By Emmanuel Legrand
[An edited version of this story was published in Music Week.]
Golnar Khosrowshahi could have easily enjoyed a very successful career as an advertising executive. Instead, she chose to steer her family's business from pharmaceuticals to...music publishing. In the process, she has build one of the fastest growing independent music publishing boutique, Reservoir Media.
In less than a decade, Reservoir has become a force to be reckoned with the US music publishing business. It now has somewhere south of 100,000 copyrights and has grown through the acquisition of catalogues and signing new fresh talent as well as established songwriters.
This strategy has paid off as Reservoir writers were involved in no less than 11 projects nominated for a BRIT Award in 2016, including How Deep Is Your Love, by Calvin Harris + Disciples featuring (and co-written by) Ina Wroldsen; Major Lazer, whose hit single featured and was co-written with Reservoir-signed MØ, or Jess Glynne's Hold My Hand, and co-written by Norwegian singer/songwriter Ina Wroldsen, and Drake's Drake's 2015 album If You’re Reading This It’s Too Late which features three Reservoir cuts written by Scott Storch.
“When I look back at the past year,” says the founder and President of Reservoir, “we spent the first half of year focusing on our catalogue and growing our catalogue, and the second half focused entirely on new signings and future deals. It is interesting how the year has divided and it reinforces the fact that you have to build both parts of this business in parallel. You cannot grow if do not excel in both aspects.”
From Teheran to Toronto
Entrepreneurship is part of the family ethos. Khosrowshahi's parents fled Iran in November 1978, just before the Shah left, and settled in Toronto where they build a retail business, later sold to Best Buy. “My father then bought a company called Drug Royalty Corp. that invested in [US Federal Drug Agency] FDA-approved markets, drugs and devices,” explains Khosrowshahi. The business centres on extracting value on IP in health care and in the pharmaceutical field. This company, now known as DRI Capital, manages in excess of $3bn in assets.
Khosrowshahi says that she was intrigued by the nature of her father's business and that she started looking at similar businesses. “To our surprise we found that the music industry is very similar to that model,” she says. With her advertising background, Khosrowshahi had been involved with music issues and started doing her due diligence and looking for investment opportunities in publishing. “I had a long history with music, so for me it was a logical step,” she explains.
The company launched in 2007 with a small number of people and zero catalogue. “I started putting the team together and we started buying catalogues,” she says. “And we knew from the outset that in this business, to be relevant you have to be participating in the contemporary space, so we started signing songwriters.”
Recent additions to the catalogue included R&B label Philly Sound, the recordings and publishing of seminal Southern rock band MollyHatchet. New signings included Julian Nixon, Lucy Rose, Mike Campbell (who penned Say Something for A Great Big World, Esthero, rapper Joey Bada$$, among others. And at the start of the year, Reservoir secured a representation deal with Norwegian band a-ha, covering six of their albums.
Says Khosrowshahi, “2015 was our best year yet because it was the year when we started to reap the fruits of those investments. We probably never had a year with such strong presence on the charts, across the board in different genres, R&B, pop, dance, which is quite positive.”
The company is based in Toronto and NYC, its main office with 12 people, with an affiliate in the UK employing six people, and many back office functions in Vancouver. Khosrowshahi lives in Toronto where her family is based and commutes to New York. “We never had everything centralised,” she says. “And it has worked for us and it is efficient, thanks really to a good team.”
Central to Reservoir's expansion is a nucleus of top executives who have helped build the company as it is today: Rell Lafargue, COO, who joined in 2008 from TVT; Faith Newman, SVP, Creative & Business Development, who worked at Def Jam Recordings and at Columbia where she signed rapper Nas; Annette Barrett, who runs the UK operations; and Hussain "Spek" Yoosuf , SVP, Creative and A&R, who joined in January 2015.
Lafargue, whose TVT connections eventually led Reservoir to make its first major acquisition (TVT's publishing catalogue), was the architect in setting up the administration side of the business (royalties, copyright registration system) and helped building a network of sub-publishers around the world. “Golnar had seen what we did at TVT and asked me to join,” recalls Lafargue. “She had done a couple of deals and we had about 2,000 songs. TVT was a landmark acquisition that took us into the pop world and brought us some great songs performed by artists like Beyoncé, Chris Brown or Christina Aguilera. Usher's Yeah! Is still one of our top songs.”
