. Maybe, they did and I wasn’t conscious of it. No, I have never encountered that. It’s funny because you do read about this all of the time. That it is a boys’ world. But I have yet to encounter the negative ramifications of that.
The 2010 purchase of TVT Music Enterprises’ publishing catalog was a substantial step toward you becoming a serious player in contemporary music publishing.
TVT was a big step up. It was a turning point. It is a hits driven catalog. There is just one after another hit in that catalog from (50 Cent's) "Candy Shop” to (Ne-Yo's) “Let Me Love You.” It was extremely well-curated catalog. We purchased that from Fortress (Fortress Investment Group) in April, 2010. We did some work on any kind of split disputes that were involved with that catalog which is normal. It has worked out very well for us.
The TVT Music Enterprises catalog had been generating about $1.2 million to $1.5 million net income. Have you been able to grow the catalog’s earnings?
Yeah. All of these assets are sort of decaying cash flows with spikes in certain years. Yes, it’s grown in the sense that we have really capitalized on sync opportunities. There are just a lot of songs in there that are just now 7 to 10 years later that we can definitely declare them in the evergreen category.
With the TVT deal, you didn’t acquire master rights.
No, the master rights were purchased by The Orchard.
[TVT Records filed for Chapter 11 protection in February, 2008 and was subsequently sold to The Orchard in June of that year for a reported $6 million.]
In many cases, there are owners of master rights that you can obviously work with as a publisher.
Absolutely. As well, every time we create a new (recording) or a variation we are creating new masters as well. We like to do that as well. We are very conscious of the need in our business to at least to sustain, if not diversify, the different income streams from which we are earning revenue. But we did purchase master rights with Black Fountain.
The value of holding some older copyrights is diminishing if you are in that middle ground of ‘80s, ‘90s and first part of the millennium. That’s a no man’s land for awhile.
I agree with that. The TVT catalog obviously sits in that category. In the sense that it is in that no-man’s land, but it is some of the best songs from that no-man’s land.
Were there any active songwriters involved with the TVT deal or had their contracts elapsed?
No, we inherited a lot of writer contracts with that. We have a bunch of them that we work with. We try to develop those. We have an A&R capacity in the office and also a consultant who we work with. That attention is across the board given to all of the writers.
With the purchase of UK publisher Reverb Music you now have enough critical mass to be a leader in the independent music publishing sector.
Yes and we like that quite a bit. That was 30,000 copyrights. Overnight, we went from (having) 4,000 to over 30,000.
How did that purchase come about?
I met (Reverb managing director) (Annette Barrett) in London in November of last year. Our relationship began then. Annette’s fantastic. It’s been a special pleasure getting to know her. She’s had such a significant role in building Reverb to where it is today that it wouldn’t have made sense to buy this company and not have her there to nurture what’s there, and grow it.
[Reverb Music was established in 1991 by the late Ian Wright. Following the purchase by Reservoir Media, Reverb managing director, Annette Barrett has remained on board as the head of the London office and European operations.
Since joining Reverb in 2001, Barrett had been instrumental in building a diverse catalogue of hits that includes Bananarama’s “Cruel Summer,” Daniel Bedingfield’s “Gotta Get Thru This,” Apollo 440’s “Stop The Rock,” Jessie J’s “Stand Up,” and Rihanna’s "Man Down," as well as the themes to the X Factor and Got Talent television series.
Previously, Barrett held executive positions at Virgin Music, and Warner Chappell Music UK.]
Annette had also developed an impressive stable of songwriters.
Yes, and there was her relationship with those songwriters as well that was important for us for her to stay involved.
[The Reverb deal covers agreements with more than 100 songwriters including Jamie Hartman, songwriter/producer John Fortis, Peter Gordeno, and Italian songwriter/producer Matteo Saggese.]
Given the size of Reverb’s catalog, was it a difficult negotiation?
It wasn’t any more cumbersome than other negotiations that we have done for things significantly smaller. We did buy the company so that was different. But I would even go so far to say that we have had more cumbersome ones (negotiations) for maybe 150 songs.
Well, the nature of negotiation depends if it’s 150 of the right songs.
Were acquiring the Black Fountain Music (publishing), and Blackground (label) catalogs difficult?
No. Black Fountain is an interesting one. I first met with Barry Hankerson 18 months ago. We closed that transaction this summer. We purchased publishing royalties as well as master rights. That deal got us into the masters’ business a little bit which has always been on the radar. It has also provided us with the opportunity hopefully helping to continue Aaliyah’s legacy which is something that we want to be involved with. To work with Barry and his son Jomo (Hankerson) to get this project off the ground.
There’s already been the release of the Aaliyah “Enough Said” with Drake.
Yes. That came out around the OVO Festival (at Molson Amphitheatre in Toronto on Aug. 5th, 2012).
