What do Stevie Nicks, Chrissie Hynde, Neil Young and Bob Dylan have in common? Apart from being iconic rockers, they are the latest in a seemingly endless stream of superstars who are doing what for many — themselves included — was previously unthinkable: selling their songs and recordings.
Who are the buyers? Activist IP aggregators like Primary Wave, which acts as a partner and typically buys a share of rights rather than the full bundle. Others are major music companies like Universal Music Group’s UMPG, which serve the assets more traditionally and with less entrepreneurial flair. And some are even publicly traded companies like the U.K.-based Hipgnosis, which promotes songs as a non-correlated asset class that performs well in all seasons — because we listen to music in good times and bad. All of the above compete in a white-hot market that isn’t just for superstars anymore.
So why now? Here are seven good reasons to sell.
1. The money is good! In fact, it’s never been better. Dylan’s deal with UMG is pegged at somewhere between $300 million to $400 million. Since COVID has all but killed touring (for now), and no one knows when it will come back on a grand scale, that means a significant income source has dried up for artists of all sizes. These publishing deals fill that gap — and then some.
2. Brand benefits. Activist buyers boast teams of marketing and branding specialists who seek out, and create, major new opportunities that otherwise would not have existed. The right one (and artists must choose wisely) can maximize the artist’s “brand” and all the many benefits, including revenue streams that flow therefrom.
3. Less of a tax hit than you’d think. As we all get older, why not enjoy that money today rather than wait for it in years to come? And the earnings from these buyouts may be treated as long-term capital gains, which are generally taxed at a lower rate than short-term capital gains. (Artists, of course, should discuss this with their tax experts).
4. Flexibility reigns supreme. It’s not an “all or nothing” proposition. Artists who want to maximize their payout today are free to sell it all, like Dylan’s 100% publishing deal. But those who want the best of both worlds — taking a major payout now and letting a significant portion ride in order to benefit from the upside created over time by activist buyers — can retain any portion of their IP that they wish. You can bet that Young, who sold 50% of his publishing for $150 million, and has famously rejected the use of his songs in commercials (“Ain’t singin’ for Pepsi, Ain’t singin’ for Coke”), created a detailed list of hard no’s.
5. Buyers become partners. Musicians must feel comfortable that their songs and recordings are in the right hands. And buyers come in all shapes and sizes. Not all are nameless, faceless entities. Activist buyers — particularly those with smaller rosters — consider their artists true “partners” and give the sort of personalized attention that a major publisher with hundreds of writers might not be able to.
6. Expanding reach. Myriad benefits flow from having a team of personal advisers. Some of these benefits are monetary, but many (though equally significant) are not. The right buyer, with the right team and strategy, can introduce music to new generations. Many iconic artists, and even their managers, aren’t aware of the many ways to reach new audiences. The massive video game market and immersive entertainment are just two examples.
7. Estate planning for a lasting legacy. Artists use these deals to define what happens to their songs and recordings when they are gone. Lest we forget the epic, and frequently ugly, family battles over control of songs when legends pass away, Tom Petty is just one sad example, but there are so many more. With the right partner, artists can ensure their songs continue to soundtrack the future and reach new generations. Their careers can last a century or longer. It’s now all possible.
Peter Csathy is chairman of advisory firm Creatv Media and has facilitated numerous music IP transactions with the likes of Prince, Boston, Devo, Air Supply and Count Basie.