When rock icons such as Bob Dylan and Stevie Nicks begin selling off their catalogs, something must be blowin’ in the wind in the music industry.
Certainly, the record business was rocked by Monday’s announcement that Dylan had sold the rights to his six-decade trove of tunes to Universal Music in a deal that is believed to be the biggest ever of its kind: Sources told Bloomberg it was more than $200 million, while the New York Times reported that it could be more than $300 million.
This news came just a few days after Nicks sold 80 percent of her stake in her publishing rights — for both her Fleetwood Mac and solo work — to music publisher Primary Wave for $100 million, according to the Wall Street Journal.
While each deal is different, selling your copyrights typically allows the purchaser to use your songs for any marketing purpose (such as a TV commercial) and, in some cases, entitles them to your songwriting royalties. Some deals, such as the Nicks one, also include the right to use such things as your name and likeness.
So what’s behind these a-changin’ times? As with just about everything else in 2020, COVID-19 was a significant factor.
“Touring was the financial engine of the music business right up until March, so everybody had to rethink,” said Jem Aswad, senior music editor at Variety. “And what’s something that’s not gonna lose value in a pandemic? Intellectual property. Copyrights. Publishing. It’s a reliable asset.”
With most artists not making big coin from physical record sales, downloads or even streaming — unless you’re Taylor Swift — touring is a major revenue stream, which suddenly dried up.
“So you’ve also got the Killers, [who] sold their publishing assets to a private equity firm; Calvin Harris sold his assets to a private equity firm,” said Aswad. “Those are two acts right there who rely enormously on touring for income … They may have made some financial decisions thinking they were gonna make X amount of money off of a tour this year. And now they’re making zero.”
No doubt, artists who are feeling the COVID crunch have to think outside the box. “They’re very willing now to talk about divestment,” said Steve Salm, chief business development officer at Concord Music Publishing, which reportedly just acquired Imagine Dragons’ portfolio for about $100 million.
Salm also cited the pandemic touring problem as a selling point for artists, but said it’s really about the “absolute gross dollars” available from deals like this. “The prices reach a point where the owner says, ‘Of course I have to sell. I never thought I would see a price like this in my life,’” he said.
On top of that, Aswad said, the incoming presidential administration will also bring “what is likely to be a big jump in capital gains taxes, [so] people are looking to get these deals done before Biden comes into office and whatever new laws he makes take effect.”
From a financial perspective, Primary Wave CEO Larry Mestel agrees that the time is right to make these deals. “First of all, interest rates are so low,” he said. “And music copyrights provide a great place for investors that like to invest in alternative opportunities — a relatively safe place to go and get yield. As an example, Stevie Nicks, her catalog has been generating very stable income now for, what, 30 years or more.”
What selling off a catalog can do is breathe new life into old classics, said Mestel. “Artists are focused on … opportunities to reintroduce their songs into a new youth culture, [which is] very important to these artists ’cause these songs are their babies.”
For Mestel, landing Nicks’ catalog was a process that began long before 2020 and the pandemic. “We’d been talking about it on and off for almost 10 years,” he said. “And there’s so much we believe that we can do and achieve together.”
Coming on the heels of the Nicks deal, the Dylan one seals the fact that “this market is white-hot,” said Salm. “Bob Dylan proves that even the absolute top of the food chain of songwriters understands that this is an asset class that has inherent dollar value.”
But, Salm added, few would be worthy of the same kind of blockbuster bucks.
“When you get to such rarefied air and such pristine, culturally important compositions like Bob Dylan’s,” he said, “you are auctioning off the finest of fine art that an auction house has.”