Invest in Music Royalties: What a $1B Catalog Operator Actually Thinks
Written By: Ryan Morrison
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Most investors who encounter music royalties treat them as a fan play - a way to own a piece of an artist they follow rather than a decision about allocating to a defined asset class. Jason Peterson, founder and CEO of Go Digital, runs the business differently. His company manages nearly $1B in music IP across several hundred thousand copyrights, with no institutional equity, and has been inside every major industry inflection since Napster - including the AI licensing settlements being negotiated right now. This conversation is about what that vantage point reveals.
Peterson's core argument is not that music is culturally interesting. It is that music copyrights behave structurally like a long-duration annuity with no maintenance costs, a growing global addressable market, and a seller dynamic that often has nothing to do with the asset's value. For investors who can get the framing right, that combination is harder to find elsewhere in the alternatives landscape.
TL;DR
Music copyrights generate royalty income across streaming, performance, broadcast, sync, and now AI licensing - for up to 70 years past the creator's death, with no physical maintenance or property taxes
The T.I. catalog makes more than double today what Go Digital paid in May 2017, with no new hits - market growth alone compounded the returns
Go Digital times emerging market acquisitions using leading indicators: smartphone penetration, wireless access, and banking participation rates. Latin America was the proof of concept; Afrobeats and K-pop are next
Artists sell catalogs for three reasons unrelated to asset quality: tax timing, personal liquidity needs, and a preference for present value over a 100-year income stream
AI adds a licensing revenue line rather than disrupting catalog economics - Peterson is actively involved in settlements with AI companies that result in favorable licensing agreements
Music IP Behaves Like a 100-Year Annuity With No Maintenance
Music copyrights generate royalty income across streaming, performance, broadcast, and sync for the life of the copyright - typically 70 years past the creator's death - with no property taxes, no physical upkeep, and a market that has grown for ten consecutive years. Peterson made the comparison directly: "I can't think of any other asset class I would rather invest in than music because it's a hundred year annuity that has unlike real estate, it has no maintenance, no property taxes, and the market is growing significantly and will grow significantly for probably the next 20 years."
The clearest proof of that thesis in Go Digital's own portfolio is the T.I. catalog, acquired in May 2017. It makes more than double today what it generated at acquisition. T.I. has not released significant new music in that period. The catalog is simply older and more valuable, because the global streaming market has expanded underneath it. According to the IFPI Global Music Report 2025, global recorded music revenues reached $29.6 billion in 2024 - the tenth consecutive year of growth - with subscription streaming up 9.5% year over year and 752 million paid subscribers globally.
The income streams are not monolithic. A single catalog generates money from streaming on Spotify, Apple Music, and Amazon, from radio and broadcast performance, from synchronization licensing when songs appear in film and television, and increasingly from AI training and licensing agreements. Peterson runs it as a portfolio business: "We're making money from generative AI. We're making money from performances on broadcast and in stadiums. We're making money from streaming on premium platforms like Spotify."
The real estate comparison is worth taking seriously. Peterson likes real estate and owns it for some of the same reasons - it is communal, it holds value, it can be shared with others. But he identifies the structural advantages music IP holds over a property portfolio: no cap-ex, no vacancy, no property tax, and a market with a clear secular growth tailwind rather than a local supply and demand dynamic. That combination is what makes him 100% invested in the asset class with his own capital.
The Two Copyrights Every Investor Needs to Understand
Music IP contains two legally distinct assets that generate income through separate mechanisms, and conflating them is one of the most common mistakes investors make when entering the space.
The musical composition is the underlying song - the notes and lyrics as they would appear on sheet music. This is what a songwriter owns. Anyone can record a version of that composition and must pay statutory royalties to the composition owner each time that recording is commercially exploited. The sound recording is a specific performance of that composition. Owning the master rights to a particular recording entitles the rights holder to income from streams and broadcasts of that specific version.
