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Why the rock stars of the baby boom era are thriving in selling songs

Paul Simon sang in the jazz performance “You Closer” by the Frederick P. Rose Hall by the Lincoln Center Jazz Band in New York City on January 20, 2015.

Ilya S. Savenok | Getty Images Getty Images

From the first time Bob Dylan inserted his electric guitar to Super Bowl commercials, there are always moments in music history where the most die-hard fans will accuse their idols of doing the unthinkable: selling out. But now “sell out”

; has a new meaning, and it is a prosperous market for investors and superstar recording artists.

A bunch of baby boomer rock icons sold out their song catalogs. This move is the latest move made by Paul Simon last week, and it demonstrates the straightforward fact that art meets money: music has always been a business, and creative talent should be rewarded generously. Currently, the major changes brought about by streaming media and the further destruction brought about by the pandemic are a business. Paul Simon, Bob Dylan, Neil Young (50% in Young’s case) and Stevie Nicks ( The 80% rights of her song) transactions highlight major trends in the entertainment industry, capital markets and wealth management.

Music distribution companies such as Hipgnosis Songs Fund and Primary Wave Music, as well as comprehensive players such as BMG, Sony, Warner Music Group, and Vivendi’s Universal Music Group, are driving large deals to purchase top song catalogs at low interest rates, and I believe there will be more substantial returns in the future by selling the copyright of these songs on entertainment platforms.

Record low prices to boost music transactions

The chief executive of Primary Wave Music, Larry Mestel, has just obtained a majority of shares in the two Rock and Roll Hall of Fame candidates. The company’s chief executive Stevie Nicks told CNBC that the economic environment created by the coronavirus pandemic has been conducive to seeking to buy large Assets of the company. Such a low interest rate makes it easier to borrow money, and the high rate of return creates an excellent opportunity for mergers and acquisitions.

He said: “What you are talking about is a low interest rate environment, you can reach a price of 7% to 9%, and then increase revenue through marketing and generate 15 times the return. This is a very attractive place for people. ,” said.

Music catalogs have also been proven to withstand the economic downturn, and as the music industry has experienced tremendous damage due to site closures and touring performances, the pandemic has only increased transaction volume.

The rise of streaming music

When these deals were concluded, streaming music (all the controversies and suspicions caused by the musicians’ own acquisition of the original deal) had proved to be an economic leader, at least for record companies. Goldman Sachs predicts that by 2020, global music revenue will reach US$142 billion in 2020, an increase of 84% from US$77 billion in 2019. Streaming media capture will attract 1.2 billion users in 2030, which is the level of 2019. Quadruple, and mainly benefit the company, such as Sony, which bought the Simon catalog, and Universal, which bought Dylan’s songs.

Last year, global streaming music revenue hit a record high, accounting for a percentage of the entire industry (83% according to a recent report), and it also attracted superstars. Spotify stated that its mission is to “provide 1 million creative artists with the opportunity to make a living from art,” but as a recent analysis by The New York Times pointed out, Spotify’s data shows that only 13,000 artists produced last year Income of $50,000 or more.

However, it is not just streaming. Once the rights to a larger behavioral catalog are obtained, the license can be used in synchronized placements to license music across various forms of media, including movies, TV shows, commercials, and video games.

Rebecca Valice, the copyright and licensing manager of PEN Music Group, said: “From a publisher’s point of view, it is very valuable to obtain rights to certain directories that we can use simultaneously.” “The success of a directory is the secret of its success, so it can Sell ​​it yourself.”

Pay attention to the rock icon

The easier it is to identify the catalog, the more valuable it is for the catalog purchased by the company and used in movies or TV. She said that the best product catalogs will “pay for themselves” over time, because synchronization can help payees recover the money spent, “over time, some money will be recovered.”

Mestel said: “I believe that icons and legends are more valuable than other artists.” Primary Wave has a catalog of stars such as Whitney Houston, Ray Charles and Frankie Varley, as well as “Four Seasons.”

