By Sabrina Lynch
- Hipgnosis is selling 29 music Latin and hip-hop music catalogs for $465M to pay off its debt
- 73% of the U.S. music market is dominated by catalog records instead of new releases
Shakira’s hips may not lie, but the balance sheets of the company who owns her music catalog sure do. Hipgnosis Songs Fund (SONG.L -2.34%) is selling songs by the Colombian songstress on other artists like rappers Nelly and Timbaland, to net a spicy $465 million, in a deal with private equity group Blackstone (BX.N) to boost its stock price. Twenty nine music catalogs are up for grabs in Hipgnosis’ bid to pay back $250 million of debt.
Why This Matters: Black music continues to be the go to route for a cash flow windfall. Nelly recently sold a 50% portion of his recorded music assets to HarbourView Equity Partners for a hot $50 million. Also, Dr. Dre turned to Universal Music Group and Shamrock Holdings for $200 million in return for his music assets. Both rappers are the latest artists to leverage their songs as a lucrative bankroll.
John Legend gave the ‘Green Light’ to KKR Co and BMG to buy his publishing catalog and royalty rights. This was right after RZA from Wu Tang Clan cashed in 50% of his creative genius with Hipgnosis when they acquired copyright interest and writers share of his songs. The acquisition of the Grammy-nominee’s track worked in the firm’s favor when their shares plunged by 31% last year.
Tracks that introduced the masses to the sounds of Nelly, Rick James and Timabland are being traded as hot commodities – and none of the money is being invested back into the culture. The remainder of the proceeds from the catalog sales will be used to cover costs to buy back $180 million in shares.
What’s Next: Music artists are beginning to understand the high yields that are gained from selling their body of work. Millions of dollars can be made from selling back catalogs, giving new talent and OG artists a new way of building their financial estate plans and removing pressure to tour endlessly. If it’s good enough for music icon Tina Turner, it’s good enough for us.
CBX Vibe: “Iz U” Nelly