Shakira, Bob Dylan, Bruce Springsteen, Paul Simon, Neil Young, Justin Timberlake and Justin Bieber. Those are just some of the major recording artists who’ve sold large parts or all of their song catalogues to private interests for huge sums since the pandemic began.
A case in point: Springsteen’s catalogue sold for a hefty US$500 million!
What’s behind this trend and can we expect it to continue?
Blame it on the pandemic
Music artists’ revenues were very hard hit between March 2020 and the fall of 2021. Concerts – a crucial source of income – simply weren’t possible.
At the same time, even though streaming was growing on platforms such as Spotify, the royalties paid by those digital giants were flat.
As their revenues declined, artists started looking for solutions to turn the situation around quickly.
How do you sell a song catalogue?
Of course, you need to find a buyer. Who are the people willing to spend hundreds of millions of dollars?
The artists didn’t actually have to look very far. Large investment funds have recognized the considerable potential in the catalogues of well-known artists.
By buying those catalogues, investment funds such as Shamrock Holdings and Hipgnosis Group obtain not only all the future royalties associated with those works but they’ll also be able to monetize the artists’ works.
Former hits generate stable, ongoing revenues for them. And if they’re fortunate enough to see classics from their catalogue become successful again — think of the song Dreams by Fleetwood Mac that rocketed into the Billboard Top 10 in early 2021 — they’ll earn even more than expected.
What’s in it for the artist?
By selling a song catalogue filled with classics before the end of their life, artists immediately and directly earn a substantial amount.
Plus, it also ensures that they avoid inheritance issues related to copyright. It’s much easier for a singer to divide up a large sum among their heirs than to worry about the abstract concepts and never-ending calculations involved in copyright ownership.
For artists who can no longer put on concerts, especially as they get older, selling their song catalogue may be the only appealing option. David Crosby told the AFP news agency that the main reason he was cashing out was simply because all the artists have been “sort of forcibly retired, and can't do anything about it.”
Rights for sale... in the U.S.
You may have noticed that this music trend seems to affect only the U.S.
Under U.S. legislation, the moral rights associated with creative content are much less important than they are in Canada and even less so than in European countries such as France.
As a result, buyers don’t really have to worry about future legal action from the family of a deceased author or from the authors themselves if their works are used in ways that they consider would negatively impact their reputation.
In addition, major tax advantages have recently come into effect that make song catalogue transactions more appealing to artists. Those advantages apply only in the U.S.