Why is there a boom in rock boomer stars selling their songs

From Bob Dylan plugging in his electric guitar for the first time to Super Bowl commercials, there have always been times in music history when the toughest fans will accuse their idols of doing the unthinkable: exhausting- if. But right now “running out” has a new connotation and is a booming market for both investors and superstar recording artists.

A wave of boomer rock icons are being sold from their song catalogs. The moves, the last of which was made by Paul Simon last week, point to a direct truth about the intersection of art and money: music has always been a business and where creative genius deserved to be rewarded with riches. And it is a business that is currently undergoing major changes caused by transmission and other disruptions caused by the pandemic. The chords of Paul Simon, Bob Dylan, Neil Young (in the case of Young with a 50% stake) and Stevie Nicks (80% of the rights to their songs) highlight the main trends in the entertainment industry. , capital markets and wealth management.

Music publishing companies such as Hipgnosis Songs Fund and Primary Wave Music, and conglomerate players such as BMG, Sony, Warner Music Group and Vivendi’s Universal Music Group, buy first-rate song catalogs in great deals fueled by low interest rates with the belief that there will be more lucrative returns in the future for the sale of the rights to these songs through entertainment platforms.

Larry Mestel, CEO of Primary Wave Music, the company that just acquired a majority stake in the two-time Rock and Roll Hall of Fame catalog, Stevie Nicks told CNBC that the economic environment it has created the coronavirus pandemic has worked in favor of companies that want to buy large assets. These low interest rates make it easy to borrow money and high rates of return have created a perfect opportunity for buyers.

“You’re talking about a low interest rate environment and you can reach 7% to 9% … and then increase it through marketing and generate revenue among teenagers. This is a very attractive place for people to put money in it “. dit.

Music catalogs have also proven to be recession-proof and the pandemic has only increased the number of deals being made as the music industry goes through a massive disruption caused by the closing of live venues and tours. .

The offers also come at a time when the transmission of music – for all its controversy and skepticism on the part of the musicians themselves about reaching a crude agreement – has proven to be an economic juggling, at least for record companies. By 2020, Goldman Sachs predicts that global music revenue would reach $ 142 billion by the end of the decade, reflecting an 84% increase compared to the $ 77 billion level of 2019 and the capture of broadcasts of 1.2 billion users in 2030, four times the level of 2019, and mainly benefiting companies like Sony, which bought Simon’s catalog, and Universal, which acquired Dylan’s songs.

Global streaming music revenue reached an all-time high as a percentage of the industry last year (83% according to a recent report) and also favors superstars. Spotify has said its mission is to “give a million creative artists a chance to make a living from their art,” but, as a recent New York Times analysis noted, Spotify data shows only about 13,000 payments of more than $ 50,000 last year.

However, these are not just transmissions. Rights over larger event catalogs, once acquired, can be used in sync locations that license music to a variety of media, including movies, TV shows, commercials, and video games.

“From an editor’s perspective, it’s extremely valuable to get the rights to a particular catalog that we can sync,” said Rebecca Valice, head of copyright and licensing for the PEN Music Group. “A catalog can do its own pitching just for its legendary success.”

The more recognizable a catalog is, the more valuable it will be for companies to purchase and use in movies or television. According to her, the best catalogs “pay” for themselves, as synchronization helps them recover the money buyers have purchased “and then some as time goes on”.

“I think icons and legends are worth more than other artists,” Mestel said. Primary Wave owns the catalogs of stars such as Whitney Houston, Ray Charles and Frankie Valli and The Four Seasons.

Some famous musicians of the boomer era have murdered the situation in which the industry has placed them, such as David Crosby, who said in a tweet in December: “I’m also selling my … I can’t work … and the transmission stole my record money … I have a family and a mortgage and I have to take care of them, so it’s my only choice … I’m sure others feel the same. “

He sold his entire catalog to Irving Azoff’s Iconic Artists Group in March, which had also recently acquired a controlling stake in The Beach Boys ’intellectual property, including part of the song catalog.

“Given our current inability to work live, this agreement is a blessing to me and my family and I believe these are the best people to do it,” Crosby said in a statement announcing the agreement.

For the musicians themselves, there is a mega tendency to work: the wealth planning needs of America’s richest generation. Boomer musicians (and those born right at the beginning of the generation like Simon and Dylan in 1941), like their fans, are getting older. “Artists are aging now so they can use cash, they can plan the property,” Mestel says.

Of course, the downside may be the loss of control over an artist’s most prized asset: the creative genius that made his career.

“These old rock stars may want to charge to stock up on their estates … but you lose control of your brand and your legacy, to some extent, depending on the protections you make in the framework. of the deal, ”said John Ozszajca, musician and founder of Music Marketing Manifesto, a company that teaches musicians how to sell and market their music.

Crosby and Azoff have been friends for a long time, a point Azoff made in the statement announcing the deal.

Some fans aren’t too happy to hear hits like Nicks’ “Edge of Seventeen” or Dylan’s “Like a Rolling Stone,” which sells cars and clothes, though Dylan has made multiple Super Bowl announcements over the years. by GM and IBM, and their songs have been featured alone in others, but decisions to sell catalogs can also help musicians avoid posthumous legal battles as they had to endure the estates of Tom Petty, Prince and Aretha Franklin.

BMG acquired interests in the catalog of Nicks bandmate Mick Fleetwood of Fleetwood Mac earlier this year and noted some statistics in its ad that show that no matter how old the boomer acts are, they can get renewed life thanks to the successes of viral transmission. Fleetwood Mac’s song ‘Dreams’ generated more than 3.2 billion broadcasts worldwide (over an eight-week period from September 24 to November 19, 2020) due to a video with a juice-loving fan of blueberry and introduced a new generation, more accustomed to TikTok, to Fleetwood Mac. The band’s album “Rumors” reached number 6 on the Billboard Streaming Songs chart 43 years after its release.

Dylan’s deal is the largest reported to date, estimated at $ 300 million, although no sale price was officially disclosed and Universal only said in a statement that it was “the most popular music deal important of this century “.

Mestel believes the boom is not approaching.

“It seems like anyone who has a relationship in the music business knows that someone is trying to raise money. But that doesn’t mean they can sell identifying assets to sell or even know what they do.”

BMG and private equity giant KKR recently signed an agreement to carry out a major acquisition of music rights and, as one executive told Rolling Stone, “we are not pursuing successes as of January 2021. We are looking at a repertoire on which has proven to be part of our lives. “

KKR has maintained great music offerings in the past and the buying rights trend is not new, but the current boom is noticeable and adapts to the appreciation of the asset class that is taking place in so many parts of the market as that investors are looking for more avenues. to put their money to work. While boomer deals are the biggest headlines, recent acts are also having big pay days. Earlier this year, KKR bought a stake in OneRepublic’s Ryan Tedder catalog for a high amount.

Companies like Primary Wave are working with artists like Nicks to try to keep them as part of the deal and improve them even more in the future, according to Mestel, who says many didn’t understand they could join a partnership, selling a piece of his catalog and this piece may become more valuable in the future than the 100% he owned before.

“If all goes well, [artists] making the most of what they try to sell and it’s usually a win-win scenario for both the buyer and the seller, ”Valice said.