Bob Dylan just made more than $300m (£227m) doing it, Dolly Parton says she might do the same, while the singer-songwriter David Crosby says he is being forced to do it. Musicians are queuing up for big paydays by selling the publishing rights to their songs, as the streaming boom and industry upheaval wrought by the Covid-19 pandemic redefines the economics of music.
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 the buyer, Universal Music, as one of the most important deals of all time.
It marks the latest peak of what one music industry executive describes as “gold fever”, with investors looking to cash in on the reliable, and increasingly valuable, returns of evergreen 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 TV shows, commercials or films. But it is royalty income from the streaming boom that has really attracted investors’ attention and fuelled the buying spree of artists’ back catalogues.
Since 2013 – the year global music sales hit a record low and Spotify started to gain international traction by launching in the US, the world’s biggest market – annual royalty revenues made by Bon Jovi’s 34-year-old hit Livin’ on A Prayer have increased by 153%. Last year, streaming accounted for 77% of the £1.4bn UK music market, according to the Entertainment Retailers Association.
“The music publishing deal market is at its peak,” says Mark Mulligan, an analyst at MIDiA Research. “There has never been a better time, there may never be a better time, for a hit artist from the 70s, 80s and 90s to sell their rights. These deals are being done at 17, 18, 19, 20 times value.”
This month, Stevie Nicks, the Fleetwood Mac singer and solo artist, sold a majority stake in her publishing catalogue for $100m to the music publisher Primary Wave. Others to have sold up this year include Barry Manilow, Blondie, Chrissie Hynde, Dave Stewart of Eurythmics, the Killers and Imagine Dragons.
Last year, more than $4bn was spent on buying artists’ music catalogues, 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 chance to make money from the royalties of songs, has spent £1.1bn snapping up rights since it launched two years ago. It is already in talks on spending a further £1bn on deals it expects to announce in 2021.
An extra impetus to get deals done quickly is the election of a new US president, with Joe Biden aiming to significantly raise capital gains tax for composers whose songs sell for more than $1m.
The pandemic has also upended the wider economics of music. It has killed live gigs and tours, a multibillion-dollar market that is the lifeblood of many musicians’ income, and made older artists consider their options. Days after 79-year-old Dylan’s deal was struck, Dolly Parton, 74, said she was considering selling the publishing rights to her catalogue, which spans hits from 9 to 5 to I Will Always Love You, a move certain to prompt a bidding war. However, Parton said that a prime motivator was “estate planning”. Many artists have died before sorting out their affairs properly.
Dylan’s deal has also served to highlight the commercial chasm that exists between artists in the digital era, as only the biggest names benefit from streaming income that pays a fraction of the royalties of those received from the inexorably declining sales of physical formats such as CDs and vinyl.
In response to Dylan’s deal, his contemporary David Crosby, of Crosby, Stills and Nash fame, tweeted that he, too, is selling his rights – but for entirely different reasons. “Streaming stole my record money,” he tweeted, saying that no live touring and the poor returns of streaming mean he is being forced to sell as he has “a family and a mortgage and I have to take care of them and it’s my only option”.
“The really high valuations go to the best properties, the really iconic artists, and there are only a finite amount of those,” says Josh Gruss, the chief executive of the music publisher Round Hill, which has spent $650m on buying rights to 120,000 songs in a catalogue that spans artists from Bruno Mars to the Beatles. “It’s about supply and demand. There is certainly only one Bob Dylan.”
Last month, the Mercury Prize-nominated singer-songwriter Nadine Shah gave heartfelt testimony to a committee of MPs investigating the economics of music, saying that despite her success and popularity she makes so little from streaming that she is struggling to pay her rent. Fiona Bevan, a songwriter who composed and sang on a No 1 album by Kylie Minogue, told the same committee she only received £100 in streaming royalties from her work on the record.
Nevertheless the deal boom continues for the most sought-after artist catalogues. Round Hill, a US company incorporated in Guernsey, is aiming to follow Hipgnosis and list on the London stock market, with the aim of raising $375m to buy catalogues of more than 5,000 songs.
“Round Hill has done 124 catalogue deals and acquisitions to date,” Gruss says. “Forty in the last year. And 84 deals in the eight years before. That tells you something.”
However, like any gold rush, the bubble cannot last as targets for prime deals dry up and valuations cannot match the potential for investor returns.
“We have a two-year window where we will probably get to between £2bn to £3bn invested [in catalogues] where these songs will remain at attractive prices,” says the Hipgnosis founder, Merck Mercuriadis, the former manager of acts including Elton John, Iron Maiden, Guns N’ Roses and Beyoncé. “The focus is buying while the songs available are at attractive prices.”