Justin Timberlake, Future, Shakira, and John Legend, have sold large percentages –some up to 100% – of their catalogs.
What does this mean?
A catalog is a collection of a performing artist’s songs. A music catalog sale does not necessarily mean the artist is selling their masters. Most often, artists are selling their publishing and sync rights. Their partial or full ownership transfers to whoever buys the catalog from them. Please note that the artist is only selling their portion of the ownership. Other songwriters involved will still maintain their part of the song ownership. Also, depending on the agreement, these sales do not include any future music the artist creates.
Of course, this exchange is nowhere near new. For decades, artists or their estates have engaged in such transactions. However, the hike in these sales cannot be ignored. They speak to a trend that I’m very curious about.
In 2022, Justin Timberlake sold his entire music catalog for $100 million. Future sold publishing rights for 612 songs in a high 8-figure deal. John Legend sold 100% of his catalog for a price that remains undisclosed to the public. In a recent Breakfast Club interview, John Legend discussed the sale of his publishing rights. For the first time, I heard someone provide a tiny bit of insight into how these companies are pursuing these catalogs. Legend explained that companies offer artists a ‘multiple’ for the sale of their catalog. Essentially, the firm projects how much money the catalog can make yearly and offers a multiple of that number to the artist in a lump sum. Even further, Legend expressed that these firms took a calculated bet on their ability to maximize revenue on these catalogs and profit well past the cost of the multiples they paid artists. After purchase, they can license the songs in movies, TV, commercials, and more. They can clear samples for new records. If remixes are made or covers are sold, the firm is listed as the songwriter.
Jermaine Dupri, in a Breakfast Club interview, discussed how his hesitance to sell his catalog actually benefits him financially. His situation may be unique. Unlike many acts who change labels throughout their career, Jermaine Dupri has kept his publishing deal with EMI, later bought by Sony Music Publishing, for the bulk of his career. His initial contract, along with subsequent negotiations, included a clause that would revert their ownership of the songs to him after a certain time. His career is due to outlive his contract. Therefore, it currently behooves him to refrain from selling his portion of rights until ownership is fully reverted. Doing so would afford him more leverage if he does decide to eventually negotiate a sale to one of these investment firms. Otherwise, he will still maintain leverage to use his ownership how he sees fit. That is yet another nuance to consider regarding these sales.
But you have to wonder who is purchasing these catalogs. Who are these firms and companies I keep describing? Hipgonosis, which is owned by Blackstone, is one. Kilometre Music Group, KKR, and Influence Media Partners are among other entities that have been active in the catalog acquisition space recently. In essence, they are investment firms. Some are non-music related firms that have taken on catalog acquisition as one of their various focuses. Others are music groups, some of which are ultimately owned by major investment firms.
Because we see so many of these occurrences happening within the market, there is clearly a benefit that may not be evident to the general public. But what exactly is that benefit? That is what still confuses me. Is there a hike in demand for song licensing for films? Commercials? Is it connected to the spike in revenue for artists when certain Instagram and TikTok sounds go viral?
The conspiracy theorist in me wonders if owners of labels see this as a way to regain ownership after the drastic changes in the music business this past decade. My suspicious disposition would normally prompt me to view this negatively, searching for exploitation. However, I want to take a different approach. Perhaps, these major firms are not doing something insidious. Still, music industry participants and those passionate about music–whether it be its integrity, history, or even the community that surrounds it– should make an active effort to learn about this. Perhaps, artists are more incentivized to research because the careers behind their artistry have not historically afforded them the luxury of creative or financial control. Financial benefits, for sure, but not necessarily control. How can this affect the increasing yearning for independence and ownership among artists?
I will be following developments over time because I am incredibly curious to see how this all plays out legally, financially, and creatively.
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