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Wednesday, October 5, 2022

$550 million Springsteen deal? It’s Glory Days for Catalog Sales.

In 1972, a struggling New Jersey musician used an acoustic guitar borrowed from his former drummer in Manhattan for an audition at Columbia Records.

Rocker Bruce Springsteen later recalled in his memoirs, “I had to carry it ‘Midnight Cowboy’-style on my shoulder on the bus and on city streets.”

Half a century later, he can buy a lot of guitars. Last week Sony, which now owns Columbia, announced that it had acquired Springsteen’s entire body of work — his recordings and his songwriting catalog — for which two people said the deal would be worth about $550. million dollars.

The price, which may be the richest payment ever made for the work of a solo musician, dropped jaws across the music industry. But this was only the latest mega-transaction in a year in which catalogs of several major artists have been sold, fetching attractive prices.

The catalog market was already in turmoil a year ago when Bob Dylan sold his songwriting rights for more than $300 million, but has since maintained a steady boil. The list of prominent artists who have recently sold their work in whole or in part includes Paul Simon, Neil Young, Stevie Nicks, Tina Turner, Motley Fool Crews, Shakira, and the Red Hot Chili Peppers, among which Many are for eight-figure payouts or more. , The industry is in discussions about impending deals for Sting and the songwriting list of David Bowie.

“Almost everything is transactional now,” says Barry M. Masarsky, an economist who specializes in calculating the value of music catalogs on behalf of investors. “In the last year alone, we did 300 valuations worth more than $6.5 billion,” he said.

Not long ago, music was seen as a crumbling business with rampant piracy and dwindling sales. not anymore.

The global growth of streaming and subscription services like Spotify, Apple Music and YouTube has changed the fortunes of the industry. One result is an increase in the pricing of music rights catalogs for both recordings and songs.

New investors, including private equity firms who have poured billions of dollars into the market, view music royalties as a kind of safe haven – an investment, somewhat like real estate, with predictable rates of return and relatively low risk.

For major music groups such as Sony and Universal, which bought Dylan’s songs, such deals allow them to consolidate power and leverage negotiations with streaming services and other tech companies, such as social-media, exercise services or gaming platforms. Blanket deals to use often, which helps. music.

Despite the popularity of youth acts like Drake and Dua Lipa, old content continues to dominate online. According to MRC data, a tracking service that powers Billboard charts, about 66 percent of all music consumption — of which streaming is by far the largest share — is for content older than 18 months, and that number is rapidly increasing. Increasing.

And for artists, sales can bring tax benefits. Royalties are typically taxed as ordinary income, while a catalog sale may qualify as capital gains, which usually have lower rates.

Artists like Springsteen, 72, are part of a generation of music stars that, beginning in the 1970s, first came in large numbers to gain control of their work in a way that previous generations had not.

“A lot of artists were taken advantage of in the 50s and 60s,” said John Branca, a longtime lawyer for Michael Jackson, who is now one of the executors of Jackson’s estate. “Better legal in the 70s and 80s.” And with the emergence of management representation, there was a push for artists to gain more power, more profits, and ultimately their own work.”

Several executives and cast advisors say many of them are now pulling the last lever of control that was unimaginable a decade ago by deciding to sell.

The desire for control is now visible in young stars such as Taylor Swift, who have publicly campaigned about the importance of artists owning their work and criticized the market for purchasing catalogs of songs without the creators’ participation or approval. is sold. In Swift’s case, she has gone so far as to re-record her songs, in part to control the earnings from those tracks.

Bill Verde, director of Syracuse University’s Bandier Program on the music industry and former Billboard editor, said, “Part of the power of owning your property is that you get to decide when to cash out and how to cash out.” Is.” , music trade publication.

In general, selling means relinquishing control, and buyers usually want to fully exploit the asset to earn back their investment.

In Springsteen’s case, negotiations for Sony’s sales included discussions about limiting how his work could be used in the future, specifically two of Springsteen’s most iconic songs, “Born in the USA”. And with particular concern about any ads featuring “Born to Run.” “According to three people briefed on the deal, who declined to be named because they were not authorized to speak publicly about it.

Throughout his career, Springsteen has consistently refused to license his music for commercials, although in February he made his first commercial appearance in a Jeep ad for the Super Bowl, requiring “Common Ground” in the United States. gave a message about , (The soundtrack was not one of Springsteen’s hits but an atmospheric score composed by Springsteen and Ron Aniello.)

Representatives for Sony and Springsteen declined to comment on the terms of the deal.

Springsteen, one of the most successful singer-songwriters in pop history, essentially struck two deals with Sony. One was for their so-called master recordings, the sounds of their music that were captured on albums and single tracks. The second, sometimes described as a music publication, is for his songwriting rights – the words, melodies and musical structure of hundreds of songs written by him. With both rights, Sony would have full control over future use and earnings of Springsteen’s music and songs, except for any restrictions that were part of the deal.

According to an estimate by Billboard, two catalogs of Springsteen’s music—his recordings and songwriting—make about $17 million per year, after costs.

Many older artists see this as a good time to sell – while their music remains popular, and market conditions are favourable.

But behind the scenes there has often been a vigorous debate between the cast and their mentors about whether or not to sell. For many of the smartest players, a key question is not so much the price, but who is offering it—as private equity players and other financial experts—who sometimes buy catalogs outright and sometimes just experts. Provide financing for companies – the hard waters of protecting the legacy of artists in the world of commerce.

“What’s the point of an artist over a half-century career,” said Jeff Jampol, who manages the estates of the Doors, Janis Joplin, and other stars, “if all of a sudden those assets disappear in the mouth of a big hedge fund.” Or has nothing to do with inheritance?

While headlines highlight those who have decided to sell, there have been some dissatisfied.

Diane Warren, songwriter of such hits as Celine Dion’s “Because You Loved Me” and Aerosmith’s “I Don’t Want to Miss a Thing”, told Rolling Stone that selling her catalog would be “like selling my soul.” When asked whether Michael Jackson would consider selling the rights to the Jackson estate, which could be worth more than $1 billion, Branca said, “I don’t think I’ll ever sell.”

But as prices rise, it can be harder to resist the holdouts.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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