Music Catalogs Rights Sold by Artists
Musicians have been selling their music catalogs at an unprecedented rate during the COVID-19 pandemic. Legendary artists like Bob Dylan and Stevie Nicks have sold the rights to their music for large lump sum payments. In the words of Stevie Nicks, “Have you any dreams you’d like to sell?” or shall we say music catalogs.
“Music”. Canva
Music Catalog
A musician’s catalog may consist of the songs they have performed as well as the copyrights for the compositions. For another artist to record a song for public release, for example, a performer must obtain permission from the music publisher of the song and pay a royalty fee.
Streaming
Music streaming services have provided consistency of revenue generation from songs. It has become easier to value a song’s worth and to project future earnings with the data accumulated from music streaming services. Investors have taken notice and see the potential for large earnings. Music is a commodity that will be consumed regardless of external circumstances, so revenue from royalties will still roll in during slower economic periods.
Taxes
The timing of many of these music acquisitions could be tied to taxes. Large music catalog acquisitions fall under the capital gains tax. As it is a profit from a sale of an asset. President Joe Bidens tax plan has is hoping to raise the capital gains tax in alignment with the income tax rate from 20% to 37%. More taxes results in less payout. Many artist might be taking the plunge before the tax changes are officially implemented.
Copyright law
Song are original works that in a fixed tangible form (such as a CD or sheet music), hence eligible for Copyright protection. This provides the owner of the songs exclusive rights distribute and perform the music for sale. Under current copyright law in the United States, any work that was created on or after January 1, 1978 will be protected for the entire lifetime of the author plus an additional seventy years.
Acquiring ownership of music provides a long-term revenue projection due to the longevity of copyright law. As musicians sell their rights to song management companies, they need to know the value of their work to ensure they are fairly compensated. An artist’s legacy and brand are an important factor to take into consideration as well.
Selling music catalogs provides musicians, especially older artists, to establish a financial legacy for their families instead of waiting decades for revenue to stream in. It is also a reminder that music is intellectual property that can be valued and sold, just like any other asset.