New York
CNN
—
Music superstars profit from a hot market.
Justin Bieber joined a list of iconic singers on Tuesday who have signed huge deals to sell their music catalogs, and possibly masters, for hundreds of millions of dollars.
Song management company Hipgnosis said it had acquired the rights to Bieber’s entire music catalog in an acquisition that “ranks among the biggest deals ever made for an artist under the age of 70.” Terms were not disclosed, but Billboard reported The price tag was a whopping $200 million.
The news comes amid a broader trend that has been on the rise since Merck Mercuriadis founded Hipgnosis in 2018 and began buying the rights to the legendary truck. “What I wanted to do on behalf of the entire songwriter community is to establish music as an asset class and create a market,” Mercuriadis said Tuesday, equating the value of hit songs to gold and oil. “I wanted to show the financial world that these great, proven songs can generate very predictable and reliable income and are therefore investable.”
Mercuriadis has certainly led the way. In recent years, generations of stars have signed nine-figure deals to transfer catalog rights.Bruce Springsteen owns his master and publishing rights reported $500 millionBob Dylan has his catalog reported $300 millionAnd young artists are getting into the act, signing singers like John Legend and Iggy Azalea.
A version of this article first appeared in the “Reliable Sources” newsletter. Sign up here for our daily digest documenting the evolving media landscape.
So why are these deals taking place in the last few years? There are several reasons.
The age of streaming has made music more valuable than ever. By the early 2000s, Top 40 stations had a firm grasp on music sales, sending fans into stores to buy physical CDs of their favorite artists. Today, services like Spotify and Apple Music are revolutionizing the music industry. And it’s still a developing business.
“The streaming market is growing steadily, especially when considered globally,” said Serona Elton, a former recording company executive who is now a music industry professor at the University of Miami Frost School of Music. increase. “We expanded into new markets as the cost of cellular, Wi-Fi and cellular service dropped.”
At the same time, the pandemic has forced artists to lose touring income and look to other money-making opportunities to expand their income streams. And the economic downturn caused by the pandemic has allowed businessmen to find music to be a “recession-proof asset,” Elton explained.
Mercuriadis wholeheartedly agreed, stating, “As humans, our emotional barometer is married to music. If we’re living our best lives, it’s to the soundtrack of music.” And likewise, when we’re in trouble, whether it’s a pandemic or inflation, we find solace and escape in these songs.Songs have always been a part of our lives. am.”
Finally, there is the recent TikTok element. Short-form video apps are accelerating music discovery by sending old tracks virally, driving streams and skyrocketing downloads. That means the popularity of songs from the past is skyrocketing.
All these factors are heating up the market.wall street journal reported Investors and music management companies “buy catalogs for as much as 30 times the average annual royalty.”
Elton has indicated that these artists risk being sold to relatively new companies such as Hypnosis. Unlike legacy companies, these new businesses do not have a long track record of managing music. “Those of us who aren’t involved in the sale, but are watching, are wondering: How will this play out over time?” Elton asked.
But Mercuriadis claimed that not only was he “managing these songs with great responsibility,” but that his boutique-style company was a better steward than a legacy record label. Labels often have a series of different goals, such as creating new hits, which can distract them from their sole mission of managing old music, he said. Mercuriadis also says they maintain a huge number of libraries.
“We are totally focused on managing proven songs from the past,” he said.
