If you’re in the music industry, you already know the value of royalties. Some artists, like Paul McCartney or Taylor Swift, have been embroiled in years-long legal disputes to buy back their songs. So why would someone sell off the rights to their music? And why are rights so valuable — for record companies, artists, and even investors — anyway?

This month, two music legends — Bob Dylan and Stevie Nicks — sold off their music rights. Nicks only sold an 80% stake of hers, while Dylan sold it all. Both business decisions made headlines because artists don’t typically get rid of their back catalogs. If anything, they fight for ownership. Rights are considered the most valuable asset for a music artist for a handful of reasons: streaming is bigger than ever, the pandemic has eliminated other sources of income, and rights are a recession-proof investment.

How music rights work

According to The Economist, when a song is recorded, the composition and the recording itself both get copyrights. If a song is covered a lot (like “Yesterday”), the composer gets paid every time the cover is played. If an artist writes their own songs, they tend to get more money. 

Royalties are then split into three categories. There are mechanical rights, which are reserved for when songs are streamed or sold in a physical format, like a record. Then there are performance rights, which are for concerts or radio plays. Lastly, there are synchronisation rights, for when a song is played during a TV show, film, or video game. And for popular songs, money comes pouring in long after the album is released.

Streaming has made rights bigger than ever, namely mechanical rights on platforms like Spotify and Apple Music. Record companies have been racing to buy up rights due to their quickly rising value. Last year, the global value of deals for publishing rights to artist catalogues topped $4 billion, a fourfold increase from 2017, according to MiDiA Research. It’s set to keep growing.

Then there’s the pandemic, which has changed the music industry completely — with no more live events (just livestreams), musicians are struggling to find steady income, making streaming an even more vital source of money. 

Artists buying and selling rights

One of the all-time biggest music icons, Bob Dylan, sold all the rights to his music in a $300 million deal with Universal Music Publishing Group. Stevie Nicks, of Fleetwood Mac fame, made $100 million from her copyright sales to music publisher Primary Wave. Nicks’s sale came on the heels of her Fleetwood Mac hit, “Dreams,” going viral on TikTok, breathing new life into a classic. 

After both sales were announced, other artists in the later stages of their careers offered a variety of viewpoints. Country music legend Dolly Parton said she’s been thinking about selling her catalog, as long as she still has some say in how the songs are used. David Crosby, on the other hand, is considering the same move due to the lack of touring during the pandemic and the lack of income coming in from mechanical (streaming) rights. In a recent tweet, Crosby wrote that “streaming stole my record money” and that “I have a family and a mortgage and I have to take care of them so it’s my only option.”

Crosby may be dependent on income from his music, but surely greats like Nicks, Dylan, and Dolly are rich enough not to sell their music? Another reason for these sales is simple: estate planning. Older artists want to preserve their legacies after they’re gone, while making a bit of cash in the process. While the notoriously media-shy Dylan hasn’t commented on his own sale, Parton listed estate planning as a motivating factor for hers.

Taylor Swift, who, like Crosby, has spoken out about Spotify’s meager checks to artists, is doing the opposite by trying to get her rights back. Ever since music manager Scooter Braun bought the rights to Swift’s first six albums in 2019, Swift has publicly criticized the deal, calling it the “worst case scenario” for her due to her disdain for Braun. The deal, which has been valued at upwards of $300 million, was made with Big Machine Label Group, the label Swift signed with as a teen. Swift’s anger came not only from the deal, which she says was made without giving her the right of first refusal, but also because of Braun himself, who managed her longtime rivals Kanye West and Justin Bieber.

In November, the rights were sold yet again to Shamrock Capital, a Los Angeles-based investment firm. Swift wrote that she’d been offered the opportunity to be a partner with Shamrock, owning equity in the investment. Swift said she turned the offer down because the deal would put more money in Braun’s pockets. Instead, Swift has entertained plans to re-record her first six albums as a way to devalue the original material.

Swift’s fight for her rights mirrors that of Paul McCartney. The former Beatle settled with SonyATV to get back the rights to 267 of the band’s tracks back in 2017. McCartney doesn’t have the rights just yet, however — once all of the 56-year copyrights expire in 2026, he should finally have ownership of his band’s music, which is worth over $1 billion. By then, he'll be 84 years old.

Investors cashing in

Record companies aren’t the only ones making money from rights. Companies like Royalty Exchange, Hipgnosis, and Round Hill Music Royalty have spent millions of dollars on rights, and it’s proving to be a hit with investors. 

Hipgnosis, for example, is a publicly traded UK company that has raised £860m since 2018. According to the Guardian, the firm has spent £700m on the rights to more than 13,000 songs, including hits by Blondie, Barry Manilow, and Bon Jovi. The two-year old firm’s founder, Mark Mercuriadis, says older hits are the key to making money, and that music rights are unlikely to go down in value despite recessions and pandemics. It seems that no matter what’s going on in the world, people need music to get them through.

Mercuriadis told the Guardian, “When I say it is as good or better than gold or oil, it is because it is uncorrelated to what is happening in the marketplace.” 

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