# Why TrackForge Exists > The case for independent catalogue verification in the music asset class. *Published by [TrackForge](https://trackforge.studio)* --- Music catalogues are one of the fastest-growing alternative asset classes in the world. Billions flow into acquisitions every year. Every one of these transactions shares the same structural weakness: there is no standardised way to verify what is being bought. Bond markets have credit ratings. Real estate has standardised appraisals. Equities have audited financial statements. Music catalogues — assets that routinely trade at eight- to fifteen-times annual revenue — have none of these. --- ## A Market for Lemons In 1970, the economist George Akerlof described what happens in markets where buyers cannot distinguish quality from junk. Sellers of high-quality goods cannot prove their quality, so buyers discount everything. The best assets are priced out of the market. The market contracts. Everyone loses. Akerlof was awarded the Nobel Memorial Prize in Economics in 2001 "for their analyses of markets with asymmetric information." A label that has spent years maintaining clean metadata, registering works with every relevant collection society, and resolving writer identities cannot prove any of this to a prospective buyer — at least not without commissioning expensive, one-off consultant work that the buyer has no way to independently verify. Meanwhile, a catalogue with incomplete registrations, missing identifiers, and unresolved rights chains looks identical on paper. The result is predictable. Buyers assume the worst and discount accordingly. ### Case Study: Hipgnosis Songs Fund, 2024 - **$690M** — gap between two independent valuations of the same assets - **67/105** — acquisitions subsequently found to have been overvalued - **75%** — of the portfolio was missing growth forecasts entirely This was not fraud. It was the predictable outcome of a market where there is no standardised way to measure the quality of what is being bought. --- ## The Due Diligence Bottleneck Traditional catalogue due diligence is a manual, consultant-driven process. A specialist team reviews metadata, checks registrations, examines rights chains, and produces a bespoke report. This works — but only at scale. | Deal Size | Typical DD Cost | Cost as % of Deal | Practical Result | |-----------|----------------|-------------------|-----------------| | £500M+ | £75–250K | 0.02–0.05% | Standard | | £50–500M | £75–250K | 0.05–0.5% | Marginal | | £5–50M | £75–250K | 0.5–5% | Prohibitive | | £1–5M | £75–250K | 5–25% | Impossible | The mid-tier catalogues — the ones that represent the vast majority of the market by count — are effectively locked out of institutional capital. Not because they lack value, but because there is no affordable, standardised way to verify that value. --- ## The Infrastructure Gap > "Every platform in this space serves the catalogue owner. TrackForge serves the truth." The music industry has no shortage of sophisticated technology. Dozens of platforms handle royalty accounting, rights management, distribution, sync licensing, and metadata administration. Many of them are excellent at what they do. But every one of these platforms serves the catalogue owner — they tell the owner what they already know, with greater efficiency. The question a buyer asks is: *Is what the seller claims actually true?* No operational platform answers this — because answering it requires looking at the catalogue from the outside in, cross-referencing against independent, authoritative sources the catalogue owner does not control. ### The buyer's due diligence checklist - Are the works registered at every relevant collection society — not just the ones the label filed with? - Do the writer splits at PRS match the splits at ASCAP match the splits at GEMA? - Are there competing claims on any works from other publishers? - Is the ISRC-to-ISWC linkage correct across all platforms? - Are neighbouring rights registrations in place at PPL and SoundExchange? - How much revenue is leaking because of registration gaps the owner may not even know about? --- ## Why Operational Platforms Cannot Become Verification Platforms This is a structural constraint, not a capability gap. The business model prevents it. 1. **Royalty Accounting Platforms** — Process payments based on data the client provides. If metadata is wrong, the system faithfully processes wrong royalties. Essential — but not verification. Ingestion is not audit. 2. **Rights Management Platforms** — Organise metadata, manage rights chains. Often described as "single source of truth" — but in practice, a record of assertion. Whatever the label enters is what the system shows. 3. **Distribution Platforms** — Deliver music to DSPs and collect revenue. Confirm delivery — but don't confirm registrations are complete or that royalties are being collected everywhere they should be. 4. **Enterprise Publishing Systems** — Process hundreds of millions of transaction lines at scale. Staggeringly capable at processing. But capability at processing is not the same as capability at verification. ### The Arthur Andersen Principle When the firm that audits your books is also the firm that helps you keep your books, the audit is compromised — not by bad intent, but by incentive structure. An independent rating requires structural separation from the entity being rated. It requires a business model where the rater's reputation — not the client's satisfaction — is the primary asset. No operational platform in the music industry has this structure, because it is incompatible with their core business of serving the catalogue owner. --- ## What TrackForge Does Differently ### 01. Independent Data Sourcing 24+ authoritative external databases — CMO registrations (PRS, ASCAP, BMI, GEMA, SACEM, The MLC, JASRAC), streaming platforms, industry reference databases, neighbouring rights registries, and forensic analysis tools. When sources conflict, higher-tier sources take precedence. ### 02. Published, Deterministic Methodology The Oracle engine applies a fixed ruleset — no per-client customisation, no discretion. A 6x3 Completeness x Assurance matrix produces standardised grades from AAA to D. A BB-rated catalogue in UK indie rock means the same thing as a BB-rated catalogue in German electronic music. ### 03. Cryptographic Verification Every track's metadata is SHA-256 fingerprinted. All fingerprints are assembled into a Merkle tree. The root hash is anchored to the Bitcoin blockchain via OpenTimestamps. If TrackForge ceased to exist tomorrow, every rating it ever issued would remain independently verifiable. ### 04. Governance and Independence The Rating Oracle is architecturally separated from enrichment — read-only, deterministic, and unable to be manually overridden. Rating criteria are immutable constants. Modelled on IOSCO's Code of Conduct for Credit Rating Agencies. --- ## The Result > "Without certainty, you cannot price risk. Without pricing risk, capital cannot flow efficiently. TrackForge brings certainty." ### For Catalogue Owners A rating provides proof of quality that commands premium acquisition multiples. Investment-grade catalogues (A and above) consistently command 12-15x revenue multiples, compared to 6-8x for sub-investment grade. The rating also identifies specific revenue recovery opportunities that directly increase the catalogue's value. ### For Buyers and Lenders Independent verification with published methodology, cryptographic evidence, and governance architecture. The rating is reproducible. The evidence is tamper-proof. The methodology is published and version-controlled. For the first time, catalogue quality is independently verifiable without trusting TrackForge or contacting TrackForge. ### For the Market Standardised ratings solve the information asymmetry that has suppressed transaction volume, penalised well-maintained catalogues, and locked mid-tier assets out of institutional capital. When buyers can distinguish quality from noise, capital flows to the best assets. The market expands. --- Music catalogues are the last major asset class to lack this infrastructure. **TrackForge fills the gap.** --- Source: [https://trackforge.studio/why](https://trackforge.studio/why)