Inside Mavin's $175 Million Sale: Exploring the Intricacies of Acquiring a Record Label (pt.4)

Catch up from pt.1, pt.2 and pt.3 here

According to the original Billboard report, HYBE and Universal Music Group are vying for the top spot as the race for acquisition of a majority stake in Africa’s leading record label heats up.

HYBE, formerly known as Big Hit, is renowned as the label of K-Pop sensation BTS, SEVENTEEN while Universal Music Group (UMG) holds a prestigious position as the world's leading record company, representing artists like Drake, Taylor Swift, and many more through its subsidiary labels. 

As stated earlier, Mavin's focus, at this time, would lie not only on receiving financial investment but also on securing a strategic alliance that can unlock its next phase and support its ambitions.

Mavin has previously collaborated with UMG-subsidiary labels like Virgin Music for distribution, and even Rema's hit record Calm Down featuring Selena Gomez is licensed through Interscope Records. I’m hardly gagged at the thought of a full-on partnership with UMG, largely because UMG’s effort in selling African music, in the past few years, has been questionable.

Per its dormant presence in the country, it may seem the company fails to understand, embrace, and employ a localized strategy that caters to the dynamics of the Nigerian market. Also, given its past affiliations with artists like Tiwa Savage who hinted in a Billboard interview, about the relegation of African music to certain playlists

I’m just not sure yet what more to be desired in a UMG-Mavin partnership if there’s a HYBE in the same conversation - of course, not outrightly. It would be interesting to explore an uncharted model, such as the potential synergy of K-Pop and Afrobeats - from creativity to business model, etc.

HYBE’s Current Status

Interestingly, HYBE had hinted at making acquisitions as part of its strategy to diversify beyond K-Pop and East Asia. The company wants to reduce reliance on BTS and expand its portfolio to include other superstars. Until 2019, BTS contributed around 95% of HYBE's revenues across various sources, including records, merchandise, live events, commercial partnerships, and more. In 2021, that percentage dropped to 70%, and by 2022, it has further dropped to 50%.

This is why it is doubling down on acquisitions and partnering with an industry heavyweight like Scooter Braun to achieve its mission. In 2021, HYBE made a $1.05 billion acquisition of Braun's US-based Ithaca Holdings, a move to expand its operations beyond K-Pop. As part of this acquisition, HYBE gained ownership of some successful non-K-pop talents, such as the country music powerhouse Big Machine Label Group and Braun's own management company, SB Projects, which represents artists like Justin Bieber and Ariana Grande.

Braun orchestrated the collaboration between BTS-member Jungkook and Latto for Seven, which garnered 16 million Spotify streams on its first day. The collaboration shot HYBE's share price by 3.12% after it had hit a record low of $82.51, due to BTS' hiatus until 2025. That collaboration would be a test for HYBE's post-BTS strategy worldwide and it seemed to have worked just fine.

Earlier in the year, HYBE’s chairman Si-Hyuk Bang told CNN that the company is closely watching the rapid growth of genres such as Latin Music and Afrobeats and is actively raising about $380 million for upcoming acquisitions.

HYBE, being drawn to the recent strides of Afrobeats, would explain the reported move towards Mavin. It must have seen the potential to partner with Mavin to replicate discovery of global talents like Rema, Ayra Starr, etc.

Earlier in the year, HYBE acquired Quality Control—an Atlanta-based hip-hop label representing hip-hop acts such as Lil Baby, Migos, Lil Yachty, and City Girls. The deal was also facilitated by Scooter Braun through HYBE America, which he now helms.

So, why is a HYBE-Mavin partnership probably more promising?

I’ve considered several parameters that hint at how their vision might be closely aligned - stay with me!

1. Artist Development

Mavin is reputed for its unwavering commitment to artist development. It is said to have a system that is rooted in thorough grooming, learning, and honing of skills. The launch of a Mavin signee is probably always an event and it has maintained this "it-factor" in its 11 years of operation.

