Thursday, September 23

Going for a Song: Why Music Legends Line Up to Sell Their Rights | Deal

Bob Dylan just made over $ 300 million (£ 227 million) doing it, Dolly Parton says she could do the same, while singer-songwriter David Crosby says she could. being forced to do it. Musicians are lining up for big paydays selling the publishing rights to their songs, as the streaming boom and industry upheaval caused by the Covid-19 pandemic redefines the music economy.

Dylan’s surprise move this week to sell the publishing rights to his 600 songs, from Blowin ‘in the Wind to Knockin’ on Heaven’s Door, was described by buyer Universal Music as one of the biggest deals of all time.

It marks the latest peak in what one music industry executive describes as a “gold rush,” as investors look to cash in on reliable and increasingly valuable returns from perennial hits. The rights to songs generate royalties whenever they are played on the radio, sold on CD or vinyl, covered by another artist, or licensed for television shows, commercials, or movies. But it’s the royalty income from the streaming boom that has really attracted investors’ attention and fueled the backlog of artist catalog purchases.

Since 2013, the year global music sales hit an all-time low and Spotify began to gain international traction with the launch in the US, The World’s Largest Market, annual royalty income earned from the hit Livin ‘on A Prayer by Bon Jovi, 34, have risen. by 153%. Last year, streaming accounted for 77% of the UK’s £ 1.4bn music market, according to the Entertainment Retailers Association.

“The market for music publishing deals is booming,” says Mark Mulligan, an analyst at Midia Research. “There has never been a better time, there may never be a better time, for a successful artist from the 70s, 80s and 90s to sell their rights. These agreements are made at 17, 18, 19, 20 times their value. “

This month, Stevie Nicks, the singer and soloist for Fleetwood Mac, sold a majority stake in her publishing catalog for $ 100 million to music publisher Primary Wave. Others that have been sold this year include Barry Manilow, Blondie, Chrissie Hynde, Dave Stewart of Eurythmics, The Killers and Imagine Dragons.

Last year, more than $ 4 billion was spent buying artists’ music catalogs, according to Midia Research. That number is expected to be easily surpassed this year.

London-listed Hipgnosis is one of the firms leading the charge. The company, which gives investors the opportunity to make money from song royalties, has spent £ 1.1bn acquiring rights since its launch two years ago. It is already in talks to spend another £ 1 billion on deals it hopes to announce in 2021.

An additional push to strike deals quickly is the election of a new US president, with Joe Biden aiming to significantly increase the capital gains tax for songwriters whose songs sell for more than $ 1 million.

The pandemic has also disrupted the broader music economy. It has killed concerts and live tours, a multi-billion dollar market that is the lifeblood of many musicians’ income, and has made older artists consider their options. Days after the deal with Dylan, 79, was struck, Dolly Parton, 74, admitted that she is considering selling the publishing rights to her catalog, which spans from 9 to 5 to I Will Always Love You, a move that will surely provoke a tender. war. However, Parton said that a main motivator was “estate planning” and not making the mistake that he had seen with the death of many artists without ordering his affairs properly.

The Dylan deal has also served to highlight the commercial gulf that exists among artists in the digital age, as only the biggest names benefit from streaming revenue paying a fraction of the royalties they receive from the inexorable decrease in sales of physical formats such as CD and vinyl.

In response to Dylan’s deal, his contemporary David Crosby, famous for Crosby, Stills and Nash, tweeted that he too is selling his rights, but for entirely different reasons. “Streaming stole my record money,” he tweeted, and said that without the live tours and low streaming returns it means he is forced to sell as he has “a family and a mortgage and I have to take care of them and he’s my only option.”

David crosby

I sell mine too … I can’t work … and streaming stole my record money … I have a family and a mortgage and I have to take care of them so it’s my only option … sure others feel the same

December 7, 2020

“The really high valuations go to the best properties, the really iconic artists, and there are only a finite number of them,” says Josh Gruss, CEO of music publisher Round Hill, which has spent $ 650 million on the purchase of rights to 120,000 songs. in a catalog that spans artists from Bruno Mars to the Beatles. “It’s about supply and demand. Certainly there is only one Bob Dylan. “

Last month, Mercury Award-nominated singer-songwriter Nadine Shah gave candid testimony to a committee of parliamentarians investigating the economics of music, saying that despite her success and popularity, she makes so little from streaming. you are struggling to pay your rent. Fiona Bevan, a songwriter who composed and sang on a number one Kylie Minogue album, told the same committee that she only received £ 100 in streaming royalties for her work on the record.

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However, the deal boom continues for the most sought-after artist catalogs. Round Hill, an American company incorporated in Guernsey, aims to follow Hipgnosis and go public on the London Stock Exchange with the goal of raising $ 375 million to buy catalogs of more than 5,000 songs.

“Round Hill has made 124 catalog deals and acquisitions to date,” says Gruss. “Forty in the last year. And 84 transactions in the previous eight years. That tells you something. “

However, as with any gold rush, the bubble cannot last as prime trading targets are exhausted and valuations cannot match investors’ potential for returns.

“We have a two year window in which we will probably invest between 2 and 3 billion pounds. [in catalogues] where these songs will be kept at attractive prices, ”says Hipgnosis founder Merck Mercuriadis, a former manager of acts that include Elton John, Iron Maiden, Guns N ‘Roses and Beyoncé. “The approach is to buy while the available songs are at attractive prices.”

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