While I was cruising along the information superhighway, I came across what I found to be a very interesting article discussing how some of the biggest names in music are selling, have sold, or are considering selling their music catalogs.
The article discusses 5 key reasons that artists are currently cashing in.
Spotify and streaming
Spotify has increased the value of music substantially in recent years. Of course, there is a catch, as artists find it more difficult to sell physical copies.
This means that if your music is a commodity, you can reasonably get more for your catalog since people want to listen to it via Spotify or another streaming app.
Interest rates entice investors
Next, interest rates are low so theoretically investors can buy more with their money and their money is more likely to retain its value longer.
Interestingly, this translates into driving up the price of music catalogs.
Sars2 closed venues and parked tour buses
Following that, the Coronavirus effectively canceled touring. The effects obviously cannot be overstated. The live music industry is on life-support.
Even well-established artists can’t put on concerts. This has led many artists looking to retirement. The logic is as follows: I can’t tour, I can’t sell CDs, my previous income has drastically been reduced so selling my songs seems like a good idea.
Even David Crosby of Crosby, Stills and Nash has voiced that he is planning on selling the rights to his songs citing the aforementioned hardships and mounting financial insecurity.
A Biden presidency could put a lid on short-term royalty profits
The recent election has prompted artists to take a hard look at holding the rights to their songs. Joe Biden and people in his circle have espoused desires to raise capital gains tax rates.
This could substantially cut into future profits. This isn’t a problem for people and investment groups who expect to be around for a while, but for an aging star, immediate cash is better than waiting out potentially high tax rates that could outlast the artist’s life.
Selling preemptively resolves legal disputes
Finally, the article discusses how these stars don’t want their songs fought over in court. Many of them have seen other artists and even their friend’s estates run through the ringer in legal battles.
The article talks about how artists lives are often quite messy and this leads to heated drama in and out of the courtroom.
Final thoughts
All in all, I found this information very interesting. As far as windows into the industry go, it’s definitely worth pondering. Follow the link below for reference and more context on prominent musicians selling their music catalogs.