What is performance attribution for a music royalty fund?

It separates the return any owner of the same songs would have earned from the return the manager added, so an investor can see how much of a result came from the streaming market and how much from the manager's own work. Here the split is market drivers against manager drivers, measured in basis points that sum to total return.

What are NPS and NLS?

Net publisher's share and net label share: the publishing and recorded-music income that actually reaches the owner after distribution fees and administration fees. Catalog prices are quoted as a multiple of the last twelve months of NPS or NLS.

How is a music catalog valued?

By discounted cash flow. Each song's last twelve months of recurring NPS or NLS is projected forward along its decay curve with an industry growth assumption, capped for copyright expiry and expected US terminations, then discounted at a single fund-wide rate. Dividing that value by the last twelve months of income gives the multiple the market quotes.

What is a catalog decay curve?

The rate at which a song's earnings decline as it ages. Decline is steep in the first years after release and flattens as a song settles into a catalog run-rate, so each song is underwritten with its own curve and the blended rate for a portfolio falls as its songs age.

What discount rate is used to value music catalogs?

A single fund-wide rate, reviewed at each half-year valuation. This model uses 8.50% from inception and 9.25% from December 2023. Valuers move rates only when interest-rate trends prove persistent, so a reset lands in one period rather than drifting month to month.

What is the difference between master and publishing income?

Master income comes from the sound recording (streaming and sales, paid through a distributor) and publishing income from the underlying composition (performance royalties through PROs and mechanical royalties through the MLC and societies). Publishing arrives later and through more intermediaries; master income is paid sooner and at a higher rate.

What are neighboring rights?

The performer and label share of broadcast and public performance of a recording, collected by societies such as SoundExchange and PPL. US terrestrial radio pays no sound-recording royalty, so US neighboring rights come only from digital and satellite radio.

What is black box or unclaimed royalty income?

Royalties a society or platform holds because the usage could not be matched to a registered owner. Cleaning up registrations and metadata claims it back. It arrives as a one-time recovery, unlike a higher match rate, which lifts the run-rate permanently.

What is operational alpha in music royalties?

Return earned by collecting more of the income the songs already generate: registration and metadata work, black box and audit recoveries, lower administration fees, and renegotiated distribution terms. It is reported separately from commercial work such as sync licensing, marketing and reissues.

What is a copyright termination and why does it affect catalog value?

US authors can reclaim a grant 35 years after it was made (section 203) or 56 years after a pre-1978 copyright (section 304(c)), within a five-year window and with advance notice. Only US income is affected, so a valuation removes the expected share from the earliest effective date.

Music Catalog Investing: Where a Fund's Returns Come From

Performance Over Time

The manager added return in every one of the 22 quarters since inception, while the quarterly total swung between −4.1% and +6.5% on market conditions.

MarketManagerFeesUnexplainedTotal

Return Bridge

Market drivers added 10.0% and the manager 3.3%, so the market the fund is invested in set the period.

MarketManagerFeesUnexplained

Attribution Detail

Driver	Contribution to total return (bps)	Share of return	Income (bps)	Capital (bps)
Total return	+1,082	100%	+653	+429
Market (beta)	+1,003	93%	+741	+262
Entry yield	+744	69%	+744	0
Catalog decay	−342	−32%	−80	−262
Market growth	+475	44%	+103	+371
Streaming volume	+463	43%	+100	+363
Broadcast & physical	+11	1%	+3	+8
Royalty rates	−39	−4%	−21	−18
Per-stream rates	−45	−4%	−23	−22
Statutory rates (CRB) & PRO/CMO tariffs	+6	1%	+2	+4
Currency (FX)	+166	15%	−5	+171
Discount rate change	0	0%	0	0
Manager (active)	+332	31%	+158	+173
Asset selection	−10	−1%	−7	−4
Performance vs. base case	−70	−6%	−13	−58
Viral & cultural resurgence	+60	6%	+6	+54
Catalog management	+243	23%	+170	+73
Sync licensingOne-time	+138	13%	+140	−1
Sample clearances & other licensingOne-time	+5	0%	+4	+1
Catalog marketing & playlist pitching	+55	5%	+11	+44
Remasters & special editions	+37	3%	+6	+30
Experiences & brand partnershipsOne-time	+8	1%	+9	−1
Rights administration & collection	+98	9%	+41	+56
Registration & metadata	+56	5%	+21	+36
Black box / unmatched recoveryOne-time	+4	0%	+4	0
Audit recoveriesOne-time	+5	0%	+5	0
Admin & distribution fees	+32	3%	+12	+21
Rights & contract management	+53	5%	+6	+47
Contract renegotiations	+75	7%	+9	+67
Terminations & reversions	−2	0%	−1	−1
Ownership disputes	−20	−2%	−1	−19
Capital deployment	−53	−5%	−53	0
Fund fees & expenses	−246	−23%	−246	0
Management fee & ongoing charges	−188	−17%	−188	0
Performance fee	−58	−5%	−58	0
Unexplained	−7	−1%	0	−7