Some famous musicians of the baby boom era criticized the situation of the record industry, such as David Crosby, who said in a tweet in December: “I also sell my things…I can’t Work…Streaming stole my record money…I have a family and a mortgage, and I have to take care of them, so this is my only choice…I’m sure other people feel the same way.”

In March, he sold the entire catalog to Irving Azoff’s idol artist group, which recently acquired a controlling stake in The Beach Boys intellectual property, which includes part of the song catalog.

Crosby said in a statement announcing the transaction: “Given that we are currently unable to work, this transaction is a blessing for me and my family. I believe these people are the best people to get along with.”

Trendy real estate planning

For the musicians themselves, a big trend is taking place: the demand for real estate planning by the wealthiest generation in the United States. Musicians of the baby boom generation (and musicians born on the cusp of this generation like Simon and Dylan in 1941), like their fans, are aging. Mestel said: “Artists are getting old now, so they can use cash for estate planning.”

Of course, the downside may be the loss of control of the artist’s most precious asset: creative genius.

John said: “These aging rock stars may want to cash in to provide property… But, to a certain extent, you will lose control of your brand and heritage, depending on the protective measures you take in the transaction.” Ozszajca, Musician and founder of Music Marketing Manifesto (Music Marketing Manifesto), the company teaches musicians how to sell and market their music.

Crosby and Azoff have been friends for a long time, and Azoff pointed this out in the issuance announcing the deal.

It seems that anyone involved in the music business knows that anyone is trying to raise funds.

Larry Mestel

Chief Executive Officer of Primary Wave Records

Some fans are not satisfied with hearing best-selling records such as Knicks’ “Seventeen-year-old Edge” or Dylan’s “Rolling Stone”, even though Dylan has done Super Bowl commercials for General Motors and IBM for many years. The song is unique among others, but the decision to sell the record can also help musicians avoid post-mortem legal battles that the estates of Tom Petty, Prince, and Aretha Franklin must endure.

BMG acquired the band member Mick Fleetwood of the Knicks earlier this year. They obtained catalogue interest on Fleetwood Mac and pointed out some statistics in the announcement that showed that although they are as old as the baby boom, they can pass Click on viral streaming to get an updated life. The Fleetwood Mac song “Dreams” (in the eight weeks from September 24, 2020 to November 19, 2020) generated more than 3.2 billion streams worldwide, this is because fans who like cranberry juice recorded it A video, and launched a new generation of TikTok more used to Fleetwood Mac. 43 years after the band’s release, its album “Rumours” ranked sixth on the Billboard Streaming Songs chart.

Dylan’s deal is by far the largest deal. Although the sale price has not been officially announced, it is estimated at $300 million. Universal only stated in a press release that it is “the most important music distribution agreement of the century.”

Mestel believes that the boom is not over yet.

“It seems that anyone involved in the music business knows that anyone is trying to raise funds. But that doesn’t mean they can sell identifiable assets or even know what they are doing.”

BMG and private equity giant KKR recently signed a deal to carry out a major music rights acquisition, as an executive told Rolling Stone: “We will not chase the hits since January 2021. Become. Part of our lives.”

KKR has been engaged in large-scale music transactions in the past, and the trend of buying rights is not new, but the current boom is noteworthy, and as investors seek more ways, this change has been adapted to the asset classes occurring in many places in the market. Appreciation puts their money into work. Baby boom trades are the headlines, but recent moves have also seen generous rewards. Earlier this year, KKR purchased shares in OneRepublic’s Ryan Tedder catalog at an allegedly high price.

Meister said that companies like Primary Wave are working with artists like the Knicks to try to keep them as part of the deal and bring them better deals in the future. He said that many people don’t know about them. Can participate in the transaction. Partnerships, sell part of their catalog, and the catalog may be more valuable in the future than the 100% it previously owned.

“If everything goes well, [artists] Make full use of the products they want to sell, which is usually a win-win situation for both buyers and sellers. “Valice said.

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