Taxes, IP Value and Artist Estate Planning Drive Increase in High-Dollar Catalog Deals

Taxes, IP Value and Artist Estate Planning Drive Increase in High-Dollar Catalog Deals
Thomas Scherer, Nikki Sixx and Michael Kachko of BMG.

It was the music catalog sale heard ‘round the world: In August 1985, Michael Jackson purchased ATV Music Publishing for $47.5 million, giving him the rights to 4,000 songs, including the Paul McCartney-John Lennon’s catalog, alienating collaborator and friend McCartney in the process. Under the guidance of executor John Branca, the late singer’s estate would sell its share to then Sony Corp. in 2016 for $750 million, a massive windfall that not only proved Jackson’s original foresight as a businessman but set a precedent for the wave of similar high-dollar transactions that have occurred with increasing frequency in the last several years.

Between 2020 and 2022, dozens of artists, some as established as the Beatles and some still in the earliest stages of superstar success, have brokered deals with music catalog companies. Bob Dylan’s sale of his entire catalog in Dec. 2020 to Santa Monica-based Universal Music Group reportedly earned him more than $300 million. After months of reported negotiations, Bruce Springsteen sold his entire body of work as a recording artist and songwriter in a two-part deal with Sony Music Entertainment for an estimated $550 million. And in January 2022, the estate of David Bowie signed a reported $250 million deal with Warner Music Group Corp. in exchange for the artist’s global music publishing rights.

Catalog sales first began ramping up after the Songwriter’s Capital Gains Equity Act became law in 2006, permitting music catalogs to be taxed separately at a lower rate than ordinary artist income.

But Branca — whose Century City-based law firm Ziffren Brittenham not only represents Jackson’s estate but also artists Beyoncé, the Bee Gees and Carlos Santana — told the Business Journal that there is a variety of factors causing the rapid acceleration of sales more recently.

“There’s the aging of certain legendary songwriters in the business who are looking at estate planning and making a judgment whether or not their heirs would be able to administer the intellectual property,” Branca said. “Part two, the tax laws are favorable. And the third reason is the valuations for IP assets in the music industry are at an all-time high.”

Sony Music Publishing, Universal Music Group and Warner Music Group are the three biggest recording companies in the global music industry, holding the rights to millions of songs. Warner’s downtown-based publishing division Warner Chappell Music Inc.’s catalog, for example, consists of over 1.4 million, and Sony acquired or administered more than 5 million as of March 2021. But slightly smaller companies like New York-based Primary Wave, Berlin-based BMG and even outsiders like investment firm KKR & Co. Inc. are giving these titans a run for their money, causing a feeding frenzy and a seller’s market for acts wanting to find a steward to maintain their catalogs.

BMG’s president of repertoire and marketing, Thomas Scherer oversees approximately 3 million songs and recordings on behalf of the company. Also a drummer and former member of the German band Playhouse, Scherer observed that the rewards and challenges of selling a catalog can vary according to the size of the company — a potentially bigger up-front payday with a big company versus more long-term control with a smaller company. He championed BMG’s broad reach and its focus on artist satisfaction with the deals but said a critical component of a deal’s success is for the artist to decide ahead of time what they want to accomplish with the sale.

“They can decide what is on top of their agenda,” Scherer said. “Is it a purely financial cash-driven decision? Is it driven by who is the best trusted partner for me, who has the global infrastructure and really has also the love for the music really to work my legacy? From there, the artist and the rights owner will make the decision what’s the best choice for them moving forward.”

Mötley Crüe founding member and bassist Nikki Sixx, who joined his fellow bandmates in the December sale of their catalog to BMG, echoed Scherer’s characterization of the company’s approach to catalog administration.

“We wanted a partner who really understands the band creatively and who will do right by the Mötley Crüe legacy for generations to come,” Sixx said. “We are fortunate and grateful to have found this partner in BMG.”

Meanwhile, two of the most streamed catalogs in the world — Jackson’s and Queen’s — still haven’t been sold; Sony Music administers the rights to both. But with more than 40 years in the business and thousands of deals under his belt, Branca said that because the recent rush of sales has produced bigger paydays, this trend among artists will become business as usual for the music industry.

“The industry has operated in a similar fashion since the birth of rock and roll,” he said. “The big companies have always generally owned the catalogs. Over time, the artists obtained ownership, but the big companies have always generally administered the copyrights for the artist. The only difference now is after having obtained the ownership, a lot of artists are turning around and selling it back.”

