(Bloomberg) -- As 20-year-old pop star Lorde danced across the stage earlier this month at New York’s Bowery Ballroom, basking in the adulation of adoring fans, Matt Pincus was in the balcony celebrating.
The founder and chief executive officer of Songs Music Publishing, Pincus, 44, represents some of the world’s top songwriters, including Ella Yelich-O’Connor (Lorde), whose just-released second album “Melodrama” premiered at No. 1 in the U.S.
Between Lorde and The Weeknd, Songs’ artists have led the charts for five weeks this year. That’s made the son of the late investment banker Lionel Pincus a standout among independent publishers. Starting with $5 million of his own money and clients in Christian rock and other neglected genres, Pincus and his partners have spent 13 years reviving an old-fashioned approach to music: signing artists one at a time and offering a more intimate, creative relationship.
“They’ve had an unbelievable run of taking early bets on people who became quite impressive,” said Michael Simon, president of Rumblefish, another independent music company.
The growth of streaming, coupled with a healthy market for licensing to film and TV, has increased the value of publishing companies. The three biggest music companies: Vivendi SA’s Universal Music (owner of Lorde’s label Republic), Sony Corp. and Warner Music Group, dominate both the recording and publishing businesses.
Below them is a vibrant market group of independents that includes Songs, which Pincus ranks among the top 10 in the world. Kobalt Music Group Ltd., a startup that collects royalties for performers and music companies, was valued at $750 million in a May fundraising -- even though it doesn’t own any music. Imagem Music, with a catalog of 250,000 songs, just sold in a deal Billboard pegged at almost $600 million.
Pincus, a Columbia Business School MBA and former rocker, started Songs after a stint at EMI, once the home of Motown music and the Beach Boys. He saw that music publishers -- the companies that collect songwriting royalties for album sales, radio play and commercial use of melodies -- were reducing their investments in new artists and instead raising money from private equity to buy songs and amass valuable catalogs.
He invited Ron Perry, 38, another EMI alum, to join him. Together, the two targeted overlooked Christian rock and hard rock musicians before Perry started signing slightly more commercial acts such as Ted Leo & The Pharmacists and the Old 97s. For a while, they specialized in moody singer-songwriters like Conor Oberst of Bright Eyes.
A few years later they broke into pop with DJ Mustard. Then they signed three acts everyone would come to know: Diplo, the DJ and producer, the pop superstar The Weeknd, and Lorde, perhaps the most precocious songwriter of her generation.
“We built the business song by song, writer by writer, through relationships with people who created the music,” Pincus said. “After 13 years, it results in a well-diversified catalog that has songs working at all levels. We are the Weeknd, Lorde and Diplo guys. But we also have Feist’s ‘1,2 3,4,’ Duran Duran and some Gershwin copyrights.”
Pincus and Perry split the responsibilities at Songs. While the former runs the business, Perry handles the creative side. He served as the main artist and repertoire rep in the making of “Melodrama” -- a job typically filled by a label executive. Lorde leaned on Perry to help find writers and co-producers, and weigh in on everything from a snare drum sound to her debut single.
“Ron is the creative that she trusts the most,” said Jonathan Daniel, Lorde’s manager. Being close to his artists, Perry has developed a reputation as a trusted executive. He introduced The Weeknd to Daft Punk and facilitated a lot of Diplo’s collaboration.
Perry first heard Lorde on SoundCloud, the online music service, and immediately cleared his schedule to fly to her native New Zealand. He wasn’t alone. Executives with larger rosters and bigger checkbooks also spent 2013 chasing the talented singer-songwriter, whose “Royals” single topped the Billboard charts in October of that year.
He followed the singer around the world for a year, showing up at concerts and chatting up her parents. “It was one of those moments where I knew it was worth dropping everything to try and sign her,” Perry said in an interview.
Pincus, who capitalized the company with $20 million in total, said he has no interest in selling.
“We’re at scale now,” he said. “Look at the airplay chart. You have the majors, Kobalt, BMG and then us. We have a diversified portfolio earning money in lots of ways, and we had an explosive 2016.”