The second major acquisition was Reverb in the UK in 2012 (see sidebar), which Lafargue credits for bringing scale and a wider scope of music genre into Reservoir's fold (as well as seasonned executive Annette Barrett, who still runs the UK operations). “It was a transformative point for us,” says Lafargue. “Overnight we passed 30,000 copyrights and it brought in an international layer.”
Khosrowshahi and Lafargue both state that the acquisitions are based on financials considerations as well as on strategic needs, in order to cover all music genres. Oftentimes, like for Philly, the deal includes publishing and recording rights, which Khosrowshahi describe as for syncs in order to own 100% of the songs licensed.
Another key acquisition for Reservoir was the 26,000-song catalogue of First State Media Group in 2014, described by Lafargue as “the biggest transaction we've done in the history of the company.” Today, Reservoir catalogues includes works from country heritage act John Denver, seminal jazz composer Billy Strayhorn, film score composer Hans Zimmer, electronic duo SOS, British composer and performer Nitin Sawhney, among others.
“What sums up our approach is passionate about music and dispassionate about investments,” says Khosrowshahi. “We invest our own equity so that's the best test on how much diligence we do. We have seen transactions trading at multiples that we feel are not in line with what we would pay, but there are still deals to be done. This is a business where the economics become more attractive the biggest it is. If you have 1000 or 100,000 copyright, you need the same overhead, so we need scale.”
“We needed scale. Once we had scale, we started investing in our own creative capacities,” adds Lafargue. “We try to keep a healthy balance between catalogue and new songwriters. We've closed six or seven deals in the past few months. We now have over 80,000 songs and our sync team have a wide range of music to pitch.” Lafargue claims “to know every one of our songs and we'll try to continue to keep it that way.”
Over the years, catalogues acquired by Reservoir include that of the late R&B songwriter/producer Allan Felder, which complemented the acquisition in 2012 of recordings from Philly Groove Records, a deal supervised by Newman. “I have been talking to Felder's widow for two years and she thought we could do a good job at protecting his legacy,” says Newman.
Alongside Lafargue, Barrett and Spek, Newman is tasked with finding creative opportunities for Reservoir. “I have a soft spot for looking at historic catalogues. And I go back and forth between what is current and new and historic catalogues. I love signing stuff that was written when I was one year old,” says Newman, who also brought rapper Joey Bada$$ into the Reservoir fold as well as US writing/producing team WatchTheDuck. “I've known him since he was 17 and we waited until he was ready. I approach A&R from a very organic perspective. I look for talent that can grow. And I look at people who can appeal anywhere.”
In the field of A&R, the newly arrived Spek also takes a panoramic views, not least because of his background. As an artist, he was part of Canadian combo Dream Warriors and also worked with US3. He then moved to the UK, where he got signed to a publishing deal with Annette Barrett, and eventually relocated to Dubai to launch Fairwood Music and PopArabia, an entity that now represents the biggest publishing catalogues in the Middle-East. Two years ago, Spek met with Barrett in London who connected him with Lafargue. “Annette is my favourite person in the music business,” says Spek. “And when she started mentioning the Reservoir opportunity I was interested, of course.”
He adds, “Being a songwriter myself, this puts me on a different footing than others: I wrote songs, I did recordings, I toured, I produced albums, I did videos. But because I had a lot of success early in my life I approach things with humility. This gives me a better understanding of the needs of our songwriters. It is never about throwing opportunities at the wall and see what sticks. Our approach is more methodical and thoughtful.” Acts signed by Spek include Esthero, Mike Campbell, and Julian Nixon of Best Kept Secret.
Setting the right environment
Lafargue says that building the right environment for artists to thrive is crucial to attract most creative talent. “Whenever we focus on things that we like, we may not win on price, but the more and more we get into this the more we see that A&R is not dead and ears matter. Songwriters do not always look for the big cheque, they are looking for services and attention to creative issues.”
When asked about the future, Lafargue jokes: “Unfortunately, we have no exit plan and that is a refreshing place to be.” More seriously, his goal is to double the size of the company both in terms of works and in revenues. “And we want to have the infrastructure in place to absorb more and more works and songwriters. We want to be one of the biggest indies but we always want to focus on quality and not jam things through the pipeline. We believe we can try to keep the boutique feel and find ways to increase scale. In any case, we'll continue to focus on quality.”