Jan. 6, 2021

BUYER: Hipgnosis
Artist: Neil Young
Terms: 50% rights to song catalog.
Value: Reported $150 million

Jan. 11, 2021

Artist: Ryan Tedder
Terms: Majority stake of catalog.
Value: Estimated $200 million

Jan. 14, 2021

Artist: Mick Fleetwood
Terms: Mick Fleetwood’s interests in Fleetwood Mac’s recordings, totaling more than 300 songs.
Value: Undisclosed sum

Feb. 2021

BUYER: Iconic Artists Group
Artist: The Beach Boys
Terms: Controlling interest in the group’s IP, including their sound recordings, the brand, select musical compositions and memorabilia.
Value: Reported $100 million

APR. 2021

BUYER: Concord Music Group
CATALOG: Downtown Music Publishing
Terms: 100% of its 145,000 songs.
Value: Reported $300 million

APR. 2021

BUYER: Sony Music Publishing
Artist: Paul Simon
Terms: 100% stake.
Value: Reported $250 million

MAY 2021

BUYER: Warner Music Group
Artist: Bruno Mars
Terms: Undisclosed stake in 200 songs.
Value: Undisclosed sum

JUNE 2021

BUYER: Warner Music Group
Artist: David Guetta
Terms: 100% stake.
Value: $100 million

JUNE 2021

BUYER: Primary Wave
Artist: Prince
Terms: 42% stake for undisclosed number of songs.
Value: Undisclosed sum

AUG. 23, 2021

BUYER: Universal Music Group

Artist: Aerosmith
Terms: Entire catalog.
Value: Undisclosed sum

OCT. 6, 2021

Artist: Tina Turner
Terms: Turner’s share of her solo works from 10 studio albums, two live albums, two soundtracks and five compilations. Turner’s music publishing; writer’s share; neighboring rights; and name, image, and likeness. .
Value: Estimated $50 million

OCT. 11, 2021

BUYER: Primary Wave
Artist: Bing Crosby
Terms: Undisclosed stake in recording archives, production rights, likeness rights.
Value: Reported $50 million

OCT. 26, 2021

BUYER: Primary Wave
Artist: Luther Vandross
Terms: Publishing and master recording income.
Value: Reported $40 million

NOV. 30, 2021

Artist: Motley Crue
Terms: Entire recorded catalog, including nine studio albums, live albums and compilations.
Value: Reported $150 million

DEC. 13, 2021

BUYER: Primary Wave
Artist: James Brown
Terms: Publishing, master recording income stream, and name and likeness rights.
Value: Estimated $90 million

DEC. 15, 2021

BUYER: Sony Music Publishing
Artist: Bruce Springsteen
Terms: Entire body of work as a recording artist and songwriter, including two deals, one for recorded work and another for songwriting rights.
Value: Estimated $550 million

DEC. 21, 2021

Artist: ZZ Top
Terms: Entire music interests, including 15 albums.
Value: Estimated $50 million

JAN. 3, 2022

BUYER: Warner Music Group
Artist: David Bowie
Terms: Global music publishing rights.
Value: Reported $250 million

FEB. 4, 2022

BUYER: Iconoclast
Artist: Robbie Robertson
Terms: Music publishing; recorded interests; and name, image and likeness rights.
Value: Reported $25 million

FEB. 7, 2022

BUYER: Round Hill
Artist: Alice in Chains members Jerry Cantrell, Sean Kinney, Mike Inez and William DuVall
Terms: 100% interest in masters and more.
Value: Reported $50 million

FEB. 9, 2022

Artist: Sting
Terms: Copyrights, royalties to 600 songs.
Value: Reported $350 million

FEB. 16, 2022

BUYER: BMG and partner
Fujipacific Music
Artist: John Lee Hooker
Terms: Entire publishing catalog,
recorded and performance royalty income, and selection of recorded catalog.
Value: Undisclosed sum

FEB. 24, 2022

BUYER: Spirit Music Group
Artist: Jason Aldean
Terms: 90% of Aldean’s recorded music catalog, including neighboring rights and royalties.
Value: Reported $100 million

Previous article Azure Signs 14-Home Deal, Puts Down Roots in Culver City
Next article L.A. Rising: Burbank
Todd Gilchrist
Todd Gilchrist is a Los Angeles-based reporter and film critic with 20+ years of experience at dozens of print and online outlets, including Variety, The Hollywood Reporter, Entertainment Weekly and Fangoria. An obsessive soundtrack collector, sneaker aficionado and member of the Los Angeles Film Critics Association, Todd currently lives in Silverlake, California with his amazing wife Julie, two cats Beatrix and Biscuit, and several thousand books, vinyl records and Blu-rays.

No posts to display