Why do major record companies pay millions for the catalog of a (deceased) artist?
Over the past year, there was regular news about major artists who had sold their music catalogs to record labels. American rocker Bruce Springsteen, for example, concluded the most expensive agreement ever as a solo artist with Sony for 500 million dollars. The company made a similar deal with Paul Simon. BMG paid millions for the oeuvre of Tina Turner. And Universal invested hundreds of millions in Bob Dylan’s collected works.
More than ever, music companies are investing again in the so-called publishing rights of (mainly older) artists. Simply because there is money to be made with it. Whoever owns the music rights to a particular work completely determines what happens to that music. Which records will be re-released, which songs can be used in commercials or films, which offers are available on streaming services.
Due to the major breakthrough of those streaming services, there is still little money to be made from the sale of music. And due to the corona crisis, the live circuit has not or hardly been running for almost 2 years, while artists themselves earn the most from those concerts.
For investors, music rights are an interesting alternative to earn money from an artist in the long term. Especially for so-called timeless artists with a long track record, whose music can last for years to come, a nice sum of money can be earned from this. And so the sale of those rights becomes a win-win situation.
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