KT Tunstall, Glenn Tipton, Ryan Tedder, David Crosby, Mick Fleetwood and Bob Dylan have sold their music catalogs and publishing rights for millions of dollars in buyouts from Hipgnosis, Primary Wave and Universal Music Group and more. This comes after artists like Stevie Nicks selling 80 percent of her catalog for reported $100 million to Primary Wave, and The Killers selling their publishing rights to Eldridge, who specialize in entertainment, finance, real estate and technology.
The buying of music publishing rights isn’t anything new for likes of Hipgnosis, founded in 2018 and specializes in investing in musical intellectual property, and Primary Wave, a publishing and talent management company. In 2018, Primary Wave purchased a portion of Bob Marley’s publishing rights for $50 million, and the following year purchased 50 percent of Whitney Houston’s estate assets for an estimated seven million dollars. While in 2019, Hipgnosis concentrated on acquiring the copyrights from songwriters and bought Timbaland’s publishing catalog which included albums from Justin Timberlake and Missy Elliot.
The biggest and most significant sell so far being of Bob Dylan’s publishing catalog which was bought by Universal Music Group for a reported $300 million. This move was seen as a proactive play to deter Hipgnosis and Primary Wave from obtaining the music rights.
It stands to question why is now the time that these companies are striking. According to Rolling Stone, companies like Hypnosis and Primary Wave are acquiring the music rights of these artists in order to gain the revenue from the royalties, licensing and other legalities that would originally have gone to the artists.
There are many speculations regarding why artists and publishers have made the decisions to sell their rights, particularly the increase in activity in 2021. Was it because of lack of income from touring, taxes, or debt relief? Nothing has ever been confirmed, but nevertheless, it is safe to assume that COVID-19 played a major role in the decision-making process.
While the economy has continued to plummet throughout the COVID-19 pandemic, the music industry is one of the sectors to continue to grow in revenue with streaming services seeing an increase of 70 percent throughout 2020. However, sales and streaming only make up for 50 percent of total revenues with the other 50 percent being from ticket sales and live performances.
COVID-19 cost the music industry billions of dollars in revenue by halting the concert industry. Live Nation reports 97 percent drop in revenue from three billion dollars to $74.1 million within its first quarter of 2020, and a $588.1 million loss in its second quarter. Live performances are expected to begin again during the summer of 2021, though it is not expected for them to fully kick off until late 2021 to early 2022.
With the start of a new presidential administration, Joe Biden’s proposed tax plan sees an increase of 20 percent to 37 percent for those with higher income. It makes sense for these artists to make these big moves now as they’ll be getting the best deal possible all around. A one-time 20 percent tax payout is much more appealing than a 37 percent cut yearly.
One of the biggest factors in these sales has been the boom in music streaming services seen over the last 10 years. Digital Media Association states that in 2019 music streaming revenue came in at over $10 billion, jump of 21 percent from 2018. During 2020, Spotify reportedly increased its revenue by 31 percent, making about two billion dollars in revenue and reaching 130 million paid subscribers.
The data gathered from these streaming services have allowed companies to estimate a song’s worth. This has made it possible for them to make offers to artists that exceed their current value in royalties. The current streaming breakdown sees the publisher and writers having to split 50 percent of a song’s royalties which comes out to six cents. Hipgnosis’ investor report states that they are purchasing artists and publisher’s rights for 14.76x their projected yearly royalty income.
It doesn’t appear as though these business moves will stop anytime soon. These companies have deep pockets and a deep want to obtain the best that they can, so they will continue to do so. Just last week BMG formed partnership with KKR to jointly buy copyrights. Hipgnosis has spent over one billion so far in the past two years and they plan on spending another billion. We’re only seeing the beginning of a bigger movement.
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