This Trend Is Making a Great Business Even Better

First, there were covers... I'm pretty sure everyone knows what a cover song is – when one artist performs a tune previously recorded by another artist – which in rare instances will lead to the remake being even more popular than the original recording... Think of Aretha Franklin putting her spin onto Otis Redding's "Respect"... […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] This Trend Is Making a Great Business Even Better By Berna Barshay First, there were covers... I'm pretty sure everyone knows what a cover song is – when one artist performs a tune previously recorded by another artist – which in rare instances will lead to the remake being even more popular than the original recording... Think of Aretha Franklin putting her spin onto Otis Redding's "Respect"... or Whitney Houston turning Dolly Parton's "I Will Always Love You" into her signature song... or Johnny Cash's searingly haunting rendition of Nine Inch Nails' "Hurt," recorded just a year before his death. You're probably also familiar with the concept of sampling, where a new song uses a snippet of a past hit, adding a new layer to the familiar. Famous examples include the 1990 MC Hammer classic "U Can't Touch This," recorded over the opening riff of Rick James' "Super Freak" and the infamous one-hit-wonder from Vanilla Ice, "Ice Ice Baby," which heavily sampled the bassline from the 1981 Queen-David Bowie collaboration, "Under Pressure." And now, the latest way that popular music is building on the success of prior hits is the rapidly growing phenomenon of interpolation... If you're unfamiliar with the term, here's how music magazine Rolling Stone described it in an article last month... As a musical concept, interpolations are a cousin to sampling, the art of sticking sound snippets of older songs into new projects that has defined so much of hip-hop. Rather than lifting or modifying a recorded track, though, an interpolation cribs only from a song's written composition – whether that's lyrics, a melody, a riff, or a beat. Young pop stars like Olivia Rodrigo, Ava Max, and Lorde have been packing their 2021 hits with interpolation. You probably aren't familiar with the latest hits from these artists, but if you want to get an idea what an interpolation sounds like, check out the recent hit "Kiss Me More" from recording artists Doja Cat and SZA on [YouTube](... Even if you haven't heard of these two singers, if you were alive in 1981 and had a radio, I guarantee you will recognize the hook that makes up a prominent refrain in the song. While the word "Physical" is never uttered, you will recognize the melody from the Olivia Newton-John mega-hit, which is front and center... but now with new words – "It's just physical" is now "It's just principle." Other good examples of interpolations include Rodrigo borrowing from Taylor Swift's "Cruel Summer" for her recent hit "Déjà Vu" and Max taking the intro melody from the '80s Bon Jovi classic "You Give Love a Bad Name" for her 2020 hit, "Kings and Queens." Unlike sampling, interpolation never touches the original sound recording... but that doesn't mean these artists are free to go around borrowing from past hits without paying. The composition is a right held by music publishers, and if you want to interpolate... you'll have to pay for it. Interpolation is an attractive proposition for owners of music rights... One music company even held a boot camp for pop songwriters, encouraging them to mine its library for songs to interpolate. As Rolling Stone describes the scene... It was the middle of June when more than two dozen songwriters, producers, and publishing representatives poured into an expansive, secluded creator's "compound" just outside of Los Angeles' wealthy Brentwood neighborhood. For three days, from 11 a.m. to 7 p.m., they wrote songs – in between catered meals and fierce games of corn hole in the estate's backyard – to shop around to A-listers like Doja Cat, Ariana Grande, and Cardi B, who could turn the tunes into lucrative anthems. It was, essentially, a summer camp for hitmaking. There was just one twist: The writers were specifically encouraged to lift music from old hit songs. "We wanted everyone to have fun, be as creative as you want, make whatever you'd like, but use our catalog as a starting point," says Franny Graham, one of the camp's organizers and the vice president of creative at indie publisher Primary Wave. Just like with sampling, interpolating can provide a path to a new hit. Borrowing from a proven winner increases the chances that listeners will connect with a song. In some instances, they may have knowledge of the original hit. A familiar hook can trigger specific memories or emotions or can just be appealing for its unspecific familiarity. And even if the listener is completely unaware of the original... the fact that the melody or beat was a hit the first time around means that it's good – and there's a good chance there is something aurally pleasing enough there to connect the second time around. So yes... music publisher Primary Wave is betting on everything old being new again. And the company is financially incentivized for this to work. If a source song is used to make a new hit, the business holding the rights to the old song will share in the royalties to the new song. An added bonus to cutting a new deal for an old riff is that often sampling or interpolating will drive new traffic to the old hit on streaming services or lead to it being covered or used for videos on social media platforms like TikTok. Some people may hear the interpolated snippet and be driven on a nostalgia quest... More often the songs of the last generation get discovered by a younger one for the first time, like what we saw happen last year with a burst of interest in the 40-year-old Fleetwood Mac catalog after [that viral TikTok video with the guy drinking cranberry juice while skateboarding](. Other artists from decades ago who have seen recent surges of interest after interpolations or viral social media use include Queen and