NexTone Inc.

Business Details

The company receives management entrustment from copyright holders such as lyricists, composers, and music publishers, and handles licensing, royalty collection, and distribution to copyright holders for performance rights, recording rights, interactive distribution rights, and other rights. It also operates the Business Outsourcing Service for Music Publishers (MCJP) through its subsidiary MCJP. The business model recognizes revenue only from the management fee portion, giving it a high profit margin. The company has achieved 10 consecutive periods of revenue growth since its founding.

Recent Overview

Achieved 10 consecutive periods of revenue growth. Driven by dramatic expansion of overseas collection and significant growth in recording rights.

In the Copyright Management Business for FY2026 (ending March 2026), total collection amount reached 112.2% year-on-year, achieving 10 consecutive periods of revenue growth since the company's founding. Recording rights grew to 124.4% year-on-year driven by strong idol-related music, while broadcast and cable broadcast rights grew 116.6% year-on-year. Interactive distribution growth slowed to 102.4% year-on-year. Overseas collection increased dramatically due to the YouTube direct collection launched in July 2024 and the expansion of direct contracts with collection societies in various countries. From April 2026, 3,930 songs (net increase of 2,321 songs) were transferred from other management operators. On the cost side, personnel and system-related expenses increased along with the growth in the number of managed songs, causing a slight decline in profit margin.

Key Products

Growth Drivers

• Dramatic expansion of overseas copyright royalty collection (worldwide direct YouTube collection launched July 2024, expansion of direct contracts with collection societies in various countries)
• Significant growth in recording rights royalties (124.4% year-on-year, extremely strong usage of idol-related music in music software, etc.)
• Steady increase in broadcast and cable broadcast royalties (116.6% year-on-year, steady increase in program usage of managed songs)
• Continuous accumulation of managed songs (823,341 songs at the end of FY2026 (ending March 2026), an increase of 131,851 songs from the prior period)
• Transfer of songs from other management operators (3,930 songs entrusted in April 2026, including songs related to well-known artists and VTubers)
• Securing a new revenue source through the launch of redistribution operations for secondary broadcast usage fees related to handled master recordings
• Improvement in collection amounts through expansion of the scope of performance rights collection (outlook for FY2027 (ending March 2027))
• Expansion of services for music publishers through the launch of the Copyright Management Cloud Service "Virco"

Risks

• Since there is a time lag of one to two quarters in the collection and distribution of copyright royalties, changes in market trends affect business results with a delay
• Growth of the streaming market has recently been moderating, creating a risk of slowing growth in interactive distribution royalties (102.4% year-on-year)
• Cost increase pressure from rising personnel and system-related expenses accompanying the increase in the number of songs (factor in declining profit margin)
• Continuous sales investment is needed to expand managed song share in a competitive environment with JASRAC
• Overseas collection operations have only recently begun and require ongoing efforts to improve accuracy and stabilize the scheme
• Failure to achieve full-line service provision due to non-entry into Category 6 performance rights (karaoke performance, entertainment venues, etc.)