Rain may be falling heavily on many musicians during the pandemic, but it is not the case for Bob Dylan. Universal Music announced Monday that its publishing division has bought the entire catalog, with more than 600 songs, of the 79-year-old legend. The value of the agreement is estimated in hundreds of millions of dollars. .
Investors are increasingly interested in music copyright as an alternative asset. The case for investment rests in part on continued recovery. The streaming services of Spotify, Apple and others have served to revitalize the industry. In the United States, sales of recorded music saw a compound annual increase of 13% between 2015 and 2019, according to Deloitte, with last year’s revenue reaching the highest in 10 years. Royalty income is very stable, a sweet that does not make anyone bitter. Artists are under pressure to sell. The money that came in from the tours ran out in 2020. Without a doubt, many will be looking for liquidity to protect themselves from the storm. Like US equities and many other assets, music rights have been changing hands at above-average multiples: around 10 or 18 times annual royalties versus 8 times or 13 times in recent years, according to the WSJ.
Dylan probably won’t benefit in the long term from increased streaming, so it makes sense for him to cash in now in a hot market. However, younger and less famous artists should be careful about giving up their future income, not to mention the risk of seeing that your songs are controlled by people you do not like, as has happened to Swift. Selling a handful of songs can solve your cash flow problems now, but selling everything in bulk and in a rush is something you may seriously regret in the future. Present value will one day be past, and when it comes to music industry finances, times are changing, as Dylan would say.
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