The last couple of years have seen a noticeable increase in famous musicians selling the rights to their songs. Bob Dylan sold the rights to his entire song writing catalogue to Universal Music Publishing Group for a figure reported to be in between $300 and $400 million. Other artists such as Neil Young and Stevie Nicks have also recently sold the rights to a number of their songs, with several other artists hoping to follow suit. These are the songs that for so long defined who these artists were, took them to where they are, and gave them what they now have. So the question begs: why sell?
To understand why so many globally renowned musicians are selling their catalogues, it is useful to consider what exactly is being sold. This depends on what the buyer seeks to acquire, and what rights the seller, or songwriter, has in his, her or their compositions. Generally, a catalogue sale will include the sale of the whole of a songwriter’s copyright interest, including all the rights and income of each individual song. This might include both the songwriter’s and the publisher’s share, performance rights and royalties, master and producer royalties, mechanical rights and royalties and any neighbouring rights. Whether all, or some of these assets are sold is the decision of the seller and will depend on their personal financial circumstances.
A huge part of the decision for musicians to sell their catalogues, relates to the way that music is consumed in the modern day. This is often referred to as the ‘Spotify effect.’ Music streaming has become the most popular way of listening to music, due to its practicality, transportability, and its ability to allow the consumer to personalise and modify their own playlists. This has led to the music industry growing economically over the past 10 years, due to the huge number of streams that songs are receiving. The data generated by online streaming has enabled potential buyers to carry out sufficient due diligence to accurately value a song’s worth, and project its future earnings.
The coronavirus has had a huge impact on the music industry. However, in terms of financial investment, it has become a good time to buy. Interest rates have dropped meaning that investors will be able to purchase more rights for their money, and take advantage of products with higher yields than bonds. In turn, this then allows the selling artists to increase their asking price for their catalogues.
Another huge blow for the music industry has been the prevention of live music due to the regulations surrounding Covid-19. Due to the ‘Spotify effect,’ musicians have been forced to rely on touring income to make a living. Naturally, the biggest artists can generate streaming numbers which will allow them to prosper in the absence of live music, but for the most part, the period has caused financial difficulty throughout the industry. The opportunity for musicians to sell the rights of their music, and build for the future, has provided a parachute in the absence of live performances.
Due to technological advances, investors in music catalogues are able to monetise the rights they are buying a lot more easily, and certainly more cheaply. Entry into the publishing business is now easier than ever before, allowing for more potential buyers to invest. Royalty collection is now orchestrated by new technology, making it much easier and less expensive to publish works globally, and collect the royalties from doing so.
These are but a few factors influencing the sale of music catalogues in the modern day. We are convinced that this trend will outlive the pandemic, as it provides creative people the ability to ‘cash-in’ on their art.
If you require advice, assistance or guidance relating to a music catalogue sale, or any other music related legal matters, please do not hesitate to contact us at email@example.com.