Run-DMC. --------------------------------------------------------------- Recommended Links: [World's richest man orders 100K units of radical new technology]( CNBC reports that the world's richest man has ordered 100,000 units of a technology that could soon change his business and your life. Legendary investor Whitney Tilson explains the full story and his No. 1 stock to profit (including ticker symbol) [here](. --------------------------------------------------------------- [How to get in on this billionaire's latest pre-IPO deal]( He's one of the most successful venture capitalists of the past 30 years. Insiders compare him to Elon Musk or Richard Branson. For the first time, you can be in on his latest deal before it goes public. [Get the details here](. --------------------------------------------------------------- I've said before that music is the most evergreen of media assets... The beauty of a music asset for the consumer is it never gets old. From the [August 19, 2020 Empire Financial Daily](... No matter how many times you may re-watch a Friends episode or a classic movie like Star Wars or Dirty Dancing, the count will pale in comparison to the number of times you listen to your favorite song from high school or college. You can hear your favorite songs a thousand times and they don't get old. An old tune is like a time machine for your soul, which may be why almost 50% of on-demand audio streams on services like Spotify (SPOT) or Apple's (AAPL) Apple Music come from the deep catalog, otherwise known as music that was released three or more years ago. A quick scan of the top 100 most streamed artists on Spotify recently included Queen at No. 46, Elton John at No. 79, Michael Jackson at No. 93, and The Beatles at No. 95. Some of my favorite bands reached their peak output well before I was born. This ability of old music to be "new to you" reinforces its longevity as a valuable intellectual property ("IP") asset. There's no better proof of the enduring value of music assets than this interpolation trend... The ability to add a fresh twist to a decades old song is literal proof of the long duration of these assets. I've written bullishly about music publisher Warner Music Group (WMG) before in Empire Financial Daily. Since I mentioned the company last August, WMG shares have returned a healthy 45%. Our recommendation of Vivendi (VIV.PA) in Empire Stock Investor last year has been an even bigger hit, returning more than 100% in just 17 months. Two weeks ago, Vivendi completed its long-anticipated spinoff of its music publishing division, Universal Music Group (UMG.AS)... so investors finally have a way to directly own this holder of some of the greatest music rights in the world, including those to works by artists ranging from Lady Gaga to Drake to the Rolling Stones. Together, UMG, Warner Music, and Sony's music division control a whopping two-thirds of the music publishing market, with UMG the largest of the three. The outlook for monetizing music rights continues to improve as music streaming gains traction in geographies all across the world, and new use cases for digital music – like TikTok videos and Peloton (PTON) home fitness classes – continue their rapid growth. The future is bright for music companies, and I think investors in the space will find themselves well-rewarded for years to come. Come work with Enrique! My colleague Enrique Abeyta is looking to hire a junior analyst to help him launch his upcoming newsletter, Empire Elite Crypto, later this fall. If you geek out on cryptos and enjoy writing, we'd like to hear from you. Send us your résumé and a one-page write-up of your favorite crypto investment idea [right here](mailto:feedback@empirefinancialresearch.com?subject=crypto%20analyst). I'm in Cyprus today participating in the Cyprus Value Investor Conference... Because I'm short on time here, I am going to skip the mailbag for today and instead share some news from the conference along with a lovely picture I took of the Mediterranean on a beautiful day... I've heard about some great potential investments already at the conference, and I look forward to researching many of them when I get home and sharing some of the best of them with Empire Financial Research subscribers in the coming months. One big theme from the first morning of the conference was that value investors are being drawn to some of the largest-cap Chinese companies, many of which are down 20% to 40% so far this year due to recent interventions by the Chinese government into the private sector – causing Westerners to have jitters about many of China's corporate leaders. Enrique has been very clear in his advice to avoid these companies. I agree with him that the issue of just how interventionist and value-destructive the Chinese government could get is an unknowable question. But I also see the power of the argument made by stalwart value investors that these companies could be multi-baggers if the Chinese government signals an intention to act more benignly. I see compelling arguments on both the bull and the bear sides of this one. One great piece of advice I heard yesterday morning: If you are going to venture into the treacherous waters of the Chinese market leaders with blown-up stocks, manage your risk through position size. Don't invest more than you can afford to lose! I want to hear from you... Are you consuming more music now that you can access almost all the music ever created on your phone? Do you think sampling and interpolation are signs of songwriters being lazy... or is all art basically iterative? Would you invest in Chinese market leaders like e-commerce giant Alibaba (BABA) or digital services juggernaut and WeChat owner Tencent (TCEHY) now that they are "on sale?" Or do you agree with Enrique that they should be relegated to the "too hard" bucket? Share your thoughts in an e-mail to feedback@empirefinancialresearch.com. Regards, Berna Barshay October 5, 2021 If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2021 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 601 Lexington Ave., 20th Floor, New York, NY 10022 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](