# Driver 4. Data Infrastructure

> Part of the *Music ABS and Institutional Readiness* knowledge base, Part III (The Five Drivers). See `03 - The Five Drivers (overview).md` for the driver framework and `INDEX.md` for the full pack map.

Adjacent to operational maturity but distinct from it, **data infrastructure determines the recoverable share of theoretical royalty entitlement.** A clean metadata layer lowers black-box exposure and raises capture rate across the life of the deal.

Thomas Smyth, whose firm Duetti closed an inaugural ABS within 18 months of platform launch, describes the underlying build as normalization and verification at scale, standardizing royalty data into a consistent and auditable dataset. Salina Sabri ties the same investment to time-to-market:

> "Our investor base is willing to underwrite newer platforms and/or differentiated portfolios, provided there is sufficient data to support their underwriting process. While Duetti was earlier in its lifecycle, the company's ability to provide granular portfolio- and asset-level data, as well as broader visibility into the middle-market music ecosystem, allowed investors to diligence both the underlying assets and a less familiar segment of the music market in depth, ultimately facilitating the transaction."
> — Salina Sabri, Managing Director, Barclays

The normalization Smyth describes allowed a non-legacy collateral profile to clear the same rating-agency operational thresholds as a legacy catalog pool, and the transparency Sabri describes compressed the runway from platform launch to debut issuance to under 18 months.

> **Pull Quote:** "Building this infrastructure was about normalization and verification at scale. To support institutional investment and ultimately ABS, we needed a framework capable of standardizing this information into a consistent and auditable dataset."
> — Thomas Smyth, CFO, Duetti

The directional lesson for music ABS comes from the most recent comparable institutionalization in private markets. The IMF's April 2024 Global Financial Stability Report observed that private credit's rapid scale-up brought reporting, transparency, and governance demands that early entrants underestimated. Platforms that built reporting infrastructure ahead of demand priced tightest and won repeat allocations; those that did not faced wider spreads and, in some cases, downgrades when borrower performance deteriorated. **The cost of building these capabilities is meaningfully lower while a market is still developing than once it has matured**, and issuers approaching the rated music ABS market should plan reporting infrastructure to exceed current minimums rather than match them.

## Metadata and registration discipline

Song-level tracking is the foundation that makes the rest of the data discipline possible, because it determines whether revenue can be reconciled to a specific rights identifier rather than aggregated into pools that obscure underlying performance. For every composition and master, the platform must maintain:

- a unique catalog identifier linked to International Standard Recording Code (ISRC) and International Standard Musical Work Code (ISWC) codes;
- writer and publisher splits with IPI/CAE identifiers at every applicable PRO;
- territory-specific sub-publisher assignments;
- registration confirmations across every PRO, MLC, SoundExchange, and HFA account; and
- full audit trails tying society and DSP statements to bank deposits.

Every revenue event needs to reconcile to a specific rights identifier, territory, and split percentage, and the absence of that reconciliation at the platform level translates into capture-rate leakage at the SPV level.

The pairing between song-level tracking and underwriting practice operates on two levels. Rating-agency models work from aggregated stratifications by vintage, genre, top artists, and other groupings because by-song projection across a million-copyright pool is not analytically practical, but those stratifications are only credible to a rating committee when the underlying records are clean and attributable at the song level. Paul Sipio describes the asymmetry:

> "It is not necessarily economical, even in the wake of AI, to underwrite over a million individual copyrights. We have found it effective to evaluate catalogs based on different vintages, different genres, different top artists or top songwriters, and other stratifications that give us comfort around how we are underwriting and financing against those cash flows."
> — Paul Sipio, Managing Director, Apollo Global Management

For a platform that wants to reach the rated market, song-level metadata, registration discipline, and reconciliation cadence should be operational standards from the first acquisition. Funds that codify metadata standards into their acquisition diligence checklist and royalty operations from inception arrive at the rating committee with the data depth that supports tight pricing.

## Black-box exposure minimization

The MLC's unmatched royalty pool, which exceeded $424 million at the agency's January 2021 inception, has reduced materially relative to its starting balance by late 2025 according to MLC public reporting. Black-box exposure remains a structural feature of the collection channels, however, because matching gaps continue to arise as new releases enter circulation.

The cost of weak metadata at the platform level is that revenue defaults to unmatched pools rather than flowing to the rights holder of record. **A platform that improves capture rate through registration discipline and dispute resolution therefore increases the cash flow base supporting both the ABS notes and the residual equity claim**, and that improvement carries through each successive vintage of issuance under a master trust.

## Loan-tape data deliverability

Strong data infrastructure builds credibility with institutional counterparties whose work depends on a platform's ability to produce a loan tape on demand. Surveillance reports, rating committee reviews, backup servicer handoffs, and investor due diligence each require breakouts that combine song-level revenue history with registration status, contractual splits, territory and rights type, vintage, and counterparty data, and **the timeline within which the platform can produce those breakouts is itself a credit signal**.

Rating agencies and structuring agents treat the tape-generation timeline as a leading indicator of how the platform will hold up under surveillance stress. Platforms whose architecture supports rapid tape generation maintain rating committee credibility through surveillance cycles and respond more efficiently to investor inquiries.

