Investors spent $5.3 billion on publishing catalogs, recorded music catalogs and producer royalties in 2021, up 180% from 2020, according to a new report from MIDiA Research. This estimate is based on MIDiA’s tracking of publicly announced catalog acquisitions. Of the 131 transactions tracked by MIDiA Research, 76% include publishing rights and 49% include master royalty rights. Name, image and likeness rights were part of 4% of transactions tracked by MIDiA.
As the music assets enjoyed safe and smart investment status, money poured into catalog sales from major music companies, a slew of independents, private equity firms and venture funds. publicly traded royalties. Among the biggest deals of 2021 were Sony Music’s acquisition of Bruce Springsteen’s publishing and mastering royalties for an estimated $500 million; Warner Music Group’s $100 million deal for artist-producer David Guetta’s catalog of recorded music; and Primary Wave’s $90 million purchase of a James Brown publishing stake, core royalty income, name and likeness.
MIDiA’s $5.3 billion figure also included corporate catalog acquisitions, such as Reservoir Media’s purchase of Tommy Boy Music’s recorded music catalog and Concord’s acquisition of the publishing catalog of 145,000 songs from Downtown Music. But MIDiA retained separate investments in funds, such as Shamrock Capital’s $196 million fund for creator loans and the Round Hill Music Royalty Fund’s $86.5 million fundraiser for future acquisitions. .
The actual value of catalog deals in 2021 is well over $5.3 billion. MIDiA only counted acquisitions that were made public by media outlets such as Billboard, press releases and financial statements. It’s a sensible approach that misses many deals that weren’t made public because the buyer or seller didn’t want to draw attention. Additionally, MIDiA did not estimate transaction valuations if they were not contained in public reports. Price tags are rarely revealed by the buyer or the seller. Billboard often estimates an assessment based on available streaming, sales, and radio airplay data, or publishes numbers that have been reported by other media outlets. Parties involved in acquisitions tend to be low-key and bound by strict non-disclosure agreements.
Of these tracked sales, rock accounted for 35% of individual catalog acquisitions (excluding deals for large catalogs spanning genres such as Downtown Music’s publishing catalog). Billboard has reported on numerous such deals in 2021, including the Hipgnosis Songs Fund’s purchase of producer Bob Rock’s royalty share; BMG Right’s acquisition of ZZ Top’s revenue from recorded music and performance royalties; and Round Hill Music Royalty Fund’s deal for a 50% stake in the music publishing catalog of Trevor Rabin, founding member of the band Yes.
Only 3% of the 131 deals were for the hip hop catalog – although a single acquisition, Tommy Boy, covers 6,000 copyrights, including many classic hip hop recordings such as House of Pain’s “Jump Around” and ” Gangsta Paradise” by Coolio – despite a quarter of American consumers, or 43% of the 16-34 age group, are hip hop fans. Hip-hop trades at a lower earnings multiple than pop and rock, genres investors generally view as more stable and predictable. However, this could represent an opportunity for specialists. “New entrants and existing businesses can sharpen their focus to stand out and truly serve the intellectual property they seek to acquire,” MIDiA Research consultant Kriss Thakrar said in a statement. “Otherwise they risk either buying at unsustainable prices or not being able to close deals.”
Large catalog acquisitions tend to favor old but viable music with a proven track record for streaming and licensing. A fifth of the transactions were for catalogs from the 1970s and included luminaries of the era such as Neil Young, Lindsey Buckingham, Mick Fleetwood, Christine McVie, David Crosby, Linda Ronstadt and Paul Simon. But MIDiA also found that 23% of them contained recordings or compositions from the 2000s. Notable deals from this era include KKR’s purchase of a stake in Ryan Tedder’s songwriting catalog; the acquisition by Hipgnosis Songs Fund of the music publishing catalog of Colombian singer Shakira; and Warner Music Group’s deal for a majority stake in Bruno Mars’ songwriting catalog.