INTELLECTUAL property startup C2W Music Limited will seek to raise between $120 million and $140 million with an initial public offer (IPO) on the Jamaica Stock Exchange (JSE) Junior Market next month.

The proposed price per share is between $1.20 and $1.40, with the stocks on offer accounting for 22 to 24 per cent of the company. The disclosure was made at C2W’s IPO investor briefing hosted by lead broker Stocks & Securities Limited (SSL) at the Terra Nova All-Suite Hotel in Kingston yesterday.

With the prospectus yet to be released — anticipated to be published in 30 days — the company was prohibited from releasing specific financial information.

C2W — an accronym for Caribbean to World — aims to procure copyright income available worldwide for regional songwriters, who the company says have been short-changed for decades.

“The Caribbean, as it is today, is still a net exporter of royalties; we collect a couple million dollars every year but we export about 85 per cent of it to the US, Canada, Europe and other societies around the world,” said C2W chairman Derek Wilkie, a Barbadian with decades of executive-level experience in the music business.

“Our mission in what we are doing is to change that equation around because right now it’s an upside-down pyramid,” Wilkie noted.

C2W plans to use funds generated from the listing to sign top songwriters in the Caribbean, whose songs will be shopped around globally. The company said it will conduct 12 songwriting camps annually across the region in which local songwriters will collaborate with renowned international writers to create songs that can be exploited globally by the entertainment industry’s biggest stars.

C2W will earn from three distinct revenue streams:

* Performance royalties from music played via media outlets such as radio and television, and live and recorded music played in public premises;

* Mechainical royalties from the sale of compact discs and digital units such as music downloads using Internet or mobile technologies; and

* Synchronisation royalties from music used or adopted in movies and television advertisements.

C2W said it will talk with performing rights organisations (PROs) worldwide to collect royalties on behalf of its songwriters. It is expecting to earn what it says is the industry standard US$0.09 per unit for mechanical royalties and US$0.11 per unit for performance royalties, with the company’s gross share projected at 40 per cent. For synchronisation royalties, the company anticipates it will earn US$40,000 for tier 1 songs, US$12,000 for tier 2 songs, and US$5,000 for tier 3 songs.

Kimberly Thelwell, SSL manager, investment banking and research, in a projections and valuation report, noted that it is anticipated that C2W will become profitable by 2013 (year three), increasing earnings incrementally thereafter, and produce up to 1,000 songs annually by 2014. Additionally, the company will operate from a virtual office, with the upshot being that 59 per cent of expenses are attributed to songwriters’ shares.

“This is really great because there won’t be any overheads such as electricity, which really weighs heavily on companies’ bottom line these days, and no rent, etc,” stated Thelwell.

Thelwell said C2W’s price multiple will be in the region of four to six times earnings, which is comparable to 2009 to 2010 junior market valuations and makes the stock very attractive.

“It is parrallell to multiples we saw when the market just started, so it is actually better than multiples we are seeing currently,” she said.

C2W advisory board chairman Ivan Berry, who has 30 years of experience in the North American music industry, highlighted that intellectual property is the most stable revenue stream in the music business. He stated that a big advantage of the business is that copyright has a shelf life of 70 years after the death of the last songwriter for each song.

C2W will have a mixture of internationally established and unnurtured songwriting talent.

According to Berry, the company is currently in talks with talented Caribbean songwriters who are globally-competitive, writing in the genres of pop, R & B, dance, rock & roll, et al.

“We have been working very diligently with some of the world’s top songwriters that happen to be Caribbean,” noted Berry. “We have been in communications with them and certainly the post-IPO announcements will be that these songwriters will be with C2W.”

He also revealed that C2W has signed a letter of intent with the Caribbean Export Development Agency to help nurture young songwriters.

“Caribbean Export will help to finance and bring international songwriters to the Caribbean and we will mix-match them with C2W songwriters to create some of the world’s greatest intellectual property and songs,” outlined Berry, who is originally from St Kitts and Nevis but has resided in Canada for over three decades.

What’s more is that C2W plans to have a dedicated person in Los Angeles who is experienced in synchronising song into film and television. Additionally, the company is in communication with world renown record label Island Def Jam to create a label dedicated to Caribbean talent.

“We have no doubt that it will be able to conclude in a ‘Def Jam Caribbean’; we want to make sure that there is a label division here to be able to exploit songs globally,” Berry said.

“I myself know every major label president and head of A&R, most of the major artistes and their managers etc,” he continued. “So it’s a matter of writing great songs, having them exploited, and really enjoy this thing called IP, and most importantly make sure the earnings come back to the Caribbean to its rightful owners.”