Existing Catalogs and Acquisitions

Catalogs held for the whole period grew LTM income +3.8% like-for-like and contributed +1,118 bps, with a further 32 bps from Marlowe, acquired during the 12 months to June 2026.

Catalogs	Contribution to total return (bps)	LTM NPS/NLS at start	LTM NPS/NLS at end	Change
Held for the whole period Halverson, Ledger, and Calder	+1,118	$14.7M	$15.3M	+3.8% like-for-like
Acquired during the period Marlowe	+32	–	$3.0M	$3.0M added
Uninvested cash	−53	–	–	$5.8M held at period end
Total	+1,082	$14.7M	$18.3M	+24.1%

Like-for-like growth compares recurring LTM NPS/NLS for the same catalogs at the start and end of the period. Contributions are linked monthly, so the two groups sum to total return.

Recurring vs. One-Time Income

84% of income in the 12 months to June 2026 was recurring royalties, which set the run-rate NAV is valued on, and the $3.0M of one-time income built none of the $8.4M change in NAV.

Recurring income$16.0M

One-time income$3.0M

One-time share of income15.7%

Run-rate yield on NAV7.6%

Run-rate yield is LTM recurring NPS/NLS divided by NAV: the income the portfolio throws off at today’s valuation. Drivers marked one-time earn cash without changing the run-rate; any lasting listening lift they leave behind is recurring and shows in the capital column.

Methodology

How Each Driver Is Measured

Driver	Measurement
Entry yield	Net income the catalogs were earning at acquisition, from the base case.
Catalog decay	Each song’s base-case decay curve applied from the purchase date, and the change in its DCF factor as it ages.
Market growth	Industry volume trends by territory and channel: streams, broadcast plays, and physical and download sales.
Royalty rates	DSP price increases net of per-stream dilution, and changes in CRB and society rates.
Currency (FX)	Currency moves on foreign royalties since acquisition.
Discount rate change	Change in NAV when the fund discount rate is reset at a half-year valuation.
Asset selection	Each song’s usage against its base case after market effects, trended outside initiative windows. Unprompted spikes are classified as viral or cultural resurgence.
Catalog management	Usage above the song’s trend during and after each initiative, plus any license or partnership fee.
Rights administration & collection	Match-rate gains, recoveries, and fee savings against the base case.
Rights & contract management	Improved deal terms, and income lost to terminations, reversions, and ownership disputes.
Capital deployment	Share of fund capital held in uninvested cash times the gap between the cash yield and the return on invested capital.

Return Math

NAV = Σ_songs LTM recurring NPS/NLS × DCF factor

DCF factor = Σ_{y = 1…50} decay_y × growth_y × share still earning_y ÷ (1 + r)^{y − ½}

Share still earning = 1 − income out of copyright − probability-weighted US terminations

IRR solves Σ_t cash flow_t ÷ (1 + IRR)^{t ÷ 12} = 0, with −price at purchase, monthly cash collected, and closing NAV plus receivables at the end

MOIC = (cash collected + NAV + receivables) ÷ price paid

Monthly return R_m = (income + ΔNAV − fees) ÷ (opening NAV + time-weighted acquisitions)

Period return R = Π_m (1 + R_m) − 1

Driver contribution = Σ_m c_m × k_m ÷ K, with k_m = ln(1 + R_m) ÷ R_m and K = ln(1 + R) ÷ R

Monthly driver contribution c_m = (driver income + DCF factor × ΔLTM_driver) ÷ capital base

Income column = driver royalties earned in the period ÷ capital base

Capital column = DCF factor × ΔLTM_driver ÷ capital base: the value of the run-rate the driver left behind. Royalties received are not part of NAV, so nothing is counted twice

