How Reservoir Media is revolutionizing the music copyright business

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The stakes, it could be said, were high. When New York’s Reservoir Media bought Tommy Boy Records in 2021 for US$100-million, it acquired one of the biggest challenges in hip-hop business history: to finally get the full discography of seminal New York group De La Soul – long beleaguered by sample-clearance legalities and contractual nightmares – onto streaming services for their millions of fans.

Though Reservoir was in the process of listing on the Nasdaq, making six wildly influential albums, including De La Soul Is Dead and Stakes Is High, available to listeners – in a way that respected the wishes of the group’s members – became a top priority. For 18 months, the company worked to legally clear sample copyrights and negotiate a fair revenue share with De La Soul.

Doing so was, as Reservoir’s Iranian-Canadian founder and chief executive Golnar Khosrowshahi put it, “our cultural obligation.”

Reservoir has grown since 2007 from a songwriting-copyright investment company to one of the most nimble independent players in an increasingly concentrated music industry. You know how musicians are selling chunks of their songwriting catalogues to private-equity firms and investment companies for eight- and nine-figure sums? Reservoir is an eager buyer, scooping up catalogues of the likes of Sonny Rollins and the Isley Brothers. It also offers pared-back services for artists less keen to sell their catalogue, managing their songwriting copyrights to get them more money for their songs – including for none other than Joni Mitchell. And it’s expanding into the label game, picking up record companies such as Tommy Boy, home to formative releases by Coolio and Queen Latifah, and Chrysalis Records.

“If you’re going to do it, you might as well pick names like that,” Khosrowshahi said in a recent interview, at Reservoir’s Hudson Square boardroom in New York. The company takes a sober approach to acquiring copyrights, but its music-fan executives work with a discerning playfulness. “The investment thesis is to always go after high-quality music. You’re not going to be able to take mediocre music and make it great.”

Khosrowshahi comes from a broad business dynasty. She is cousins with Uber chief executive officer Dara Khosrowshahi, and her father is Hassan Khosrowshahi, whose Persis Group of Companies founded the Canadian electronics chain Future Shop and later sold it to Best Buy for $580-million in 2001. Hassan’s family then bought the company now known as DRI Healthcare, which owns a publicly listed trust that invests in royalty streams from pharmaceuticals and related inventions; it’s run by Golnar’s brother Behzad Khosrowshahi.

Sixteen years ago, Golnar had a realization that could expand her family’s intellectual-property holdings: Pharmaceutical patents aren’t the only things out there that generate royalties. Songs do, too.

“The genius scientist, we realized, was not too dissimilar from the genius songwriter, who probably has equally as many idiosyncrasies and just hopes not to be a one-hit wonder,” she said.

Khosrowshahi quickly tapped Rell Lafargue – a publishing-industry veteran who had developed a model to assess the value of a songwriting copyright over time – to become Reservoir’s president and chief operating officer. Then the young company began hunting for public catalogues to buy. One of the first it purchased, in the late 2000s, belonged to Bruce Roberts, who’d written pop songs for artists such as Donna Summer and Barbra Streisand.

Roberts had worked with plenty of major publishers, including Warner Chappell, but found the company Khosrowshahi and Lafargue were building to be a perfect match. To this day, Roberts said, Reservoir helps his songs find lucrative placements in TV and film – often called syncs – and “they’re really good with pushing songs in the right direction, even when there are no syncs.”

The catalogue acquisition space has since exploded, with massive deals routinely grabbing headlines. Major asset managers such as BlackRock and KKR have been snapping up copyright royalty streams in recent years, while in a single month in 2021, Hipgnosis Songs Fund bought the rights to some or all of the catalogues of superproducer Jimmy Iovine, Neil Young and Fleetwood Mac’s Lindsey Buckingham.

Back catalogue values have soared so much that Khosrowshahi said she’d have still made money off the least-enticing ones she was considering a decade and a half ago. But it’s the scrutiny that she’s imbued in Reservoir – as well as the fact that the company treats the art that it buys and manages as, well, art – that observers say sets it apart.

