Recently, there has been a lot of focus on buying music catalogs in the music industry. For example, in 2020, Universal Music bought Bob Dylan’s entire collection of over 600 songs, which was one of the largest acquisitions ever of a musician’s song rights.
These acquisitions have always been happening, but they’re now drawing attention because of major investments from major investors. Deals worth millions are common, and this is partly driven by the increasing popularity of streaming services. But wait, what is a musician’s catalog?
What Is a Catalog in Music?
This is a collection of songs owned by the same person or entity. It includes all the musical compositions created and registered under their name. The owner holds the legal rights (publishing, master rights, and/or sync) to this material and earns income through music royalties whenever the music is used or played.
Some people own all the rights to their music, but this is rare today. Usually, copyrights are shared among various contributors, like the performing artist, songwriters, musicians, beatmakers, publishers, record labels, managers, and other stakeholders. This means a single song is often part of multiple music catalogs, with royalties shared accordingly.
The size of a music catalog varies. If an artist releases an album, those ten or so songs become their catalog. Many artists, composers, and performers have hundreds or thousands of songs in their collections, depending on their career. Publishers and record labels have extensive catalogs, sometimes including thousands of tracks. Overall, the number of songs in a catalog depends on the rights owned and how these rights are classified.
How Are Royalties Involved?
A music catalog includes songs that earn royalties for the owner. These royalties, in turn, are payments received whenever the songs are used, played, streamed, or licensed.
Types of royalties:
- Performance royalties — Generated when a song is streamed on digital platforms like Spotify, played on radio or TV, or performed in public venues (restaurants or clubs). Performance rights organizations (PROs) manage the collection and distribution of these royalties, paying songwriters for the writer’s share and the publishers for the publisher’s share.
- Mechanical royalties — Generated when a track is reproduced, whether in physical formats like CDs or digital formats like downloads on platforms like iTunes and Spotify. These royalties are paid by streaming services and distributors to songwriters and publishers.
- Sync licensing fees — Paid when a song is synchronized with visual media (commercials, video games, or TV shows). These fees are negotiated and paid directly to rights holders.
Music publishing income is typically split equally (50/50) between the writer and the publisher. Of course, specific agreements vary. Songwriters receive their writer’s share directly from PROs for performance royalties. Other royalties are collected by publishers who then distribute payments to songwriters based on contractual terms.
What Is the Value of a Music Catalog?
Music catalogs with a history of consistent royalty income are valuable because they are not linked to financial market fluctuations and offer regular cash flow from royalties.
Single songs are usually too risky due to their volatility and dependence on the song and album’s popularity. However, a music catalog spreads the risk across multiple songs, each earning money from royalties. Catalogs with various artists or bands offer even more value through diversification. With a proven track record, music catalogs consistently perform well, with annual returns for successful ones being 5%-15%.
The value of a catalog is boosted by the rise of subscription-based streaming platforms and social media. In any case, music is always evolving and growing. This makes music catalogs a smart and stable asset for investors looking to generate consistent income. However, even the most popular music catalogs need proper management and tracking of all royalty income streams to maximize their value.
Why Some Musicians Sell Their Catalogs
When musicians sell their catalogs, they get a guaranteed amount of money right away. This means their income isn’t affected by how popular their songs are in the future or by any problems in the music industry. Put simply, the big advantage is the immediate income.
There are good and bad times to sell. During the pandemic, many artists sold their catalogs because they couldn’t make money from tours, and investors became more interested in buying their catalogs. For example, as mentioned, Bob Dylan sold his catalog for several hundred million dollars. It was a “sizable nine-figure amount, north of $200 million,” according to a source familiar with the deal. Since then, artists like Bruce Springsteen, Dr. Dre, Tina Turner, and Justin Bieber have done similar deals.
In various countries, copyright laws safeguard creative works for up to 70 years after the creator passes away. By selling their catalogs, musicians secure future earnings right away.
Music Catalogs With Highest Sales
Apart from Bob Dylan, there have been several other notable sales of music catalogs:
Bruce Springsteen
Deal worth: $550 million
Springsteen, known as ‘The Boss,’ has won 20 Grammy Awards and is a Rock and Roll Hall of Fame inductee. Sony Music Entertainment acquired rights to Springsteen’s music in December 2021, and it covered his recorded works and songwriting rights. Includes classics like “Thunder Road” and “Born to Run.”
Phil Collins & Genesis
Deal worth: $300+ million
Genesis, formed in 1969, continues with core members Collins, Tony Banks, and Mike Rutherford. In September 2022, Concord Music Group purchased the publishing copyrights of Phil Collins and Genesis, including Collins’ solo hits and albums by Mike & the Mechanics.
Sting
Deal worth: $300 million
Sting, a 17-time Grammy winner, is a significant figure in music and entertainment. In February 2022, Universal Music Group bought Sting’s entire songwriting catalog, which covered his solo career and songs from The Police.
David Bowie
Deal worth: $250 million
Bowie, a Grammy Lifetime Achievement recipient, is still widely celebrated for his music and contributions to cinema. So, Warner Chappell Music acquired Bowie’s publishing catalog in December 2021, including hits like “Let’s Dance” and “Space Oddity.”
Katy Perry
Deal worth: $225 million
Perry’s known for multiple Billboard Hot 100 No.1 hits and is among the highest-earning female musicians. She recently sold her music catalog, including hits from albums like “Teenage Dream” and “Prism,” to Litmus Music.
Highest Estimated Music Catalogs
The sales figures offer clear evidence of how valuable these catalogs are. However, not all artists or their estates have chosen to sell their catalogs. For those who haven’t, there’s a lot of speculation about what their catalogs could be worth.
These estimates from Yahoo Entertainment give us an idea based on market trends and the lasting popularity of their music:
- The Beatles — Topping the charts with a catalog worth well over $1 billion, The Beatles’ music is an unmatched cultural phenomenon.
- Queen — It’s estimated that Queen may have rocked their way past the $1 billion mark, too.
- Michael Jackson — The King of Pop may have a catalog nearing $850 million.
Why Other Musicians Buy Their Catalogs Back
Musicians acquire their catalogs to take back control of their rights and earnings. When they own their music, they can decide how it’s used and have a say in its production.
Nearly twenty years ago, Jay-Z bought the rights to his music. Other artists like Rihanna in 2016, Zara Larsson in 2022, and Dua Lipa a year later have done the same. Taylor Swift, after her former label sold her first six albums without her consent, re-recorded them and now owns the new versions, which are more popular on streaming platforms. She also signed with a new label and made sure she would retain full ownership of upcoming recordings.
Taylor Swift’s situation gained attention through social media and news outlets, spreading the word quickly. In response, major labels now include clauses in contracts that prevent artists from re-recording their songs for up to 30 years.
What’s the Future of Music Catalogs?
As artists become more aware of their rights, many publishing houses are now offering contracts where they don’t outright own the recordings but instead hold exclusive licenses tied to them. Alternatively, some contracts allow the publishing house to own the recordings for a set period before the rights revert back to the artist. For instance, Kylie Minogue signed a deal where she would regain ownership of her recordings after a specific number of years.
Other than that, next up in the evolution of the music industry is the rise of micro-royalties on platforms such as TikTok and Snapchat. These quick-take platforms are increasingly influencing how music is discovered and monetized. Similarly, they are changing the way music catalogs are viewed and valued. Going forward, musicians and everyone in the music industry will need to learn and protect their rights in this evolving landscape.
