In our Money Moves series we speak to the movers and shakers of the music finance industry. Next up is Olivier Chastan, Founder + CEO at Iconoclast.

Last month saw the unveiling of Los Angeles-based Iconoclast, a new player in the music rights acquisition market founded by seasoned industry executive Olivier Chastan.

Armed with significant spending power and a mega-deal already under its belt (Robbie Robertson’s music publishing, recorded music, and name, image and likeness rights), Iconoclast’s strategy is focused around the overall brand and legacy of an artist, not just the music.

Here, Chastan discusses Iconoclast’s unique approach, the significance of name, image and likeness rights, and why technology is creating an exciting new era for legacy artists. 

Congratulations on the launch of Iconoclast. What types of catalogs are you targeting?

Two types really. One is legacy artists, and the primary criteria for me is artists where I feel we have a lifetime of stories and a brand we can develop – a legacy we can help perpetuate. In that first case, we are in the brand development business. The decision is entirely around the plan. Do we have a vision? Do we have a plan to help develop and perpetuate that legacy?

The second part is pure catalog acquisition. For example, we bought Mike Posner’s catalog and we’ve done five other deals like that, but those are much narrower in scope than the plans we have for some legacy artists.

Most M&A activity is focused on Anglo-American repertoire. Do your plans extend beyond this?

We’re already involved in several transactions outside of traditional Anglo-American repertoire, but the operating environment is more complex. Familiarity with the artists and their legacies is an issue, the tax implications are extremely complicated once you get into Europe compared to the US.

It has nothing to do with value. A lot of people say look outside of the US and the UK because it’s better value. It’s not that. There’s just a limitation by lack of familiarity. However, if you think of artists like Charles Aznavour or Serge Gainsbourg, they do crossover from time to time but it remains capped. The emotional content and the cultural relevance is exactly the same as the Rolling Stones or Frank Sinatra. The only difference is that it doesn’t travel as much.

What sets you apart from companies like Primary Wave in your strategy to manage the overall brand and legacy of an artist as well as the music rights?

There’s not a gigantic difference with what Primary Wave offers except that they also operate as a standalone publisher. They will do admin deals and are in the business of buying “straight catalogs” more frequently than we are. I think that is our most obvious difference. When I started Iconoclast, I made two conscious decisions: 1) I did not want to operate as a traditional publishing business which meant not investing into building a traditional admin infrastructure, and 2) I made a strategic choice to not aim for scale. It might sound pompous but I think of Iconoclast as more like a club where we hand-pick artists to whose legacy we can make a significant difference.

Now, there is a case to be made for scale when you’re Universal Music Publishing or Kobalt – scale matters because of data, black-box income, market share, DSP equity, etc. However, I’m not in the business of processing large volumes of data and will never build a competing infrastructure. I’m primarily in a creative-driven segment of the business. It’s a completely different strategy.

The other thing which I think differentiates us from the competition is that we actually pay true consideration and value for name, image and likeness rights on their own, not as a byproduct of a sale of a catalog. On certain deals, our share of the purchase price allocated to name, image and likeness is significant. If we feel that somebody has a strong potential, we’ll underwrite it. We’ll put our money where our mouth is.

We don’t think of ourselves as publishers or labels. We are clearly in the music business and have a tremendous amount of experience but that’s not the center of gravity. The driver is brand development. That’s what will drive the conversation and ensure that our artists are going to have a place that is clearly defined in the future of entertainment – a future that is going to be primarily tech-driven.

What does defining the place of legacy artists in the future of entertainment tech look like? And how do those ancillary rights beyond just music play a part here?

Today it’s a little hard to determine because it’s quite limited. If you look at, for example, the adoption of VR headsets, it’s a very small user base. It’s emerging tech so our value-add at this stage is primarily around planning ahead. Consumers are not going to leave Spotify or TikTok or YouTube or Netflix. It’s just going to be additive to these platforms but will be a dramatically different experience.

This leads to two things. One, where does music, and especially older music from the 60s, 70s, 80s, live in the future? Right now, we know that Herbie Hancock or Keith Jarrett are not going to be performing a jazz piano recital in Fortnite. So where does that live? We are not driving that conversation in the sense that we are not the ones defining the platforms, but we do need to start thinking and engaging with them to figure out what that is going to look like.

Secondly, the type of content that is going to be produced will be dramatically different. It’s not just making a catalog available on those platforms. You’re suddenly going to have to become producers of that content, which is what we do. That’s where the other rights come in. If I want to talk to John Lennon in X in Roblox (that’s an awkward idea by the way!), it’s not just about the recording of “Imagine” – in this case, it’s about that person. And that person has certain rights that belong to the estate, so the rights required to make that experience a reality need to become part of the licensing basket.

Now, the positive benefit from this technological change is that a lot of those artists are going to be in a position where they can literally live forever, and we are best positioned to be the custodian of that legacy in “perpetuity.” So, we’re going to have to figure out how those rights get licensed and for what kind of fees but more importantly, it’s an opportunity to truly perpetuate the legacy.

“These tools are just starting to get there but it is the prelude to an exciting era for legacy artists.” 

It’s absolutely in line with what we set out to do as a company. We’re going to be helping in any form, whether it’s a physical object such as a coffee table book all the way to developing concent for these emerging tech platforms. In the end, it’s  about maintaining the relevancy of the artist. That is something we couldn’t have done as efficiently before because we didn’t have the same set of tools. These tools are just starting to get there but it is the prelude to an exciting era for legacy artists. 

