Flexpoint Ford’s Mike Morris on Firm’s Indie Strategy & Why AI Could Make ‘Human-Driven’ Catalogs More Valuable

Mike Morris is 1 of music’s biggest caller investors — and he’s placing his bets connected the indies. The managing manager of Chicago-based backstage equity steadfast Flexpoint Ford has overseen what Billboard estimates is much than $375 million of investments successful immoderate of music’s astir influential autarkic companies since 2023. After initially backing the front-line euphony concern astatine Nettwerk, the statement that broke Sarah McLachlan and Barenaked Ladies, that aforesaid twelvemonth the steadfast announced a “significant concern and partnership” successful Goldstate Music, the catalog concern steadfast founded by erstwhile BMG president/COO and J Records co-founder Charles Goldstuck. Last year, Flexpoint led a $34 million equity financing circular for Duetti, a euphony concern institution that focuses connected indie rights, and led a $165 million investment successful Create Music, a euphony distribution, publishing and information analytics company. 

Morris, who has antecedently held positions astatine Northleaf Capital Partners, H.I.G. Capital and Moelis & Co., says that Flexpoint’s absorption connected high-return middle-market companies serving autarkic artists has resulted successful “repeated success.”

“We’ve truly leaned into the autarkic assemblage of the euphony manufacture — it is conscionable increasing overmuch faster than the accepted majors ecosystem,” Morris says. “This portion of the marketplace is truthful ample and fragmented and determination is truthful overmuch growth…and tremendous accidental for innovation.” 

What bash you deliberation of the maneuvers by the majors, similar Universal Music Group’s projected acquisition of Downtown Music, that people the maturation of the indie segment? 

They are grounds capable of the information they person been losing stock to the autarkic ecosystem. They wouldn’t beryllium buying these companies if it weren’t the case. We deliberation our level companies — whether 1 oregon much of them ends up successful a large astatine immoderate point, we’ll spot — tin outcompete due to the fact that they don’t person the bequest infrastructure that immoderate of the majors do. And they tin complement the majors successful serving this vast, fragmented and increasing portion of the market.

What are the caller modes of monetization you person talked astir that excite you?

I’m talking astir everything extracurricular of the accepted streaming platforms: Meta, TikTok, YouTube, which is wherever Create started out. YouTube rights management, if you cognize however to bash it correctly, is simply a precise charismatic and important area. Synch placement successful video games, fittingness apps — each of these tangential gross streams. Not everyone knows however to monetize those streams, and it is halfway to the strategy for each of our portfolio companies.

What makes Create special? 

Create has lone been astir for astir 12 years. They are a digitally autochthonal work and superior supplier to the autarkic sector. It doesn’t person the bequest baggage astir infrastructure that immoderate of the services and labels have. Create started retired arsenic a pure-play rights absorption concern and past went done a earthy evolution, tacking connected distribution, accounting systems, publishing — each built connected this digitally autochthonal background. Their numbers aren’t public, but if they were, they’d talk for themselves.

Duetti was the first, but apt not the last, institution to get the masters and publishing rights of indie artists bubbling nether the mainstream radar. How are they prepped for competition? 

This is thing [Duetti CEO Lior Tibon] has thought a batch about. They bash person a first-mover advantage. But the crushed nary 1 other is doing it is due to the fact that it’s truly hard to do. Buying these tiny catalogs involves a precocious grade of sophistication, data, AI [artificial intelligence] and operational subject to get thousands of catalogs and thousands of idiosyncratic tracks. Most euphony companies and different funds successful the abstraction person not acceptable themselves up to bash that successful a mode that’s scalable. More contention is thing we’ve planned for astatine the committee level and among the shareholder radical and absorption team. We consciousness similar it’s going to beryllium precise hard to replicate the strategy astatine this benignant of scale.