Discount rate change = LTM × [DCF factor(r_new) − DCF factor(r_old)]

Net income = units × rate × FX × (1 − fees), allocated to drivers by log-mean Divisia index

Assumptions

Discount rate. A single fund-wide rate is applied to every catalog and reviewed at each half-year valuation: 8.50% from inception, 9.25% from Dec 2023. Music catalog valuers change rates only when interest-rate trends prove persistent: most held about 8.5% through 2022 and moved to about 9.25% in late 2023, and yields have been broadly flat since. The rate sits in the 9% to 10% range acquirers use, which pairs with this valuation’s market growth assumptions.
Cash flows. Each song’s LTM recurring NPS/NLS declines along its base-case decay curve, with industry growth of 5.0% a year for 10 years, 3.0% for years 11 to 20 and 1.5% thereafter, over a 50-year life. Master recording income stops when the recording leaves copyright, 70 years after release outside the US and 95 years in the US.
Terminations. US authors can terminate a grant 35 years after it was made (§203) or 56 years after a pre-1978 copyright (§304(c)). From the earliest effective date, the valuation removes US income with a 50% chance of exercise for named songs and 25% for the rest of each catalog, until the last date notice could be served. Pre-1978 recordings are treated as works made for hire.
Acquisitions are valued at cost on the purchase date.
Capital raise. $40.0M of new subscriptions arrived in Nov 2025 and is held in Treasury bills yielding about 3.9% until invested; Marlowe was bought with it in Apr 2026. Subscriptions are new capital, not return. Catalog drivers are measured on invested capital, and uninvested cash is attributed its share of capital times the difference between its yield and the invested return. The management fee applies to cash as part of NAV.
Underwriting case. Income each catalog earned at purchase, carried forward on each song’s base-case decay curve with the valuation’s industry growth and expected terminations, at purchase exchange and royalty rates, and on actual payor lags. Sync and other one-off income are not underwritten.
IRR and MOIC are money-weighted from each purchase: the price paid, monthly cash collected, and closing NAV plus royalties receivable as the value still held. Catalog figures are gross; net figures are at fund level after fund fees.
Transaction comparisons use published deal and valuation multiples. Press estimates and survey averages differ in basis (NPS/NLS, net revenue, trailing or forecast), so they indicate a range rather than a precise benchmark.
Existing catalogs and acquisitions. Catalogs bought during a period are reported separately from those held for the whole period, and like-for-like income growth compares only catalogs held throughout.
Rest of catalog. Beyond the 35 to 45 largest songs, each catalog’s remaining songs are grouped by release period and tracked in aggregate, each group with an average base-case decay curve.
Recurring and one-time income. Statement royalties are recurring and set the run-rate that NAV is valued on. Sync fees, licence and partnership fees, audit settlements, and black box claims are one-time: they count as income when earned and are never capitalized, so they cannot raise NAV. Any lasting listening lift an initiative leaves behind is recurring and does show in the capital column. Run-rate yield is LTM recurring NPS/NLS divided by NAV.
Returns are time-weighted. Monthly Modified Dietz returns are linked geometrically, and contributions are linked by the Carino method. Following GIPS, returns for periods longer than one year are annualized and periods of a year or less are not. For annualized periods, each driver’s contribution is restated as an annual rate in proportion to its share of the cumulative return, so drivers still add up to the annualized return; the cumulative return is shown in hover tips and footnotes.
Sync income is excluded from the base case, so every sync fee counts as outperformance and is attributed to the manager.
Initiatives. A lasting lift is credited once three months of data follow an initiative. Before then, only the lift during the initiative counts.
Viral resurgence is recorded when a song runs more than 35% above its trend with no initiative behind it.
Fees are a 1.40% management fee and 0.25% of ongoing charges, accrued monthly on NAV, and a 15% performance fee on fund total return above an 8% annual hurdle, subject to a high-water mark. The performance fee accrues monthly, is paid each December, and is shared across catalogs by capital.
Leverage. The fund is unlevered, so no financing cost is attributed.
Pre-acquisition decay is measured from the seller’s royalty statements provided in due diligence, available from January 2019.
Statement data. Every payor’s statements are mapped to common fields (income type, channel, territory, song, and month of use) and converted to US dollars before attribution runs.