When Joni Mitchell was looking for a new administrator for her catalogue after a quarter-century with Sony Music Publishing, her business team asked Roberts where would be a good home for her copyrights.

Some songwriters, he explains, just want “a giant bank” that can squeeze money out of their copyrights. But that wasn’t Mitchell’s style, Roberts says; she wanted an artist-first approach. His answer was easy: “The only place she should go is Reservoir.” The company has been administering her catalogue since 2021.

Margaret McGuffin, chief executive officer of Music Publishers Canada, said that among publishing companies, “the most successful ones are going to be the ones like Reservoir who can understand the creative and understand potential – creating new lives for old songs while also finding opportunities for new creators.” (Lafargue sits on McGuffin’s board, while Khosrowshahi is a director with the U.S. National Music Publishers’ Association.)

Songwriting copyrights are generally managed by publishing companies such as Reservoir, while recordings themselves are usually overseen by record labels, and artists often have separate managers overseeing their whole careers. Reservoir, whose share price on the Nasdaq has slumped alongside many technology-oriented companies since November, 2021, has been diversifying its business well beyond publishing.

About a third of its revenue now comes from non-songwriting-copyright sources. It’s moved into artist management with the majority-owned subsidiary Blue Raincoat Artists. (Khosrowshahi is very happy her client Phoebe Bridgers was one of the openers for Taylor Swift’s latest stadium tour.) The company also majority owns PopArabia, which invests in musicians, labels and copyrights in the Middle East, and was founded by Reservoir’s emerging-markets executive vice-president, rapper-songwriter Spek of Toronto hip-hop legends Dream Warriors.

Still, Reservoir’s highest-profile expansion may be its push into the label business, thanks to the aforementioned rescue operation it performed with De La Soul’s six Tommy Boy albums.

In the early 2000s, De La Soul – its key members known as Posdnuos, Dave and Maseo – learned that a dispute between Tommy Boy and their long-time major-label partner Warner had left their first six records essentially shelved. Just as the digital-music ecosystem was beginning to mature, Kelvin (Posdnuos) Mercer said in an interview, the group found themselves facing Warner executives asking whether songs they’d sampled were “cleared” – that is, their uses approved by the original copyright holders.

Though De La Soul insisted they’d cleared the samples, the executives weren’t sure; some of the paperwork would have been nearly 20 years old, and possibly in the hands of the group’s ostracized former label, Tommy Boy. Everything from 3 Feet High and Rising to AOI: Bionix was shelved for years. As negotiations dragged on, De La Soul were never offered a cut of streaming revenue they felt was fair, Posdnuos said.

All that changed when Reservoir bought Tommy Boy. The band’s long-time acquaintance Faith Newman was an executive vice-president at Reservoir, having signed the likes of 2 Chainz and Phantogram to publishing deals. As Posdnuos recalled, Newman immediately reached out with an offer: “We’re here to work this out. This is a part of hip-hop history – a part of music history.”

But it was the start of another long journey. Posdnuos, Maseo and Dave spent endless hours on Zoom calls, trying to figure out all the songs they’d sampled back in the heady days before such borrowing became highly scrutinized.

“There were times where there were samples that I remembered but I didn’t remember the name of to find the original record,” Posdnuos said. He spent hours digging through his garage to find the albums he’d sampled from. Even once he found them, he often had to call the original musicians – or the people overseeing their estates, such as Otis Redding’s – to ask for permission to release art he’d made three decades earlier.

This work went on for a year and a half. Then, just weeks before Reservoir’s planned March, 2023, release of De La Soul’s missing discography, Dave (Trugoy the Dove) Jolicoeur died at 54.

“It feels horrible,” Posdnuos said. “All the success we gained, all the accolades we gained, ups and downs we lived through – to have this gigantic down that was about to be an up, and he didn’t make it across that particular finish line.”

But De La Soul will soldier on, with the surviving members touring this summer. And with Reservoir’s backing, Dave’s legacy will see new light, on streaming and wherever the company can promote the group’s music.

“These guys deserved everything that they’re getting now,” Lafargue said. “We’re just getting started. There’s a lot more work to do.”