Why Artists Sell Their Editions and Why They Make So Much Money From Them
Recently, many great artists have made headlines by selling their publishing rights, or their masters, or both, and often for mind-blowing sums. Bruce Springsteen shocked fans when he sold his masters and publishing rights for $500 million. Bob Dylan sold his publishing rights for $300 million and then sold his masters in a deal that was surely also nine figures. Sting recently sold his publishing rights, as did Stevie Nicks.
But it’s not just members of the Rock and Roll Hall of Fame selling out: Relatively younger artists like John Legend and Ryan Tedder have also sold their publishing rights.
Micahel Pagnotta has worked in music advertising, as a manager, as a music supervisor and in publishing. We reached out to him to get a sense of why so many artists are selling off their most valuable assets now and why they’re getting so much money for them.
An obvious question is, why are companies paying so much money for these catalogs? While rock fans may love and revere artists like Springsteen and Dylan, when a company pays hundreds of millions of dollars for a catalog of songs from an artist in the 70s or 80s, they’re clearly investing for the long haul. ; they assume that the artist’s songs will still be in demand for movies, TV shows, commercials, and other uses for years to come. And how much money can they generate from these catalogs in 10 and 20 years?
“That’s the big question, isn’t it?” Pagnotta says, “They don’t throw hundreds of millions of dollars on anybody, no matter how much they like them, unless they’ve worked out the numbers. So on some level, you know, they have to be able to justify what they’re paying.
“Selling publishing catalogs is not a particularly new thing,” he notes. “It used to be something people did at a different point in their careers, usually out of desperation. [for money]. The first thing I learned when I entered the music business was from a music publishing lawyer: he said, “Any artist you represent, tell them never to sell its editions”.
One of the reasons for the huge infusion of cash into the catalog shopping space is Wall Street companies that don’t come from the music industry, but have more money to spend. As rolling stone reported, Kohlberg Kravis Roberts (KKR), an investment firm with more than $230 billion in assets, recently purchased a majority stake in a publishing catalog from Ryan Tedder, the leader of OneRepublic who wrote hits. for and with Adele, Beyoncé, Stevie Wonder and the Jonas Brothers. Pagnotta says, “When a big investor comes in who doesn’t know much about publishing commercial and radio syncs and film and TV placements, you have to think: they’re spending a fortune on that kind of stuff. I just hope they have people who understand how to spread this stuff. It’s not necessarily clear to me that this is the case. They claim they do. But they never really talk about how they’re going to get that money back.
As for artists, some fans may have been surprised to learn that artists who have gained some credibility, like Springsteen and Dylan, would essentially sell their legacy. Neither artist seems to be fighting for money. However, no matter how wealthy and successful an artist is, you can imagine that a nine-figure check would be hard for anyone to refuse. But there could be other considerations: there have been high-profile battles between Prince’s heirs and also Aretha Franklin. Selling the edition is a bit of a testament to artists whose catalogs will generate money long after they’re gone. In addition to avoiding animosity, an artist’s heirs may not be qualified or interested in running a publishing business.
“While you’re sane and there’s a good deal on the table, you can take it to keep your whole family from killing each other while you’re away. I think that’s a perfectly fine thing. reasonable to do,” Pagnotta said.
But what about younger artists like John Legend and Ryan Tedder?
These two artists [selling their publishing] mystifies myself, but I think we just have to assume that they have great advisors around them and probably good instincts, and they’re making the decision based on something very real that we’re not aware of Pagnotta said. “John Legend writes a lot of hit songs, but not a lot of number one or top 10 pop hits. So if someone comes to him with an offer of $100 million or twenty-five times what his catalog makes a year, maybe he’s like, ‘Well, this won’t last forever.’ I’m afraid the tax laws will change. I’m a smart guy, I have good people around me, I can take $100 million and turn it into $500 million in 70 years. We just don’t know. But that would be the only reason.
Pagnotta added: “Nobody is doing it to do anybody a favour. But if he makes this deal, he obviously knows something that we don’t know. But I think, as we’ve said before, if someone is throwing tens or hundreds of millions at you, it’s very hard to say no.