Peterson explained this distinction through the Taylor Swift re-recording situation, which confused many outside observers. Swift's record label, Big Machine Records, owned her sound recordings. But she separately owned her compositions. When the contractual restriction on re-recording expired, she could legally re-record her own songs - creating new sound recordings of the same compositions. Buyers of her original masters still own those recordings. What they do not own is the right to prevent her from making new ones of the same underlying songs. When Go Digital acquires a catalog, especially at scale, the purchase agreement includes a contractual provision preventing re-recording without consent. The precedent from the Swift situation, as Peterson noted, is actually instructive: when she re-released her new recordings, renewed interest helped the original catalog too. The two can coexist.
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Why the Platform Equity Playbook Changes the Investment Thesis
Music rights holders who become equity owners in the platforms distributing their content earn returns on both the royalty stream and the platform's growth - a dynamic the industry missed with Apple and YouTube, then captured with Spotify, and is now replicating with AI companies.
Peterson is direct about the Apple mistake: "Our industry wasn't smart enough at that time to become equity owners in Apple. What we should have said at the time was our music is a form of currency - our music is a customer acquisition method. It is lead generation for you, Apple, to get people into your Apple ecosystem." The industry provided the content that made the iPod and iPhone indispensable without taking any ownership in the company that captured the value.
The Spotify deal corrected that. The four major labels - Sony, Universal, Warner - and Merlin, the collective bargaining agency for about 750 independent labels including Go Digital, negotiated equity ownership in Spotify alongside their advances, minimum guarantees, and royalties. That equity turned out to be meaningful. Peterson is clear that the same mistake was made again with Google and YouTube, where the industry never obtained ownership. But on the AI front, the strategy has shifted.
"We are going to be owners in the AI companies. And it's already happened." Go Digital is directly involved in licensing settlements with AI companies - Peterson referenced cases against 11 Labs, Suno, Udio, and others, several of which settled in the weeks preceding the recording. The settlements result in licensing agreements, and Peterson describes the terms as favorable. The structural logic is the same as Spotify: music is the customer acquisition currency for AI companies training models and building consumer products. Content owners who recognize that dynamic early can convert it into equity rather than just licensing fees.
The Amazon example illustrates why this matters at scale. Amazon spent $1B on two seasons of Rings of Power - $200M for rights, $800M to produce 16 episodes at $50M each. When Peterson asked Amazon executives whether that was accurate, they confirmed it was, and added that they had no intention of making money on the content itself. The metric they care about is Prime subscriber acquisition and retention. The content is a loss leader for lifetime value. "If you're Amazon, how much money do you think you guys are gonna spend on Amazon over the course of your lifetime? It's hundreds of thousands of dollars. And that gross margin from that dwarfs the contribution margin from your Spotify or Netflix subscription." Single-content platforms like Spotify face a structural disadvantage against conglomerates that can use content as a loss leader for a much larger ecosystem. Music rights holders who understand this can position accordingly - by managing concentration risk, maintaining a portfolio across multiple platforms, and capturing equity in the ecosystems where their content is most valuable.
How Go Digital Times Emerging Market Acquisitions
Go Digital acquires music rights in markets where smartphone penetration, high-speed wireless access, and banking participation are still maturing - then benefits as those indicators converge and local music gets consumed in larger, more monetized markets.
The Latin music playbook is the most fully executed version of this thesis. When Go Digital began acquiring Latin music copyrights, banking participation rates across central and South America were running at 10-15% in many markets. High-speed wireless penetration was limited. Smartphone ownership was low. The result was significant price elasticity - consumers had neither the devices nor the payment infrastructure to subscribe to streaming services, so they used free YouTube or pirated content. The music rights traded accordingly - at prices that did not yet reflect what the asset would be worth once the infrastructure matured.
"What we've experienced is that not only have all of those leading indicators matured - everybody's got a smartphone, there's high speed wireless everywhere, banking participation rates went from like 10, 15, 20% to 50, 60, 70%, depending on the market in central and South America." The revenue from Latin music catalogs followed. According to Music Business Worldwide's reporting on the IFPI Global Music Report 2025, Latin America saw recorded music revenue growth of 22.5% in 2024, among the fastest-growing regions globally.
The U.S. amplifies the thesis. There are 62 million people in the United States who identify as Hispanic, the second largest such population globally after Mexico. Music produced in Colombia or Puerto Rico and consumed by that audience in a mature market with high willingness to pay represents an unusual convergence - the production cost of the rights reflects the origin market, but the consumption happens in a market with Spotify-level monetization. Peterson describes this as "the secret": buy music or acquire rights in far-flung markets that are going to be consumed in more mature ones.
