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OT: Why the rush of musicians selling off their song catalogues?

Waste Management Consultant

Waste Management Consultant

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Jan 1, 2019
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Neil Young sold 50% recently, Lindsey Buckingham sold his entire thing. These are the most recent. Is it royalties in perpetuity vs lump sum? Tax planning? Estate planning? There has to be long term value if someone is willing to purchase for hundreds of millions $$$. And likely increase in value. Finance guys & Law guys is there some benefit than the obvious windfall on this?
 
Waste Management Consultant said:
Neil Young sold 50% recently, Lindsey Buckingham sold his entire thing. These are the most recent. Is it royalties in perpetuity vs lump sum? Tax planning? Estate planning? There has to be long term value if someone is willing to purchase for hundreds of millions $$$. And likely increase in value. Finance guys & Law guys is there some benefit than the obvious windfall on this?
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Bob Dylan too.
 
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Waste Management Consultant said:
If so, the irony in that situation that most “entertainers” are Liberal Dems.
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Sheesh. It's not that sinister or complicated (noting Dylan and few others are able to pull off this kind of deal); Dylan has made decades worth of money on his stuff; cashing out at 79 offers lots of benefits to he and his family:


There's a reason for this influx of big purchases: music royalties and intellectual property (IP) have become investment opportunities due to the fact that royalty payments can remain steady despite fluctuations in the stock market. For buyers, artists' catalogs are commodities that can be traded like gold or oil. "If the investment is good, if you're investing in proven back catalogs, they tend to perform really well independent of any stock movements," music business writer Cherie Hu told VICE in March. "If you're investing in a tech stock, a lot of the bigger tech stocks move in the same direction a lot of the time. Investing in music royalties escapes that codependence. It's pure passive income. You'll make money in your sleep from it. It doesn't require any proactiveness." That, coupled with historic lows in both interest rates and inflation means that they can pay a premium for publishing rights. While it's arguably bleak to think of songs as investment assets, Goldman Sachs did predict music revenue will more than double to about $131 billion by 2030 so putting money in songs might actually work to diversify a stock portfolio.

For a legacy artist like Dylan, cashing out now also makes sense. After decades of receiving yearly royalty checks and making considerable money off the music he's owned, getting a lump sum payment with multipliers accounting for future royalties at 79-years-old probably more than doubled his wealth. Unlike annual royalties, which are taxed as ordinary income, the estimated $400 million or so he's getting from Universal is taxed as capital gains, which would save him millions on his tax bill even when adding state and net investment income (NII) taxes. While Dylan has given up his entire catalog, any future recordings he makes are not included in the Universal deal. At the twilight of his career, taking the money and running doesn't seem like a horrible option for Dylan. When you take into account that a music marketing giant like Universal has a vested interest in and dedicated teams for promoting, securing commercial syncs, and preserving the artist's legacy, there are worse places for an artist to be.
 
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Midnighter said:
Sheesh. It's not that sinister or complicated (noting Dylan and few others are able to pull off this kind of deal); Dylan has made decades worth of money on his stuff; cashing out at 79 offers lots of benefits to he and his family:


There's a reason for this influx of big purchases: music royalties and intellectual property (IP) have become investment opportunities due to the fact that royalty payments can remain steady despite fluctuations in the stock market. For buyers, artists' catalogs are commodities that can be traded like gold or oil. "If the investment is good, if you're investing in proven back catalogs, they tend to perform really well independent of any stock movements," music business writer Cherie Hu told VICE in March. "If you're investing in a tech stock, a lot of the bigger tech stocks move in the same direction a lot of the time. Investing in music royalties escapes that codependence. It's pure passive income. You'll make money in your sleep from it. It doesn't require any proactiveness." That, coupled with historic lows in both interest rates and inflation means that they can pay a premium for publishing rights. While it's arguably bleak to think of songs as investment assets, Goldman Sachs did predict music revenue will more than double to about $131 billion by 2030 so putting money in songs might actually work to diversify a stock portfolio.

For a legacy artist like Dylan, cashing out now also makes sense. After decades of receiving yearly royalty checks and making considerable money off the music he's owned, getting a lump sum payment with multipliers accounting for future royalties at 79-years-old probably more than doubled his wealth. Unlike annual royalties, which are taxed as ordinary income, the estimated $400 million or so he's getting from Universal is taxed as capital gains, which would save him millions on his tax bill even when adding state and net investment income (NII) taxes. While Dylan has given up his entire catalog, any future recordings he makes are not included in the Universal deal. At the twilight of his career, taking the money and running doesn't seem like a horrible option for Dylan. When you take into account that a music marketing giant like Universal has a vested interest in and dedicated teams for promoting, securing commercial syncs, and preserving the artist's legacy, there are worse places for an artist to be.
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Does anyone know a way to buy IP like this?
 
Waste Management Consultant said:
Sounds like a good investment if you can afford it, like pro sports franchises.
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I am sure that the investors buying these rights know what they are doing, but it doesn't make much sense to me. Bob Dylan's first album was released ~60 years ago. The vast majority of big Bob Dylan fans aren't going to be around that much longer. It seems like a challenge to monetize some of these artists' work to recoup the huge fees that are being paid. Neil Young? I didn't think he had a super huge draw even in his best days.
 
