Baltazar, an AI-powered analytical platform that can aid in royalty valuation thanks to the ingestion of $2 billion worth of music statements protected by anonymizing architecture, has added Shot Tower Capital, a boutique investment bank specializing in music industry assets, and its asset valuation unit, RedBrick Advisors, to its growing list of design partners.
Built by Swedish company Chapter Two, Baltazar allows users to ingest their royalty information, but silos it so they can access it when needed (and so others can’t see it). Collectively, the ingested information enhances Baltazar’s overall data library in volume while also making the platform smarter, allowing users to gain financial analytical insight to assess valuation and provide revenue forecasting, according to Chapter Two and Shot Tower Capital executives. It is one of a few emerging analytical platforms — another is the Mogul catalog valuation dashboard — aimed at helping the financial sector and industry executives make economic sense of the growing trillions of annual micro-transactions and the resulting royalty payment flow.
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“Music has always been a data-rich industry, but the tools to interpret that data have lagged behind,” Shot Tower Capital managing director Rob Law said in a statement. “As music matures into an institutional asset class, the technology powering it must evolve just as quickly. This partnership reflects the next step in our commitment to leading that evolution — ensuring the market has the sophisticated, data-driven infrastructure it needs to scale with confidence.”
While the $2 billion worth of ingested royalty information is a good place to start, the platform will only get better as more financial data is ingested, according to the company. As it stands now, that $2 billion includes historical royalty information that comes from a CMO (collective management organization) and private acquisitions deals like the sale of a stake in producer Rodney “Darkchild” Jerkins‘ catalog to HarbourView Equity Partners.
In total, the ingested data comes from more than 100,000 catalogs, according to Chapter Two. The volume breaks out to 62% in revenue from master rights and 37% from publishing rights, but the company says that data comes more from publishing catalogs than master recording catalogs.
Going forward, Shot Tower will feed Baltazar financial information from whatever deals it’s working on, which helps the platform learn. In addition, Shot Tower will also play the role of stress testing the system and providing feedback, according to Chapter Two CEO Michel Dahlbert Traore. Shot Tower is “pushing us on correctness,” he says. “They are asking, ‘Can you trace all decisions the system has made?’ Also, Shot Tower wants to know what is assumed and what is fact — they will help make this institutional-grade.”
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Chapter Two was founded in 2021 by Traore, COO Filip Stromsten, and chief music officer Ida Brink. It is backed by Swedish House Mafia’s Axwell, King.com video game creator and founder Sebastian Knutsson, and Stride.VC, a London-based seed-stage tech fund, according to company literature. Traore describes Baltazar as the “Bloomberg Terminal for music assets.”
Royalty statements from around the world can be radically different, but Baltazar allows users to upload messy, incomplete and incompatible data and organize it with proprietary AI, Traore elaborates. First, it identifies the data, he explains, which allows a second step to kick off — namely, cleaning up the data, which addresses things like double counting and spacing between numbers that a computer can’t understand. A third step fixes those things. It does this by ingesting, rationalizing and cleaning up data to provide standardization across revenue flows from around the world, and quickly putting it into a structure that allows users to tailor royalty information into understandable analytics. This can allow for apples-to-apples comparisons, according to Chapter Two’s literature on Baltazar.
As Sachin Sagger, co-founder of Shot Tower Capital’s valuation unit, RedBrick Advisors, said in a statement, “Reliable valuation starts with reliable data. Baltazar strengthens the analytical foundation required for high-quality valuation and transaction decision-making. This technology furthers our ability to provide additional transaction support and services to our clients.”
In normal times, artists say that understanding royalty statements can be difficult. In today’s music industry, “in order to make sense of [royalty payments], you need to put in a lot of work,” says Traore. “Over the years, institutional buyers solved that issue manually with a bunch of analysts.” That’s where Baltazar comes in. “We are building an infrastructure to get to the source of earnings,” he says. Or, as Chapter Two’s press release puts it, Baltazar is a new intelligence platform designed to standardize music royalty analytics and copyright valuation for institutional markets. In a few hours, “Baltazar gets you from raw statements to actionable data,” he adds.
As things stand now, Traore says there is no publicly available data source that shows what a catalog should be making, nor is there enough data publicly available that allows for accurate forecasting. These are things that Baltazar was built to address, he adds.
Currently, Chapter Two is targeting sophisticated institutional investors and financial advisors that are buying or looking at music assets. But eventually, as the system’s infrastructure is built out, the company claims it will serve every stakeholder across the music industry. For instance, later this year, “we want to roll something out for rights holders, starting with business managers,” Traore says. “You would need a good driver who understands the system to get the most out of the tool.”
Beyond that, the next phase would target labels and distributors that pay advances and need models to forecast. Eventually, the hope is that it can also evolve to be used for auditing royalty statements. “For now, we are not focused on the auditing aspect, but that may come,” says Traore. “With every ingestion, the system gets smarter.”
What’s more, Chapter Two expects that other providers, like valuation and auditing services, will build out capabilities on top of the Baltazar platform — or that perhaps a management firm will create a nice user interface to let its clients navigate their financials. With chat and query capabilities, a songwriter wouldn’t need a forensic guru to find out how much their song catalog made in Japan in 2021, for example.
In order to access Baltazar, users will have to become subscribers, says Traore, which will be based on the size of the company and usage. One of the advantages of becoming a subscriber is that it would allow financial firms not to invest so heavily in analyst and technology staffing, since Chapter Two maintains a staff of about eight tech people who are continually tweaking the system to improve it, says Shot Tower’s Law.
Baltazar “provides the raw horsepower that experts need to see the ‘why’ behind a valuation, not just the ‘what,'” said Traore in a statement. “For those who live in these numbers, data quality is the entire game.”
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