Go Digital is applying the same framework to K-pop and Afrobeats. K-pop has already arrived as a global export. Afrobeats - anchored in Nigeria, a market of 230-240 million people - is Peterson's conviction call for the next phase. "Personally, I think Afrobeats is the next big genre." Indonesia, at 270 million people, is another market he watches for similar reasons. The underlying logic is consistent: look at leading indicators, acquire before the infrastructure matures, and position for consumption in larger markets.
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Why Artists Sell Catalogs - And What That Tells Buyers
Artists sell music catalogs for three reasons that have nothing to do with their belief in the asset's long-term value: tax timing, personal liquidity events, and a preference for present value over a 100-year income stream.
Peterson laid out the framework cleanly. The Bob Dylan sale is the clearest tax example - at his age, Dylan wanted a liquidity event at a time when capital gains rates were favorable. "If you think about, I'm going to get liquidity today, and then I'm going to reinvest that and compound that over time - sometimes it makes sense." The second reason is personal: divorce is common. An artist whose primary asset is a catalog needs liquidity to settle with a spouse. The third is the structural shift in how music income flows over time.
Under the CD model, an artist made most of their money in the first six months after a release. A hit album generated a large upfront pile of cash that could be reinvested. Under the streaming model, that same total value is distributed as a smaller annual payment over decades. The present value may be equal or higher depending on the discount rate - but the artist cannot access it in six months. "In some cases, people want they need to have a liquidity event to pull that future value to the present." Someone who needs money for a house, a new business, or a divorce settlement cannot wait 20 years for the income stream to fully realize.
The buyer's implication is direct: seller motivation and asset quality are structurally decoupled. An artist selling because they are divorcing is not selling because they believe the music has peaked. An artist selling for tax reasons at a favorable capital gains rate is often selling from a position of success, not distress. Understanding why a catalog is for sale tells you something about the seller's situation, not about the catalog's trajectory.
Go Digital often structures acquisitions as partial purchases rather than full buyouts. A 50% undivided fractional interest in a catalog allows the artist to receive cash upfront while retaining ongoing participation in the royalty stream. Go Digital manages the rights and pays through the artist's share out of management fees. The artist diversifies. The investor gets managed access to a catalog the artist still has skin in. Peterson noted that no artist has ever asked for equity in Go Digital's broader catalog, but the fractional structure accomplishes something similar in a more practical form.
AI Is Adding a Revenue Line, Not Disrupting the Asset
Peterson does not view AI-generated music as a threat to catalog value. He views it as another tool for creating culturally significant content and a new licensing revenue stream, similar to how the synthesizer was once treated as a threat to orchestras and became the foundation of modern music production.
"If you go back to England at that time, orchestras tried to get the synthesizer outlawed. Computers are not music - basically that's what they were saying. And we all know that evolved into digital audio and video workstations and nonlinear editing and all these other things, and it's still music." The same logic applies to AI. Whether a piece of music is made with traditional instruments, a digital audio workstation, or a generative model, the question Peterson asks is whether it creates an emotional bookmark for a large audience. "If it resonates with a lot of people and creates that emotional bookmark for a large audience, it becomes culturally significant. And if it's culturally significant, it's durable and we can price that and we can acquire it."
The noise floor concern is real but manageable. There are already 250 million tracks in existence, most of which generate no meaningful streams. A flood of AI-generated content adds server load without changing the economics of professional catalogs. The industry has addressed this structurally: recordings that generate fewer than 1,000 streams on Spotify or Deezer are demonetized, excluded from the revenue-sharing calculation entirely. This concentrates the royalty pool among content that actually gets consumed.
The more interesting AI dynamic is on the licensing side. Go Digital is directly involved in settlements with AI companies over the use of copyrighted music in training data. Several of those cases settled recently, resulting in licensing agreements Peterson describes as favorable. The industry learned from the Apple and YouTube mistakes: the goal is not just to prevent unlicensed use but to convert that use into an ownership stake. "We are going to be owners in the AI companies. And it's already happened." For investors evaluating music IP as an asset class, AI represents a new revenue line added to an existing annuity - not a disruption to the underlying cash flows.