And presumably that’s going to cause some interesting and difficult conversations around estate management and how artists want to be portrayed on these platforms.

In a sense you are seeing that already through these messy conversations around NFTs. People are asking, how much should I get? How much should the publisher or label get? Is it subject to approval? That is something that exploded overnight and nobody knows what the template is.

For a lot of the artists, it’s an opportunity. It’s going to be a bit messy for a while, but I’m confident that we’ll sort that out pretty quickly.

How much potential do you think there is for exploiting these rights across new platforms, whether it’s TikTok or Peloton or new spaces in Web3 and the metaverse?

It’s really hard to tell. If I had told you two years ago that somebody would be selling an 8-bit monkey image on the blockchain, you would’ve laughed. So, in a sense, there’s no playbook – there’s no roadmap that’s clearly defined.

The way I think about it is not to focus on our ability to impact the platforms per se. We [the music industry] don’t drive the conversation around tech. What matters is really once they’re here, how do we engage with them? What does that mean to our rights? What does that mean to our artists? And what does it mean as an ecosystem? 

“We [the music industry] don’t drive the conversation around tech. What matters is really once they’re here, how do we engage with them? What does that mean to our rights?”

I’m not too focused on the individual platforms who come and go, I’m focused on the longer-term tech trends. I don’t have to be some genius visionary about the future of tech. I just have to recognize that it’s changing and gauge the applicability of technology to what we do on a day-to-day basis.

We now have these amazing tools at our disposal whereby, maybe five years from now, Miles Davis can go and perform at the Montreux Jazz Festival again in an authentically credible and artistically respectful way.

How are name, image and likeness rights impacting valuations? And could some catalogs, where these were not taken into consideration, have been undervalued?

No, I don’t think so. I think the challenge is, and this is why I think we’re different, that artists have never really developed or monetized their brand. And so, when you look at a deal, if you are a traditional publisher, you’re going to be struggling to put a value on it.

Unless you are the Grateful Dead, or somebody with a large captive audience, you’ve not really monetized your brand. Now, not everybody has IP that can translate into a brand. You’re not going to do Coca-Cola with the incredible Joni Mitchell or Rickie Lee Jones! I think it becomes less a question about monetization and more about what kind of guide, custodian, protector and engine of growth will you be for the legacy overall.

It’s both a tool and potentially something that can be monetized. That means that your valuation methodology is extremely complicated. Should you pay $20 million for the Rolling Stones brand? Is it worth $200 million? Nobody knows today. We know they’re making some money but is it a true reflection of what they could do? Not really, in my view, but it is also a choice. Do you really want to “maximize”? Our view at Iconoclast is that it is not about maximizing income. It’s about doing what is aligned with what the band has been doing and standing for the past 50 years. It’s got to be a natural extension of that.

“If name, image and likeness is suddenly subject to bidding, then the byproduct of that is everybody’s going to have to “pimp” those brands in order to make their money back. Big mistake.”

If name, image and likeness is suddenly subject to bidding, then the byproduct of that is everybody’s going to have to “pimp” those brands in order to make their money back. Big mistake. These are dialogues that we’re having with artists all the time. What do you want to do in the future? What should be the guidebook for us over the next 20, 50, 100 years? And that, for me, is what really drives the conversation around the value of name, image and likeness.

We’re seeing a continued flood of activity in the acquisition space but, at the same time, there’s uncertainty around the global economy as well as rising interest rates and inflation. How is this all going to evolve in the years to come?

I think that, unless you’re a “strategic”, somebody who is in the business of managing catalogs with deep experience, there are a lot of risks. I think for the financial-only players, it’s good when things are good and when things are trending up. The problem is, how do you manage during rocky times?

I’ve been doing this for a while now, and went through some insane disruption when CDs were disappearing and companies were losing 15%, 20% of income every year. Managing decline is damn hard. Just like with any other business, if you are not in the business of understanding the granularity of the assets and the music and recordings and publishing and all those things that we’re doing, then your risk is much higher.

“I don’t go and write a check and expect to just ride the wave of streaming. I’m not saying it’s wrong, but based on the current valuations, I think it is a bit of a gamble.”

That’s how I segregate the current market: Operators of vs. investors in catalogs, they’re two different jobs. I’m not an investor. I don’t go and write a check and expect to just ride the wave of streaming. I’m not saying it’s wrong, but based on the current valuations, I think it is a bit of a gamble. I’d rather bet on myself, my team, my company, on being able to pro-actively manage those assets and come up with creative ideas that reintroduce that music into public consciousness regularly.

I’m not here trying to figure out whether Spotify subscriptions in Malaysia are going to grow at 5%. I’m here to figure out how I can get somebody in Malaysia to listen to some of the great music that we have. If we can generate one engagement with somebody, we have the tools to turn that into a lifetime of engagement. That’s our business model.

Found this article interesting? Why not check out:

• Money Moves: Sherrese Clarke Soares on the Enduring Value of Entertainment IP and Investment with a Conscience
• Money Moves – Merck Mercuriadis on Changing Industry Paradigms and the Future of Music as an Asset Class
• Money Moves – Primary Wave’s David Weitzman Talks Acquiring Iconic Catalogs & Unique Marketing-Driven Approach