The industry-wide chatter about music catalog buyouts tends to be geared towards the biggest pennies for the biggest superstars, however, there is a smaller but equally lucrative market.
Bruce Springsteen ($590 million), Jay-Z ($470 million), Bob Dylan ($300-400 million) and Paul Simon ($260 million) are among the biggest music catalog sales boomers .
But in reality, the opportunities are much wider, and purchase prices can be low six figures.
“There’s a lot in the news about huge, massive artist sales, but there’s a lot of smaller artists, producers, and songwriters taking advantage of the groundswell that’s happening in this space. “
So says Matt Bird, partner and head of royalties at an Australian music accounting firm. white sky.
Is there also room for local catalogs of international investors?
“Definitively!” Bird underlines. “The quality of Australian music is world class, and as we know, with the internet, wide reach is easier than ever, so geolocation doesn’t have to be a factor.
“Buyers are looking everywhere for catalogs to acquire,” he says. “Some buyers are also looking for untapped opportunities, which can be a certain catalog to exploit in other markets.
“So it’s definitely being considered globally.”
White Sky has already been involved in the catalog sales of two major international songwriters and is exploring other opportunities both in their home country and overseas.
This is major growth for the business since it was founded in 2002 by Tom Harris in his bedroom in Melbourne, providing accounting for Australian bands and small music businesses.
Twenty years later, White Sky has 50 employees in its Melbourne and Sydney offices, providing tax services, bookkeeping, tour accounting and specialist royalty accounting.
Bird joined in 2012. Eight years as a royalty manager at record labels allowed him to see the monumental shift in royalty accounting from inside the bubble.
White Sky participated in two recent international catalog sales
The first was Calvin Harris (who Variety estimated sources at “approximately” US$100 million), and the second was Bruno Mars co-writer, collaborator and record producer Philip Lawrence.
“We were part of the larger team that made these deals outside of the United States,” says Bird. “Our role was to analyze the data and analyze the numbers of the different sources of royalty income.
“Interpret the data in a meaningful way to ensure we negotiated the highest selling price.
“We have been providing royalty services to artists and business owners in the US and UK for about five or six years now.
“Having these unique skills has allowed us to build a strong network around the world.
“These trusted relationships, combined with an understanding of music royalties, allow us to facilitate catalog sales for Australian artists and ensure they get the best possible price for their work.”
A number of reasons are given as to why so many catalogs have come to market.
The long tail of streaming is driving demand.
“Traditionally, you might only see these massive artists with ‘classic’ back catalogs going on in a space like this,” according to Bird.
“But streaming revenue is a far cry from the ‘peak then drop’ pattern we’d see with the album cycles of previous decades.
“Revenues can be ongoing and generated in ways other than just releasing new music.”
The data generated by DSPs made it easier to assess a song’s value and project revenue.
Other factors include rising royalty rates, low interest rates, catalog diversification and a tendency to seek returns streams that are less correlated to the stock market and have higher yields than those offered by bonds.
There are many minefields to avoid, so getting expert advice and support is recommended.
The shopping process can be tedious, especially finding the right buyer without the right contacts or understanding the value of their copyrights.
Good catalog and royalty data are all important to increase the selling price.
“Artists only have one chance to capitalize on an opportunity like this,” Bird warns.
“So it’s essential to make sure they get the maximum sale price.
“There is a lot of information hidden among the thousands of lines of a royalty statement and being able to understand and analyze this data correctly is key to increasing the chances of a great result.
“Identifying key territories, understanding particular revenue streams and demonstrating continued interest in the catalog are all key factors.”