Frequently Asked Questions
What is the buy and build strategy in private equity?
The buy and build strategy involves acquiring a platform company at a baseline EBITDA multiple and then adding smaller, complementary businesses at even lower multiples to create a larger, more valuable combined entity. The combined platform commands a higher valuation multiple at exit than any of the individual components would on a standalone basis — a mechanism known as multiple arbitrage. Nearly three-quarters of all PE-backed buyouts in North America now involve some form of add-on acquisition activity.
How does EBITDA multiple arbitrage work in a PE rollup?
Smaller companies typically trade at lower EBITDA multiples than larger ones because they carry more concentration risk, limited management depth, and less predictable cash flow. A PE firm that acquires a platform company at 10-12x and adds smaller businesses at 6-7x blends down the effective entry cost. When the combined entity is sold at the multiple a larger, more established business commands — 15x or higher in some sectors — the difference between the blended entry multiple and the exit multiple flows directly to equity holders. This structural gain exists before any EBITDA improvement occurs.
What does it actually look like to run a PE-backed company compared to a public company?
The most significant practical difference is the absence of a quarterly reporting cadence. PE-backed executives organize decisions around a five-year exit arc rather than 90-day earnings cycles. This actually creates more room for longer-horizon investments and operational restructuring — the difficult work gets done early, when it will not appear in the three years of financials a future buyer will examine. The tradeoff is that the pressure to execute is just as intense, and the consequences of missing the exit timeline are more direct.
When does it make sense for a senior executive to leave a public company for a PE-backed role?
The natural window is late 30s to early 40s — enough P&L track record to be credibly recruitable, and enough career runway and energy to operate aggressively under a compressed build timeline. The most important reframe is reversibility: the move is not permanently closing a door. A VP or GM at a large public company who tries a PE-backed operating role and finds it is not the right fit can generally find a comparable corporate position. The risk runs more in the other direction — not trying and spending years wondering what the outcome would have been.
How does executive compensation work in a PE-backed role?
Base compensation and annual incentives typically run behind the public company equivalent at the senior VP level during the early years of a hold period. The equity package — structured as management equity or carry — represents the full upside thesis over a five-year horizon. A CFO-level position in a PE-backed company commonly carries around 1% equity ownership; the CEO holds proportionally more depending on deal structure. The bet is that total compensation over five years — including the equity realization at exit — significantly exceeds what the same executive would have earned staying on a public company salary trajectory. Without a successful exit, it may not.
What percentage of PE buyouts use add-on acquisitions?
Add-on acquisitions represented more than 76% of all PE-backed buyouts in the United States through early 2024, according to Goodwin Law research. This figure has remained near historic highs as PE firms have shifted toward consolidation strategies that do not depend on leverage expansion or market multiple growth to generate returns. The buy and build approach now accounts for the majority of middle-market PE activity across most industry sectors.
What do PE firms look for when recruiting portfolio company executives?
PE firms recruiting operating executives are primarily looking for demonstrated impact on a P&L — evidence that a candidate has moved top-line revenue, improved margin, or both, in a business of meaningful scale. Credentials and tenure matter less than a track record of execution. The cultural fit question matters equally: PE-backed operating roles require the willingness and energy to make decisions quickly and build aggressively without the organizational infrastructure and consensus processes that large public companies provide.
Final Thoughts
Peterson's framing for music IP is not built on enthusiasm for the industry. It is built on a structural argument: a 100-year annuity with no maintenance, a growing global market, a seller dynamic that decouples urgency from quality, and a platform equity playbook that creates upside beyond the royalty stream itself. The T.I. catalog doubling in eight years without a new hit is not a story about T.I. It is a story about what happens when a well-acquired catalog sits inside a market that compounds.
For investors who have written music off as inaccessible or too niche to underwrite, the real question Peterson's experience surfaces is simpler: if the leading indicators in Latin America matured enough to produce 22% annual revenue growth, what does that imply about the markets where those indicators are still early? The investors who asked that question in 2009 alongside Peterson are sitting on those answers now.
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