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SheldonJoe2215 said:
I am sure that the investors buying these rights know what they are doing, but it doesn't make much sense to me. Bob Dylan's first album was released ~60 years ago. The vast majority of big Bob Dylan fans aren't going to be around that much longer. It seems like a challenge to monetize some of these artists' work to recoup the huge fees that are being paid. Neil Young? I didn't think he had a super huge draw even in his best days.
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This is true, but good songs are good songs. Think of something like Leonard Cohen's 'Hallelujah' (published in 1984) and you probably say, 'Oh - the Jeff Buckley song? (from 1994) or 'the Rufus Wainwright song (from 2001) in Shrek?' And now it's everywhere. Could happen again down the road when Dylan or Young aren't around.
 
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Is there a statute of limitations on song rights? Is someone going to own the rights to these songs forever? I thought once a song get old enough it becomes public domain and anyone can use it. If you can't hand the rights down to your kids in perpetuity then you might as well sell them.
 
Op2 said:
Is there a statute of limitations on song rights? Is someone going to own the rights to these songs forever? I thought once a song get old enough it becomes public domain and anyone can use it. If you can't hand the rights down to your kids in perpetuity then you might as well sell them.
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Generally life of author +70 for post-78 works.

This sort of tactic is really quite common. Pharma development cos sell off royalty streams for lump sum cash to meet current cash needs.
 
SheldonJoe2215 said:
I am sure that the investors buying these rights know what they are doing, but it doesn't make much sense to me. Bob Dylan's first album was released ~60 years ago. The vast majority of big Bob Dylan fans aren't going to be around that much longer. It seems like a challenge to monetize some of these artists' work to recoup the huge fees that are being paid. Neil Young? I didn't think he had a super huge draw even in his best days.
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CDNY drew huge crowds, Neil after Rust Never Sleeps sold out most of his venues. Even later in his career he did pretty well on the concert tour. We are not talking Zeppelin or Floyd, but Neil did pretty well.
 
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It seems to me that this is the work of PR companies that promote musicians. The specifics of the modern music industry are such that a musician who is not signed to a label and does not cooperate with specialists in the field of music business is forced to ensure the promotion of his work himself. Of course, most artists do not think about acquiring such skills and completely immerse themselves in the process of composing and/or performing music. Therefore, most simply have no choice. I don't think it's something bad, that's why I decided to start doing music pr.
 
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There is a lot going on here but I read up on this stuff when Dylan sold his catalog a year or so ago. Apparently, a lot of these decisions have to do with estate planning and protection of the music for the future. They seem to think it's better to deal with it now than let some heir deal with it.
But this leads to the bigger problem, "wealthy" people, not rich people (huge difference), want to buy and control any entities that have value or future value....all of them baseball cards, music catalogs, real estate, classic cars, you name it. They have so much of the overall money they can easily do it. We are in a time when 1% of people own 45% of the stock market and 10% of people own 80% of the stock market. These folks don't have enough to do with their money, so they are loading up on anything and everything that has perceived value or may provide passive income. They know Dylan's songs are timeless and not only is it cool to own them but every streaming service, movie that wants to use a song, commercial will lead to continued rights paydays in perpetuity.
I have news for a lot of you, letting people control and make ungodly sums of money doing nothing is NOT capitalism. It's actually anti-capitalism because they buy out the competition which helps to regulate supply and costs. Passive income and compounding interest is not capitalism. But those folks will go to any measure to make sure you think it is. I can assure you, it is not. You think Charles Koch's new yacht is cool and he earned it the old fashion way? Actually, its a giant middle finger to YOU! You think Tucker "Fishsticks Heir" Carlson is fighting for you.....Hahahaha, then your intellect is nearly non-existent.
I saw another post about predicting a recession......You think the 500 people who control the stock market are going to let that happen ever again? Comical. It's their money, they can't play off the retail investors of yesteryear because all the skin in the game is theirs now. Why would they destroy their own capital? Barring a complete monetary policy collapse or a World War III, there won't be any recession's in the future, the money is to condensed in the hands of too few.
 
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For my catalog I would take ¼ the amount that was paid to Dylan........
 
Good discussion. I think the other thing is that in times of inflation, people want to hold real assets. I have some small investments in coins, currencies, rare scotch and some Lego sets. The prices for all is going up fast. Anything the wealthy can get their hands on that will stay steady with inflation. Most equities and debt are dogs right now and real estate has peaked some say.

like some others have said, you have the very wealthy looking for new places to invest and not hold cash. I would think that any finance guy worth his salt did some discounted cash flow analysis on these guys’ music catalogues before buying them.

