Recently, a lot of huge artists have made headlines by selling their publishing rights, or their masters, or both, and often for mind-blowing amounts of money. Bruce Springsteen shocked fans when he sold his masters and publishing rights for a reported $500 million. Bob Dylan sold his publishing rights for a reported $300 million, and later sold his masters in a deal that was surely in the nine figures as well. Sting recently sold his publishing rights, as did Stevie Nicks.
Michael Pagnotta has worked in music publicity, as a manager, as a music supervisor and in publishing. We reached out to him to get some perspective on why so many artists are selling their most valuable assets now, and why they are getting so much money for them.
One obvious question is, why are companies paying so much money for these catalogs? As much as rock fans may adore and revere artists like Springsteen and Dylan, when a company is paying hundreds of millions of dollars for a song catalog of an artist in their 70s or 80s, they’re clearly investing for the long run; they’re working under the assumption that the artist’s songs will still be in demand for movies, tv shows, commercials and other uses for years to come. And how much money can they possibly generate from these catalogs 10 and 20 years from now?
“That’s the big question, right?” Pagnotta says.”They’re not throwing hundreds of millions of dollars at anybody, no matter how much they love them, unless they’ve crunched the numbers. So on some level, you know, they must be able to justify what they’re paying.”
“Selling publishing catalogs is not a particularly new thing,” he notes. “It just used to be something that people did at a different point in their career, usually out of desperation [for money]. The first thing I ever learned when I entered the music business was from a music publishing lawyer: He said, ‘Any artist you ever represent, tell them to never sell their publishing.'”
One reason for the huge infusion of money in the catalog-buying space is the Wall Street firms that don’t come from the music industry, but who have more money to spend. As Rolling Stone reported, Kohlberg Kravis Roberts (KKR), an investment firm with over $230 billion in assets, recently purchased a majority stake in a publishing catalog from Ryan Tedder, the OneRepublic frontman who has written hits for and with Adele, Beyoncé, Stevie Wonder and the Jonas Brothers. Pagnotta says, “When a huge investment guy comes in, who doesn’t really know very much about publishing business and radio syncs and placements for film and television, you have to think: they’re spending a fortune on this stuff. I just hope they have people who understand how to get this stuff out there. It’s not necessarily clear to me that that is the case. They claim they do. But they never really talk about how they are going to make this money back.”
As for the artists, some fans may have been surprised to learn that artists who have built up a certain kind of credibility, like Springsteen and Dylan, would basically sell their legacies. Neither artist would seem to be struggling for money. However, no matter how wealthy and successful an artist is, you could imagine that a nine-figure check would be hard for anybody to turn down. But there could be other considerations: there have been well-publicized battles between the heirs of Prince and also Aretha Franklin. Selling the publishing is sort of like a will for artists whose catalogs will generate money long after they’re gone. Besides avoiding any animosity, an artists’ heirs may not be qualified, or interested in, running a publishing business.
“While you’re in sound mind and there’s a great offer on the table, you might take it so that you can keep your whole family from killing each other when you’re gone. I think that’s a perfectly reasonable thing to do,” said Pagnotta.
But what about younger artists like John Legend and Ryan Tedder?
“Both of those artists [selling their publishing] mystifies me, but I think we just have to assume that they have excellent advisors around them and probably good instincts, and they’re making the decision based on something very real that we’re not aware of,” said Pagnotta. “John Legend writes a lot of successful songs, but not a lot of number one or top 10 pop hits. So if somebody comes to him with an offer of 100 million dollars or twenty-five times what his catalog makes in a year, maybe he thinks, ‘Well, this isn’t going to go on forever. I’m worried that the tax laws are going to change. I’m a smart guy, I have good people around me, I can take $100 million and turn it into five hundred million by the time I’m 70.’ We just don’t know. But that would be the only reason.”
Pagnotta added, “Nobody is doing it to do anybody a favor. But if he’s making that deal, he obviously knows something we don’t know. But I think as we said before, if someone throws tens or hundreds of millions at you, it’s very hard to say no.”