A platform building toward rated execution should design tape-generation capability into royalty operations from the bilateral phase because the systems and processes required to produce a tape in days are also the systems that catch capture-rate leakage and surveillance issues before they become rating events.

### Chart: Concord Capital Structure Before vs After Securitization

![Concord Capital Structure Before vs After Securitization](../4.%20Reference%20Charts%20(optional)/08%20-%20Concord%20Capital%20Structure%20Before%20vs%20After%20Securitization.png)

Sources: Apollo Global Management, KBRA, Moody's, IFR / Refinitiv, Asset Securitization Report, Music Business Worldwide, Billboard, Alternative Credit Investor, Milbank, J.P. Morgan. Data as of July 2025. Underlying figures: [Google Sheet](https://docs.google.com/spreadsheets/d/14b-wdzadE65ja6CJOQtraIjLmOkQ_6O_/edit).

**Chart data:**

| Category | Before — Bilateral (pre-Dec 2022) | After — Rated ABS Master Trust (Dec 2022 + subsequent vintages) |
| :--- | :--- | :--- |
| Financing structure | ~$600M term loan & $1.4B HoldCo notes (Apollo 2022); plus ~$450M corporate-level debt over $1.0B of catalog | Master trust SPV; cross-collateralized; six series by KBRA's count; ~$3.3B in cumulative rated issuance over four years |
| Investor base | KKR HoldCo investors; bilateral bank syndicate; limited insurance participation | Broad institutional insurance general account demand; multi-tranche participation across rating bands |
| Rating visibility | No public rating; bilateral relationship-driven diligence | KBRA A+ (joined by Moody's A2 on 2025-1 series); concurrent multi-agency surveillance |
| Cost of capital | Speculative-grade corporate pricing wider than rated 144A senior | +160 bp over swaps on 2025 senior tranches; ~5.50%–6.50% coupons across the curve |
| Maturity profile | 5–7 year typical bank/term-loan tenor at maturity | 5-, 7-, and 10-year ARDs against 40-year legal final; multi-vintage ladder |
| Structural protections | Corporate covenants negotiated on the loan stack | Catalog OC of ~52% on 2024-1; six-month senior interest reserve; cash trap and rapid-amortization triggers; concurrent quarterly surveillance |
| Repeat issuance ability | Each issuance required re-syndication of bilateral, no standing shelf | Master trust supports concurrent rating actions and four series in four years; >1.3M underlying assets |
| Scaling rate | ~400,000 songs added; $1.8B equity raise via JV | 1.3M+ copyrights; $5.1B catalog value added post-2025 redemption |

### Chart: ABS Readiness, Hipgnosis vs Recognition

![ABS Readiness: Hipgnosis vs Recognition](../4.%20Reference%20Charts%20(optional)/09%20-%20ABS%20Readiness%20-%20Hipgnosis%20vs%20Recognition.png)

As of August 2025. Sources: KBRA presale and new-issue reports, Shot Tower Capital, Hipgnosis Songs Fund filings, Blackstone and Sony/GIC transaction press, trade press. Underlying figures: [Google Sheet](https://docs.google.com/spreadsheets/d/1YV-WN8qlVqSuAGoZH2QbO6NXRi170AUT/edit).

**Chart data:**

| Dimension | HIPGNOSIS (pre-Blackstone) | RECOGNITION / LYRA (post-Blackstone) |
| :--- | :--- | :--- |
| Song-level data | Partial/incomplete song-level tracking; reliance on third-party reporting | Lyra ~47,000 works tracked at song level; reconciled across DSPs, PROs, MLC, sub-publishers |
| Vintage depth | Appropriate vintage mix of indie/legacy | Weighted-average asset age ~21 years; only ~3% of assets <5 years old |
| Active vs. passive rights | Mixed administration across acquired catalogs | Integrated active publishing and master operations; both publishing and recording rights |
| Valuation independence | Citrin Cooperman at an 8.5% discount rate held through the rate cycle | Independent third-party DCF valuation for KBRA; $2.36B (Aug 2024) rising to $2.95B (Jul 2025) implied catalog value across the rebuild |
| Geographic royalty mix | Short Tower mark wider c.f. the catalog above 24% | Lyra 48% of royalties in non-USD currencies (12% UK, 5% DE, 4% FR, ~28% other) |
| Concentration | HSA 2022-1 had ~40% in its top 10 | HSA 2022-1 outdated; rebuild balanced to lower top-10 concentration |
| Governance and control | Listed board; continuation vote failed and a strategic review opened (2024) | Blackstone-owned; integrated operating platform; Recognition governance, ratings confirmation for repeat issuance |
| Refinancing visibility | None; ran the fund-level facility at maturity | Lyra master-agency rated (KBRA A−); Lyra 2024-2/3 upgraded to A in 2025 |
| ABS execution outcome | $700M City National Bank facility at SOFR+225 floating | Lyra 2025-1 at 5.604%/170 bp fixed; same catalog set up to anchor Sony/GIC purchase ~$4B vs Blackstone 2024 take-private |

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**See also:** `03b - Operational Maturity.md` (the servicing systems that produce the data this driver depends on) · `03c - Legal Architecture.md` (how data depth supports perfection and account control) · `05 - Path Forward.md` for the checklist version.
