Putting A Value On The Great Music Catalogue Bonanza

Consultancy company Midia has put a dollar value on the music catalogue acquisition boom in 2021, estimating the combined worth of the deals publicly announced last year at $5.29 billion.

To put that in context, the entire value of the global recorded music business last year was, according to IFPI numbers, $25.9 billion.

Of course, those catalogues sold in 2021 include sound recordings and music publishing as well as other non-musical rights, so it is not comparing like with like; but it does help to capture the sheer scale of the deals happening here.

While a handful of major names will naturally dominate the headlines around the booming market for music catalogue sales, the overall market for such rights goes far beyond the superstars. Typically, the sellers and buyers in this market tend to keep details of the prices paid quiet, but there is plenty of informed industry speculation around the sums involved.

The blockbuster deals in recent years include Bob Dylan selling his publishing catalogue (for an estimated $300 million, or possibly even $400 million), Paul Simon selling his publishing (for a rumoured $250 million), Bruce Springsteen selling his recorded and songwriting rights (speculation puts the deal at $500 million), the David Bowie estate selling his publishing (for around $250 million) and Sting selling his publishing (for a sum rumoured to be north of $300 million).

Midia haș gathered all the information publicly available about the heavy-hitter deals as well as the mid-sized ones and the small ones that never get reported outside of the music business trade media to arrive at its $5.29 billion figure.

Showing just how keen companies like Primary Wave, Hipgnosis, BMG, Concord, Universal, Sony and Warner (to name just some of the most active names here) are to get their hands on these rights, Midia estimates the acquisition market in 2021 was up 180% from the acquisition market in 2020.

An important caveat in the figure for 2021, as pointed out by Music Ally, is that it “excludes $6.7bn invested into music companies or music acquisition funds last year – that’s money that will be used for deals in 2022 and beyond”.

There has been a sense that it is Boomer artists (or their estates) cashing in when the market for catalogues is hitting its peak. These are typically internationally famous artists with several decades of hits to their names and that the market is skewing, for the moment at least, towards classic rock.

Indeed, Midia found that in its analysis of 100 classic acts who had number 1 albums on the Billboard chart between 1970 and 1999, a third of them have sold up all or some of their rights. It also found that 35% of catalogue deals last year were tied around rock music but only 3% were tied around hip-hop.

This might be because the investors here understand rock far better than they understand hip-hop. It might also be down to a type of genre conservatism in the rights acquisition world. Or possibly it is a question of timing and they will turn to a genre like hip-hop once all the big rock catalogues that could be sold have been sold.

It is important to note that there is an additional rights ownership issue with regard to hip-hop given that it typically draws on samples and so all the sound recording and publishing rights involved in a track might not be for sale. As such, the investment is somewhat diluted in a way that it would not be for the likes of Bowie, Dylan or Springsteen who were typically the sole authors of almost all their catalogues, barring occasional co-writes.

There was a further hint in Midia’s analysis about where music acquisitions will move next given that most of the big catalogues that are likely to be up for sale have been sold and major names like Elton John insist their music is not for sale.

Midia found that 76% of deals last year included publishing rights, 49% included master recordings and 4% involved name, image and likeness rights. This last bundle of rights is something that Primary Wave in particular has been focused on in recent years, notably in its 2019 deal to acquire 50% of the Whitney Houston estate. Others are clearly following suit.

When someone acquires all the rights, not just the publishing and recording rights, around an artist, there is a lot more that can be done commercially and there are many more monetisation opportunities that can be opened up.

The big catalogue deals show no sign of slowing down just yet, but in the coming years we will likely see name, image and likeness rights being rolled into considerably more than 4% of the deals.