Bob Dylan, Stevie Nicks, Bruce Springsteen, David Bowie. What do these artists have in common? They are, of course, among the most successful and influential musicians of the 20th century. But they (or their estates, in the case of Bowie, who died in 2016) have also all recently sold their catalogs in high-value deals. We are witnessing a boom period for songwriter acquisitions.
On January 3, it was reported that Bowie’s catalog publishing rights had been sold to Warner Chappell Music (the publishing arm of Warner Music Group) in a deal worth minus $250m (around £185m). Deal includes 26 studio albums and over 400 songs, including ‘Heroes’ and ‘Ziggy Stardust’, and posthumous album rights Toy, which was released on November 26, 2021. The deal was for Bowie’s publishing rights (songwriting copyright) as opposed to rights to his master recordings, which Warner acquired in September 2021 The majority of Bowie’s music is no longer owned by his estate, but by one of the largest entertainment conglomerates in the world.
“The music industry has never been more creditworthy than it is today,” said Barry Massarsky, music industry valuation expert and partner at the accounting firm and consultant Citrin Cooperman. “Streaming has galvanized the market,” he added. People are listening to more music than ever before, increasing its value.
While live touring, typically the industry’s most lucrative business, has been on hiatus during the pandemic, copyright has proven to be a more durable good. Streaming services were once the place to go for “new pop or cutting-edge R&B,” Massarsky said, but in the past two years music fans have also been streaming more “catalogue” music – usually songs released before 2000. Radio stations, too, favor old classics on playlists. The owner of a song’s publishing rights earns money every time it is played on streaming platforms, in public, including on the radio, or licensed for use in television, movies or in advertising.
Investors have taken notice. The majors – Warner, Sony and Universal – are now in competition with private equity groups and specialized investment funds, such as Hipgnosis (co-founded by Merck Mercuriadis and Nile Rodgers) in London or Primary Wave in New York, for redeem the most valuable rights. Legacy artists offer the most reliable rights. “These songs from the catalog have been tested over time,” Massarsky explained. “They don’t have ups and downs; they are constantly used. And investors like consistency.
Massarsky has been advising funds on music copyright valuation for 15 years, but the market wasn’t considered entirely legitimate until recently. “You always need a player who takes you from acceptance to full credibility,” he said. “And in my opinion, that player was Bob Dylan.”
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In December 2020, the New York Times reported that Dylan had sold his entire songwriting catalog to Universal Music for over $300 million, which was then probably the biggest ever acquisition of music publishing rights from a single writer. -composer. Then, a year later, Bruce Springsteen sold his entire music rights – as artist and songwriter – to Sony for $550 million.
The reported figure of £185m for Bowie’s catalog sale seems relatively low, but every valuation starts “with a blank slate”, Massarsky said. Economists will analyze a song’s sources of income in recent years. They will assess performance royalties (money earned when a song is played publicly, such as on the radio or in a restaurant), mechanical royalties (when a song is reproduced, on CD, vinyl or for streaming) and sync royalties (when a song is licensed for use in television, film, advertising and, increasingly, TikTok). They will then monitor growth rates to forecast the song’s future revenue.
“I’m not saying Bowie is more important than Springsteen,” Massarsky said. “But does Springsteen have better earnings in the key, high-growth areas of streaming than Bowie? It may be true. It’s not a matter of cultural significance; this is the revenue curve. The finer details of such an agreement – exactly what rights are included and the specific requirements – also affect the sale price.
Whether such a deal is “good value” or not depends on when you ask for it. At present, with the copyright market remaining stable despite stock market fluctuations, the answer is probably “yes”. Investors will be “happy as long as nothing crazy happens to the unexpected revenue streams,” Massarsky said.
And for a “legacy” artist, selling rights can be smart estate planning. This saves them from leaving their music – complicated assets that require careful management – to heirs. Selling may mean choosing to forgo future royalty payments, but it instead provides them with an immediate injection of cash. President Joe Biden’s pledge to increase the amount of capital gains tax on rights transactions above $1 million has also led to a wave of sales in the United States since his election in November. 2020.
Does an artist win or lose in such a sale? “The great thing is that the artist is still immortalized in the work,” said Aaron Casey, music rights and royalties consultant and head of music business at the British and Irish Modern Music Institute in Dublin. “You can sell certain rights to the assets to someone else, but you will still be known as the writer.” And selling certain rights does not prohibit an artist from performing their own songs in public or releasing new songs to which they own the copyright. This is particularly important for young artists, as it is not only “heritage” artists who sell their rights. Young musicians and songwriters, including Calvin Harris, Jack Antonoff and Mark Ronson, have also recently sold parts of their catalogs.
“But there’s always the fear that the legacy of the artist — what he stood for, his moral foundations — will be lost,” said Casey, who gave the hypothetical example of a rights holder firing the an artist’s song for dental floss or dog food ads. , “just to make money”. Worse, a song could be associated with a political campaign the writer never aligned with.
But many transactions will contain written terms to prevent such occurrences; there are many more clauses and details that will never be made public. Additionally, Massarsky explained, the buyer “often consults with the estate before embarking on a campaign. You certainly don’t want to own an esteemed catalog and then sell it to an unwary user and diminish the value of the whole deal. He doesn’t seem financially aware.
Critics of the trend worry that the focus on established musicians will reduce investment in new artists. Massarsky thinks the new artists’ market is “dynamic in itself” and does not yet see the end point of the wave of rights sales. “There is a lot of money circulating. This will last as long as revenue forecasts warrant.
Acquiring the rights of musicians is a popular move these days, but there’s nothing new about treating music like capital: In 1985, Michael Jackson outbid Paul McCartney to buy the publishing rights to the majority of the Beatles catalog.. The very structure of the modern music industry, over which big business has held sway since its inception in the early 20th century, is based on the merchant trade of artists’ intellectual property. Music may seem intangible – the emotional pull of some unmistakable lyrical or harmonic sequence – but the music business is still a business.
[See also: A year without music venues]