Maybe it will become the next securitized product Goldman sells to the super rich — tranches of royalty streams from a few hundred different artist catalogues.
 
lowhandicapper said:
There is a lot going on here but I read up on this stuff when Dylan sold his catalog a year or so ago. Apparently, a lot of these decisions have to do with estate planning and protection of the music for the future. They seem to think it's better to deal with it now than let some heir deal with it.
But this leads to the bigger problem, "wealthy" people, not rich people (huge difference), want to buy and control any entities that have value or future value....all of them baseball cards, music catalogs, real estate, classic cars, you name it. They have so much of the overall money they can easily do it. We are in a time when 1% of people own 45% of the stock market and 10% of people own 80% of the stock market. These folks don't have enough to do with their money, so they are loading up on anything and everything that has perceived value or may provide passive income. They know Dylan's songs are timeless and not only is it cool to own them but every streaming service, movie that wants to use a song, commercial will lead to continued rights paydays in perpetuity.
I have news for a lot of you, letting people control and make ungodly sums of money doing nothing is NOT capitalism. It's actually anti-capitalism because they buy out the competition which helps to regulate supply and costs. Passive income and compounding interest is not capitalism. But those folks will go to any measure to make sure you think it is. I can assure you, it is not. You think Charles Koch's new yacht is cool and he earned it the old fashion way? Actually, its a giant middle finger to YOU! You think Tucker "Fishsticks Heir" Carlson is fighting for you.....Hahahaha, then your intellect is nearly non-existent.
I saw another post about predicting a recession......You think the 500 people who control the stock market are going to let that happen ever again? Comical. It's their money, they can't play off the retail investors of yesteryear because all the skin in the game is theirs now. Why would they destroy their own capital? Barring a complete monetary policy collapse or a World War III, there won't be any recession's in the future, the money is to condensed in the hands of too few.
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Tell me you don't understand economics or what causes a recession without telling me you don't understand economics or what causes a recession.
 
heckmans said:
Tell me you don't understand economics or what causes a recession without telling me you don't understand economics or what causes a recession.
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Genius.....
Stick to your boundaries, it's a perfect match for someone just like you.
Did I hurt your feelings talking about your boyfriend, I mean your propaganda minister, I mean the one you love and trust, lil Tuckie?
 
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1) many of those selling are old
2) they are often getting huge $
3) did I mention they're old???
 
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lowhandicapper said:
Genius.....
Stick to your boundaries, it's a perfect match for someone just like you.
Did I hurt your feelings talking about your boyfriend, I mean your propaganda minister, I mean the one you love and trust, lil Tuckie?
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Only one of us mentioned politics or is worked up. And only one of us understands economics and that 10 rich people can't prevent a recession. Have a nice evening
 
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heckmans said:
Only one of us mentioned politics or is worked up. And only one of us understands economics and that 10 rich people can't prevent a recession. Have a nice evening
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Keep sleeping dude, that's just how they need you.....and yes, of course they can.
They also could end world hunger with only the interest they accrue in a single year but keep talking about Reganomics.
 
lowhandicapper said:
Keep sleeping dude, that's just how they need you.....and yes, of course they can.
They also could end world hunger with only the interest they accrue in a single year but keep talking about Reganomics.
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I'll humor you here...please explain how a small number of rich people can prevent a recession?
 
Waste Management Consultant said:
Neil Young sold 50% recently, Lindsey Buckingham sold his entire thing. These are the most recent. Is it royalties in perpetuity vs lump sum? Tax planning? Estate planning? There has to be long term value if someone is willing to purchase for hundreds of millions $$$. And likely increase in value. Finance guys & Law guys is there some benefit than the obvious windfall on this?
Click to expand...
My guess is that they’re trying to settle their estates before they die. These catalogs are worth a lot of money and when they pass them along their heirs will have to pay a high percentage of inheritance tax. Probably something like 30 or 40%. When you sell something that’s worth $200 million at 30% tax you have to come up with $60 million Dollars in taxes. Very few people have that kind of liquid cash. So they have to do a fire sale and get low dollar value for the total asset. Better to sell when you don’t have to. I am sure they never gonna have to worry about where the next bill comes from or how to pay the rent
 
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heckmans said:
I'll humor you here...please explain how a small number of rich people can prevent a recession?
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You really need to read up and unlock your mind dude. There has only been one real recession in the last 40 years and it was caused by mortgage gamblers gone wrong not worldwide economic conditions. It turns out that in the following years that recession created more wealth than any single event in the history of mankind. If you can't understand that all the investible assets are actually owned in their entirety by a very small group of people then you aren't living in reality. Your 401k is crumbs. 500 people own 40% of the stock market. They can in very real terms dictate how those businesses operate, which is directly related to their stock price. They will never let the market crumble again because it now is all their money. If they do it will be a controlled crumble on their terms for their benefit....Ever hear of a short? They so literally can control markets, if you think you are living in some free capitalist market utopia boy do I have news for you. So yes, barring a complete global meltdown of proportions much worse than a global pandemic, there will not be any recessions coming soon. Will there be periods of slowed growth, of course but a recession in a historical sense will never happen again. If you want to know how fake our economy is just take note that wealthy people made as much money in a pandemic as they ever have while people couldn't buy things or find work, all while the stock market hit all-time historical highs. So there goes that argument about how such conditions create a recession.

This isn't a hard concept but keep clinging to that 1980 economics book you read 30 years ago, you can file that book next to the 1978 book entitled America's Bomb Shelter Map Under School District Properties.
 
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