As a privately-held company, Reservoir does not disclose its financial results, but Khosrowshahi is keen to say that the company is profitable. Looking back, she measures the progress made over less than a decade, from starting the company to becoming a company courted leading songwriters and catalogue owners. As a sign that Reservoir is now fully part of the music publishing establishment, Khosrowshahi was elected in 2015 to the board of directors of the National Music Publishers’ Association (NMPA), and she also sits on NMPA’s SONGS Foundation board of directors.
“The NMPA, under the outstanding leadership of [President/CEO] David Israelite, did id a lot of things for the business that made us more relevant and a serious player as an industry,” says Khosrowshahi. “They gave us a front row seat in what happens in this business and advocate for songwriters. I am proud to be part of this impressive group of people.”
So what's in for 2016? “Our No.1 priority is continuing to build our creative services for all of our active, forward-looking songwriters,” says Khosrowshahi . “It is great to do these deals but the day we close a deal is the day we start working. Our writers need creative services behind them so that we make the best of all the opportunities to make sure that our songwriters become successful. We will continue to focus on catalogue growth. We run our forecasts with conservative scenarios so it is important to have catalogue. And we will be actively looking for deals. Our third strategic priority is technology-related investments. We spent time looking at different targets or ways to invest in technologies related to our business in order to collect with more efficiency, and also tracking and monitoring. We are very busy and dedicated to growing the company. We want to be a top independent music group.”
She adds, “We've enjoyed ourselves the whole time. We're still learning but I do do think that coinciding with our ten years [in 2017], there will be greater stability in our business and we are very much looking forward to enjoy that stability.”
Reverb brings European talent to Reservoir
By Emmanuel Legrand
One of the turning points in Reservoir's growth strategy was the acquisition in August 2012 of London-based music company Reverb Music, founded by former Virgin Music and Warner/Chappell Music executive Annette Barrett. Not only did Reservoir acquire a significant catalogue, but it also created a European outpost for a company that so far had been North American-centric. And in the person of Barrett gained a seasoned executive with a wealth of knowledge of the industry and a wide network of contacts.
“Reverb was build with a focus on creators, writers, producers,” says Barrett. “That has not changed. We complement North American operations from a creative side.” Barrett adds that the ethos of her company has always been to provide creative support to creators and strong administration service to its clients, and Reservoir helped strengthen both aspects of the company. “Reservoir and Reverb got to know each other very well before we did the sale and knew we were on the same page,” she explains.
“Some acquisitions are done to get assets, but in this case we wanted a footprint in Europe and we wanted Annette there,” confirms Khosrowshahi. “She came with tens of thousands copyrights, and the kind of assets we did not have in our catalogue, such as pop contemporary songwriters, with inroads in different parts of Europe, especially Scandinavia. Annette's relationship with these writers is very important. It was definitely a long-term decision.”
Dealing with creatives is the aspect of the job Barrett prefers the most. “We are very much talking to writers, developing , meeting with A&R, management people, and we are in constant contact with NY office,” she says. “Spek and I go back a long way.”
From London, Barrett overseas the signing of acts from the ULK and the rest of Europe, exemplified by the recent signing of a representation deal with a-ha, whom she got to know during her Warner days. Reservoir/Reverb also recently signed a new partnership with Budde Music in Germany, which resulted in the co-signing of British singer-songwriter Kelvin Jones, whose debut album Stop The Moment is released through a joint venture between Sony Music in Germany (out last October) in the and UK (out on Epic in UK on March 26).
Barrett also recently signed Lucy Rose, who has a recording deal with Columbia, but also writes for others, such as with US rapper Logic for the cut Innermission in the album The Incredible True Story, which went to No.1 in US hip hop charts. “When I look at writers and signings, I've always looked at where they can fit and what their key strength are, knowing the different markets,” says Barrett. “You have to play to the strength. At Reverb, in early days that was key part of how we looked at things.”
She concludes, “We are not going to be growing the company just for the sake of it. We are growing organically and creatively. They are looking at developing into a major creative independent publishing company. We are all involved in signings and have a passion for it. We all agree it is something really worthwhile and we can make a difference to. It is fantastic to have the support system that Reservoir allows. It's taken Reverb to another level and that's great. I think I was lucky and they are very good people to work with. I am just enjoying it.”