Selling Music Catalogues

[Stadler]

I don't know if we've talked about this before, but this is the latest thing.  It started I think with Bowie back a while ago, but in recent months/years, Bruce, Dylan, Floyd, Genesis and the Stones have all sold their catalogues - some performance rights, some publishing, some both - for insane amounts of money.  Floyd is asking £400 for their catalogue.

Anyone know the details here?  I can't imagine selling an annuity like that, especially for some of these artists that don't seem to be of the ilk to use their songs in car commercials.  But some of them are awfully business savvy (Gilmour, Jagger, Springsteen) and for them to do it, it can't be the ridiculous thing I tend to think it is.

Do they maintain some control? 

[pg1067]

Floyd is asking £400 for their catalogue.

£400 is less than $500.  Guessing you left off a few zeroes here.   

Anyone know the details here?  I can't imagine selling an annuity like that, especially for some of these artists that don't seem to be of the ilk to use their songs in car commercials.  But some of them are awfully business savvy (Gilmour, Jagger, Springsteen) and for them to do it, it can't be the ridiculous thing I tend to think it is.

Do they maintain some control?

I'm familiar with one transaction in particular, although I can't say who it was.  For the sake of being clear about the terminology, "publishing rights" generally refers to all of the exclusive rights of copyright (17. U.S.C. section 106 in the U.S.) held by the owner of a musical composition copyright (as distinguished from a sound recording copyright).  "Performance rights" are one of these exclusive rights (the right "to perform the copyrighted work publicly under section 106(4)).  I suppose it could be possible to sell only the public performance right, but I've never heard of it.

At the end of the day, it's a bit like winning the lotter.  You can take payments over time that total to $X or get a chunk of cash up front that is equal to, e.g., $0.6X.  Copyright royalties are an income stream.  When a rights owner sells his/her rights, he/she is taking up front cash in exchange for that stream.  It's certainly possible that the rights owner could reserve some control, but I think the more likely thing would be a restriction on the buyer's right to license the works for certain purposes.  Obviously, such a limitation will reduce the value of the rights.

Not quite the same situation, but I handled a case involving a c. 1980 recording contract between a then unknown singer's loan-out company and a major label in which the singer was able to get language in the contract that restricted the label from licensing any recordings for commercial purposes.  There's certainly no reason why something similar couldn't be added into an agreement by which a rights owner's catalog of publishing rights is purchased.

[Stadler]

Floyd is asking £400 for their catalogue.

£400 is less than $500.  Guessing you left off a few zeroes here.   

I meant "millions".  400 million pounds sterling; I though that was about $600 million USD, no?

Anyone know the details here?  I can't imagine selling an annuity like that, especially for some of these artists that don't seem to be of the ilk to use their songs in car commercials.  But some of them are awfully business savvy (Gilmour, Jagger, Springsteen) and for them to do it, it can't be the ridiculous thing I tend to think it is.

Do they maintain some control?

I'm familiar with one transaction in particular, although I can't say who it was.  For the sake of being clear about the terminology, "publishing rights" generally refers to all of the exclusive rights of copyright (17. U.S.C. section 106 in the U.S.) held by the owner of a musical composition copyright (as distinguished from a sound recording copyright).  "Performance rights" are one of these exclusive rights (the right "to perform the copyrighted work publicly under section 106(4)).  I suppose it could be possible to sell only the public performance right, but I've never heard of it.

At the end of the day, it's a bit like winning the lotter.  You can take payments over time that total to $X or get a chunk of cash up front that is equal to, e.g., $0.6X.  Copyright royalties are an income stream.  When a rights owner sells his/her rights, he/she is taking up front cash in exchange for that stream.  It's certainly possible that the rights owner could reserve some control, but I think the more likely thing would be a restriction on the buyer's right to license the works for certain purposes.  Obviously, such a limitation will reduce the value of the rights.

Not quite the same situation, but I handled a case involving a c. 1980 recording contract between a then unknown singer's loan-out company and a major label in which the singer was able to get language in the contract that restricted the label from licensing any recordings for commercial purposes.  There's certainly no reason why something similar couldn't be added into an agreement by which a rights owner's catalog of publishing rights is purchased.
[/quote]

So it's basically cashing out an annuity of sorts.  That's what I thought.   But I think it says something pretty potent that so many of these artists are taking the payday. I know copyrights don't last forever, so there's that (you can calculate that present value fairly accurately when you know the discrete time line) but I would think as something to pass on to your heirs, that annuity has advantages over the lump sum.  Interesting.

Thanks, Paul, for the info.  And whenever you can disclose the band, we're all ears!  .  (I understand well why you can't and am only making a joke here.)

[faizoff]

Didn't Motley Crue do something similar like getting the rights to their music and then selling it later on?

[pg1067]

I meant "millions".  400 million pounds sterling; I though that was about $600 million USD, no?

Per google, 400M GBP is $481,092,800.

So it's basically cashing out an annuity of sorts.  That's what I thought.   But I think it says something pretty potent that so many of these artists are taking the payday. I know copyrights don't last forever, so there's that (you can calculate that present value fairly accurately when you know the discrete time line) but I would think as something to pass on to your heirs, that annuity has advantages over the lump sum.  Interesting.

Thanks, Paul, for the info.  And whenever you can disclose the band, we're all ears!  .  (I understand well why you can't and am only making a joke here.)

Yup.  That's an apt analogy.  While you're right that copyrights don't last forever, it may as well be.  For example, the Beatles songs co-written by McCartney will be under copyright (in the U.S., and I think it's the same in the UK) for 70 years after McCartney croaks.  Contrast that with stuff that Lennon wrote on his own, more recently, which will fall into the public domain in a little over 25 years.  The particular transaction I'm familiar with involved a one-plus-hit wonder, and I think there was a need for large chunk of cash.  Others would rather have the big chunk of cash now and let money managers grow it, rather than relying on a continuing royalty stream over the next century.

BTW...I don't mind disclosing the artist in a one-on-one situation.  I'm certain that the occurrence of the transaction is public knowledge.  I just don't want to connect any dots in a public, written forum (and, to be clear, it's NOT the artist whom I've mentioned here frequently).   

[El Barto]

Seems like in a roundabout kind of way it might allow an artist to maintain more control of his music after he croaks. There's not telling how family will deal with things once it turns into their revenue stream. At least this way he could have some of his own concerns addressed. Thinking about Hendrix and Zappa here. Had they converted it all into cash it could have been disbursed according to their own wishes. Instead the music became the basis for lawsuits that would have likely been contrary to their wishes. The girl who runs Hendrix's affairs doesn't seem to be doing a particularly good job, and probably isn't who Jimi would have preferred to see handling it. All quite ugly. Something similar with Zappa's family arguing over who gets to perform his music (though that might not be any different if he'd sold the rights).