CBx Daily

Why Artists Are Parting Ways With Their Song Catalogs?

May 11

By Chika Dunu

  • Hipgnosis Songs acquired a 50% stake in rap legend RZA’s catalog, including Wu-Tang and Kanye West songs
  • In 2016, Sony agreed to pay the estate of Michael Jackson $750M for its share of the Sony/ATV Music Publishing catalog

It was once believed that rap and hip-hop would be a passing fad, yet those genres along with R&B have dominated the last decade of music and people are betting big on the future worth of nostalgia listening. More artists are jumping on the wave of parting ways with their catalogs. Hipgnosis Songs acquired a 50% stake in rap legend RZA’s catalog, including Wu-Tang and Kanye West songs, a trend that’s likely to continue.

Why This Matters: Fans aren’t the only ones doling out money for their favs, so are investors who recognize the upside potential of purchasing song catalogs by major artists is hard to ignore. Earlier this month, Drake ate pasta out of his Spotify plaque for 1 billion streams of “In My Feelings.” The optics were boss-like but for most artists, yes, including Drake, streaming isn’t nearly as lucrative for them as most would think. For example 75% of major artists’ bread and butter comes from touring, reported Billboard. But with major companies such as Sony and Concord Music Publishing willing to snatch up musicians’ catalogs, artists can secure a financially-sound future that doesn’t include months on the road, or life on Earth.

Sony & Concord Music Publishing are willing to snatch up musicians’ catalogs, artists can secure a financially-sound future

Music publishing and catalog ownership is big business. In 2016, Sony (SNE +0.79%) agreed to pay the estate of Michael Jackson $750 million for its share of the Sony/ATV Music Publishing catalog. Jackson purchased the ATV portion of the catalog in 1985 for $41.5 million, netting a 1,707% profit. Acquiring the Jackson Estate’s portion of the catalog meant Sony now fully owned the rights to three million songs, including hits by the Beatles and Sting. Most importantly, the acquisition erased Jackson’s alleged $500 million debt and monetarily benefited his children’s future.

What’s Next: Several artists are happy with making millions of dollars from their back catalogs, entitling companies like Hipgnosis to all future revenue. In a statement to Variety, RZA said: “I wear various hats in my artistic expressions but the one that has been so deeply reflective of my life’s journey is my songwriting. I’m honored to partner up with Merck and the Hipgnosis team to usher my songs into an exciting future.”

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