BlackRock Inc. is providing funding to Alignment Artist Capital, a new financial firm formed by Howard Lipson and James Diener. Financial terms weren’t announced. Alignment aims to provide financing options to established artists with investments ranging from $5 million to $20 million per deal. Diener is the former CEO/President of Octone Records. Lipson, a former Blackstone Group partner, was an MD of The Pilot Group.
NEW YORK and AUSTIN, Texas, April 7, 2015 /PRNewswire/ — Veteran private equity investor Howard Lipson and longtime music entrepreneur James Diener have formed Alignment Artist Capital, a new financial firm with funding from BlackRock, Inc. (NYSE: BLK), the world’s leading asset manager. Alignment will offer established music artists a new financing option that will allow them to expand their brands and careers, fuel growth and fund innovative, creative projects.
With equity funding from BlackRock Alternative Investors (BAI) accounts, Alignment will work with artists who have already built a foundation of creative and business initiatives such as recorded music, songwriting, producing, touring, TV and film, merchandising and licensing, social media and more. The company will build a diversified portfolio of structured investments in targeted artist and related entities that will initially range from $5 million to $20 million per transaction. In turn, artists who receive capital from Alignment will have access to funding for a diverse set of revenue streams and to help them pursue business objectives under a new model that co-exists with the industry’s existing recording, publishing and touring agreements.
The founding of Alignment reunites Diener, former CEO/President of Octone Records, the innovative independent record label, with Lipson, who along with other professional investors were key strategic and financial backers of Octone. Octone discovered and developed worldwide superstars Maroon 5, as well as platinum acts such as Hollywood Undead, Flyleaf and K’naan, among others. The private equity-backed Octone pioneered the “upstream” model by securing their artists further major record label marketing and promotional support. At launch, Diener and Octone partnered with Clive Davis’ RCA Music Records Group/Sony Music Entertainment, and later entered into a joint venture to create A&M/Octone with Universal Music Group in a deal led by Jimmy Iovine, then Interscope Records Chairman. In 2013, Octone sold its 50% share of A&M/Octone to UMG.
“Being part of Octone for the past decade gave me a front row seat to observe the massive changes in how fans enjoy music and the pressures that artists have in creating music within conventional industry structures,” said Lipson. “I saw artists getting pulled into different, often conflicting directions. While there have been attempts to structure more comprehensive deals with artists, a lot of dissonance remains. With Alignment, we wanted to reduce the friction in the process and provide financing that takes a holistic view of an artist’s career and the overall music business. We’ll be investing in artists we believe in within a time horizon that provides a good runway for the creative process and a philosophy that will reap solid returns.”
“The way recording artists create and realize their ambitions is unique; it doesn’t always fit the conventional structure or traditional model,” said Diener. “We now provide an innovative financial product backed by BlackRock, the world’s most successful asset manager, for artists with an existing foundation of work. We aim to provide them with a new financing source to pursue a range of creative objectives, over and above their current industry relationships. It’s invaluable and empowering for artists to have aligned financial support and regular access to capital. We believe this approach is right for the times ahead and, in the coming years, will be a contributing factor in helping artists to achieve their professional and personal aspirations.”
Joining Diener and Lipson on the Alignment Artist Capital Board of Directors is Matt Botein, Global Co-Head and Chief Investment Officer, BlackRock Alternative Investors, and BAI Managing Director Patrick Riordan, who spearheaded this investment on behalf of BlackRock.
“We at BlackRock are excited about the opportunity to work with Howie and James to support leading artists in today’s highly dynamic music industry. As the music industry continues to evolve and innovate, we believe there is tremendous opportunity to provide new, creative forms of financing based on new business models and revenue sources,” said Botein. “The founders of Alignment have already proven their ability to anticipate trends and create modern business models to thrive in today’s dynamic global market. We are pleased to be working with them.”
BlackRock Alternative Investors manage more than $110 billion on behalf of institutional investors, financial institutions and ultra-high net worth families across a wide range of investment strategies. BAI’s investment capabilities include hedge funds, private equity, real estate, infrastructure, and private investment strategies.
Lipson and Diener are co-founders and will lead Alignment Artist Capital’s operations. In addition, Katherine Chen has joined Alignment as Chief Investment Officer, coming from The Pilot Group with previous positions at Moelis & Company and Bank of America Merrill Lynch
Alignment is being formed at a time of significant change in the music industry, with global music consumption continuing to rise, and revenue streams shifting from more traditional recorded music – which continues to generate 1 $15 billion per year to global live music, estimated to have grown in into a 2 $20 billion annual industry. Fans continue to enjoy more music than ever, with music streaming services experiencing 3 54% growth, mobile use of music continuing to rise and radio continuing to be an influential music discovery driver.