This strategy resembles HYBE's approach to developing and launching K-pop talents like BTS. In fact, in 2021, HYBE and UMG's label, Geffen announced a partnership focused on launching a new girl group through a global talent search. This initiative will emulate the esteemed K-pop training and development system for which HYBE is renowned. The project reportedly attracted 120,000 submissions from aspiring artists, and 20 have since been chosen. They’re currently being trained under the world-renowned K-pop system in LA.

The journey of these 20 aspiring artists will be documented in a world-class audition program called "The Debut: Dream Academy". Fans will have the opportunity to follow their progress through content that will premiere on YouTube (Global) and ABEMA (Japan). As the audition program unfolds, the final members of the group will be determined, and the group's name will be revealed.

The years-long creative process of forming the girl group will also be the focus of an upcoming Netflix documentary series, which will capture the behind-the-scenes journey.

If you have studied Mavin long enough, the similarity between Mavin's artist development and the initiatives undertaken by HYBE may be apparent.

1. HYBE’s Technological Infrastructure

WeVerse is an in-house platform developed by HYBE's subsidiary, beNX, that serves as a centralized hub for various content created by HYBE artists such as BTS, SEVENTEEN, TOMORROW X TOGETHER, etc. It offers a wide range of content including music videos, teasers, movies, merchandise sales, and live streams for fans’ convenience.

This platform is a part of HYBE's global strategy, as the company plans to introduce a subscription-based membership tier to its impressive 9.3 million monthly active users (MAUs). The success of WeVerse was instrumental in HYBE's pandemic revenue, contributing to a total of $400 million.

One remarkable highlight of WeVerse was BTS's virtual concert, "BANG BANG CON The Live," held in June 2020. The virtual event broke records by generating nearly $20 million in ticket sales and attracting 756,600 concurrent viewers from 107 regions. WeVerse exclusively handled all aspects of the event, encompassing ticket sales, live-streaming, and merchandise sales.

Following this success, HYBE opened WeVerse to include UMG artists, as it now reaches over 200 countries. This is such an interesting opportunity that even UMG can’t help but get a piece of, and Mavin is positioned to explore and develop assets that can take advantage of such technology.

1. Non-Artist Reliance

HYBE is strategically focusing on developing a self-sustaining business structure that doesn't solely rely on the direct participation of its artists. A clear show of this approach is their expansion of intellectual properties (IPs) associated with their artists. One example is TinyTAN, a collection of animated characters inspired by the seven members of BTS (it goes crazy on YouTube). These TinyTAN characters have their own unique stories and have been brought to life through a range of lifestyle products. By cleverly leveraging their artists' music, photos, music videos, and other source IPs, HYBE has ventured into secondary IPs and is building a thriving business model on this foundation.

Another noteworthy success is the BTS Graphic Lyrics books, released in Korea, North America, and Japan. Within just one week, all five volumes climbed to the Top 10 weekly bestseller list, both online and offline. In HYBE’s report, it was emphasized that these projects were executed with minimal direct involvement from the artists themselves.

This experiment of Non-Artist Reliance can be linked to Mavin's recent move to launch its merchandise arm, Culture Hayvn, which notably doesn't involve direct participation from its artists.

It is also worth noting that Mavin has achieved the feat of establishing its own brand and identity that is hardly reliant on the artists on its roster per time - something many Nigerian labels have struggled with.

As something HYBE also aligns with and has experimented pretty much, it would be interesting to see how Mavin and HYBE can collaborate and leverage each other's strengths to uncover new possibilities that could further improve their revenue generation.

While this isn’t exhaustive, fingers crossed for developments that may unfold in the coming months. Again, the deal, being handled by Shot Tower Capital, a music industry-focused investment bank based in the US, adds a relaxing dimension.

Shot Tower Capital brings a wealth of experience in working with artist estates, handling aspects related to music and image rights. They have worked with esteemed estates such as Aretha Franklin, Michael Jackson, Prince, Elizabeth Taylor, and Robin Williams.

They reportedly have a track record with a close rate of over 95% on engaged transactions. Also, their expertise spans global markets and cross-border transactions, as evidenced by their involvement in deals spanning the US, Canada, UK, Europe, China, Japan, and the Middle East.

I hope you had fun reading this as much as I did writing it! 💜