[In Aug, 2012, the new Aaliyah track, "Enough Said," featuring Drake and produced by Noah "40" Shebib, hit the Internet. Three hours after being posted, the song racked up more than 100,000 clicks. The release, of course, set off speculation about a posthumous Aaliyah album.
Her cousin Jomo Hankerson has reportedly indicated that the label will be using 16 songs and "fragments" to assemble an album of songs from the singer, who died in an airplane crash in 2001.]
When will we know about an Aaliyah album?
That is hard to say and not entirely in my hands but I think that it will be….really; it’s hard for me to say. But it is in the works.
Sources indicate there’s enough material for two albums.
We listened to everything. That was really such a beautiful listening session to listen to her voice. But I think that’s a subjective call. Volume? Sure there’s enough (tracks) for two. What you decide to do with it and how you decide to release it is a creative call.
Posthumous albums can tarnish or embellish an artist’s memory with the public. But you don’t want to forget them either.
No. It’s great that her uncle (Barry) is involved. There wouldn’t be anybody closer in this creatively which for me confirms that the creative product is in good hands.
What are some of the strategic points you are now looking at for the company?
For us, it’s really important that we grow the catalog from the standpoint of having diversity from a genre standpoint while still making investments in evergreens or songs that one day will become evergreens. We are looking probably more avidly at catalogs from the ‘60s or the ‘70s. We probably would take a second look at a rock catalog versus a hip hop catalog today.
You have hip hop well covered.
Well, we have that covered and we have that covered on a futures basis as well. So we work with Nate Hills; we work with 2 Chainz. The contemporary marketplace; it’s not that it’s 100% covered, but at least we have some representation in that area.
The lines are blurring; the root of music publishing was producing and licensing music. You have gone back to the roots of music publishing. Signing both 2 Chainz, as well as singer/songwriter/producer Slakah The Beatchild will generate new song copyrights and masters with their activities.
Exactly. That is something that I was touching on earlier is that we have faith in people like this so that then new opportunities came along--and one was more contemporary and one was a rock opportunity---we were put in a position to pick then we would look at the opportunities that would really help the catalogs’ diversity. Rock is an area that we need to populate, and we fully recognize that.
[Over the past few years, Slakah The Beatchild has produced and collaborated with Drake, Nelly Furtado, Ray Robinson, and Melanie Durant. Slakah’s catalog includes four Slakah and Slakadeliqs albums, as well as a fifth release currently in production.]
Today, the Internet gives publishers greater flexibility, including the ability to control distribution of catalogs. Despite Pandora’s recent publicity campaign, there still seems to be a disparity between what music services are using, and what they are paying for.
That’s something that we are looking at all of the time. It’s not just with Pandora, it’s with anybody who is new and changing the playing field as far as how our product or these copyrights are distributed. We are conscious about that; about tracking it; and about checking the tracking.
Now there’s only so much that you can do as far as checking the tracking goes.
We were the first independent to do a direct deal with YouTube. The rest of the independent deals go through the Harry Fox Agency. It is about taking measures like that in order to make sure that as there are new royalty streams coming in that we are first of all actually getting paid; and second of all getting paid properly.
Another thing that we do is employ the services of a product called TuneSat which basically takes a footprint of our songs and scours. It doesn’t scour new media, new distribution vehicles, but it does scour television around the world, 24/7.
You have to take these measures. We are constantly looking at how to control what is happening and check that against what is owed to us because Soundscan is not going to do it for you anymore in any of these areas.
[Pandora recently unveiled an aggressive publicity campaign by revealing the amounts of royalties some artists' songs generate on its service. Pandora pays all royalties for the performance of sound recordings to SoundExchange, the organization that collects digital performance royalties on behalf of sound recording owners and performing artists.]
Meanwhile, without a coordinated and seamless licensing environment, Europe remains a highly challenging marketplace for music publishers. A real mess.
It is still a mess absolutely. For foreign work, that is harder to track. TuneSat does track foreign activity but only television. We have to rely a lot on our sub-publishers. We are very selective as far as our sub-publishing goes; who we work with in the different territories. We like to cherry-pick who the strongest people are in each territory, and work with them.
Tell me about your involvement with GoGoNews.
GoGoNews is a personal initiative that was started for my children. It sort of gained momentum and has some ridiculous number of hits on a daily basis now. It’s a passion project which is really for my children. It doesn’t get much attention from me these days.
[In 2006, Khosrowshahi created GoGoNews, an online news source for her twin daughters then four. They had seen a newspaper article with a disturbing photograph of a little girl after an earthquake in Pakistan. The two asked: ‘What happened to her? Why did this happen?’”]
I think GoGoNews could really grow.
I think so too. But it’s not my day job.
Larry LeBlanc is widely recognized as one of the leading music industry journalists in the world. Before joining CelebrityAccess in 2008 as senior editor, he was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record. He has been quoted on music industry issues in hundreds of publications including Time, Forbes, and the London Times. He is co-author of the book “Music From Far And Wide.”