About Alignment Artist Capital
Alignment Artist Capital is a new breed of financial firm focused on helping global music creators realize their vision, build their audience and expand their brands. Alignment offers established artists access to capital needed to reach business objectives, via structured investments with a 4-5 year horizon. The firm takes a holistic view of an artist’s career and of the global music industry to reduce friction and deliver maximum returns for artists and investors. More information is available at www.alignmentartist.com
BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At December 31, 2014, BlackRock’s AUM was $4.652 trillion. BlackRock helps clients meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, as of December 31, 2014, the firm had approximately 12,200 employees in more than 30 countries and a major presence in key global markets, including North and South America, Europe,Asia, Australia and the Middle East and Africa. For additional information, please visit the Company’s website at www.blackrock.com | Twitter: @blackrock_news | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock
James Diener, co-Founder, Alignment Artist Capital
James Diener is a 25-year music/entertainment industry veteran who co-founded Alignment Artist Capital in 2015 to aid artists in gaining access to capital to help them fuel their careers and realize their ambitions.
He is also co-founder of Freesolo Entertainment; a music company comprised of Freesolo Music, a record label joint venture with RCA Records/Sony Music Entertainment; Freesolo Publishing, a joint venture with SonyATV Publishing; and Freesolo Management, a joint venture with Vector Management; part of the Live Nation Entertainment family.
Previously, Diener was CEO/President of A&M/Octone Records, a joint venture between Octone Records and Universal Music Group, which was ultimately sold to UMG in 2013. The label discovered and developed worldwide multi-platinum superstars Maroon 5, platinum modern rap-rockers Hollywood Undead, platinum modern rock act Flyleaf, and internationally acclaimed hip-hop artist K’naan.
Diener launched Octone Records in 2000 as an innovative independent label distributed through BMG, while simultaneously holding the position of Senior Vice President of A&R/Marketing for the RCA Music Group, a division of Sony Music Entertainment, where he signed and developed platinum singer-songwriter Gavin DeGraw. He formed a joint venture with Sony Music that gave his company the option to upstream successful acts signed to Octone with the RCA Music Group.
Prior to establishing Octone, Diener was Vice President of A&R and Marketing at Columbia/SME Records from 1992 to 2000, where he worked with such platinum and developing artists as Aerosmith, Bruce Springsteen, Bob Dylan, Pink Floyd, Johnny Cash, Black Crowes, Clutch, The Jayhawks, Tony Bennett, Roger Waters, Chris Whitley, Jesse Malin, Iron Maiden and New Kids on the Block, among others.
He is an accredited record producer and voting member of both The National Academy of Recording Arts & Sciences and the Academy of Magical Arts.
Diener began his formal career in 1991 at Columbia Records. Prior to that, he held various industry positions as a personal management associate and recording engineer. Diener, whose work with Octone is the subject of two Harvard Business School case studies, has been a speaker at New York University, Harvard Business School, Wharton School of Business, Berklee College of Musicand the Benjamin N. Cordoza School of Law.
Diener graduated in 1991 with honors with a Bachelor of Arts in both economics and sociology from the Johns Hopkins University inBaltimore, MD.
Howard Lipson, co-founder, Alignment Artist Capital
Howard Lipson has a 25 year-track record as a successful private equity investor with a focus on the media and entertainment industries. As an entrepreneur, Mr. Lipson combined his lifelong passion for music and experience driving sophisticated financial transactions to help conceive of and found Alignment Artist Capital. He was essential in structuring and launching Octone Records and was a principal financial backer of the company.
Prior to Alignment, Mr. Lipson was a Managing Director in The Pilot Group, a media-oriented private equity firm started by Robert W. Pittman (past CEO of MTV Networks, AOL and now Chairman and CEO, iHeartMedia, Inc. – formerly known as Clear Channel). At The Pilot Group, Mr. Lipson was involved with investments in companies including Barrington Broadcasting, Daily Candy, Thrillist, David’s Bridal and Zynga. Separately, in 2011, Mr. Lipson helped advise and raise capital for the Sony-led consortium that acquired EMI Music Publishing $2.2 billion.
Before The Pilot Group, Mr. Lipson was a Partner and member of the Investment Committee at The Blackstone Group, which he joined in 1988. During his 17 years at The Blackstone Group, Mr. Lipson led Blackstone investments in a variety of industries including in Universal Orlando, Six Flags, US Radio, Inc., Graham Packaging, Mega Bloks Toys and Columbia House. During his tenure at The Blackstone Group, Mr. Lipson was involved in the investment of approximately $2 billion in transactions with an aggregate value of over$20 billion.
Prior to joining The Blackstone Group, he was a Member of the Mergers and Acquisition Group of Salomon Brothers Inc.
Mr. Lipson graduated with honors from The Wharton School of the University of Pennsylvania.
Additional information about The Alignment Artist Capital team and board of directors is available at alignmentartist.com
1 IFPI 2014 Year in Numbers
2 Billboard Boxscore December 2014
3 Nielsen US Music Year End Report 2014
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SOURCE Alignment Artist Capital