57 years ago, Bob Dylan enraged folk purists by strapping on an electric guitar and performing with a rock band.
What could these purists have said when they learned that he had sold his valuable catalog of songs, including timeless and defining classics such as “Blowin’ in the Wind”, “Masters of War”, “Mr. Tambourine Man,” “Hurricane,” and “A Hard Rain’s A-Gonna Fall”—to a multinational conglomerate for nearly $400 million?
From a purely emotional point of view, selling your songs may seem uncomfortably close to selling your soul: after all, what is a song if not the expression of its author’s spirit? But in practical terms, these agreements make sense for both parties.
When entering the winter of life, it is prudent to consider what will remain and to whom. For most of us, it’s possessions, vehicles, inventory and boxes of stuff covered in dust – aka “trash” or “shit”, in the parlance of spouses around the world – cluttering up attics, basements, garages, closets and storage areas. Presumably, Bob Dylan has amassed those things, too – along with an extremely valuable catalog of songs, which generates publishing and writers’ royalties; master recordings, which earn money when sold, streamed, synchronized or otherwise “played”; and a vast archive of lyrics, notes, notebooks, letters, manuscripts and other “shit”.
In recent years, the value of these assets has soared to previously unimaginable heights, with publishing seeing multiples (or, the selling price of a catalog relative to its annual revenue) well over 20 times market value. current – especially after the pandemic stop touring, the main source of income for most musicians.
Against this backdrop, it’s no surprise that in the five years leading up to Dylan’s 80th birthday in 2021, he’s sold his catalog of songs, master recordings and personal archives for an estimated combined sum of over of $650 million, presumably leaving only his post-2016 archives and paintings, as well as everyday assets like real estate and cars, in the care of his heirs. The man’s suitcases are ready.
Most financial planners would applaud Dylan’s deal – and those of Fleetwood Mac’s Bruce Springsteen, Paul Simon, Sting, Stevie Nicks and Lindsey Buckingham, and the dozens of other upper-aged musicians who have chosen to do the same for nine-figure sums (and who also chose not to speak with Variety for this article).
“There is very favorable tax treatment in the form of capital gains, and multiples are still very high for premium catalogs,” says Larry Mestel, CEO of Primary Wave Music and a major player in song catalog acquisitions. “As these artists get older, they want to plan their estates and leave their heirs with money, not messy assets.”
Indeed, music as an asset is among the most messy, due to archaic laws governing royalty rates. After all, music isn’t like a Picasso, with a smooth but fairly predictable value and marketability. It requires constant attention: the songs need to be packaged and presented to advertisers, television networks, film companies and other potential customers. Unlike a Picasso, most songs and artists have periods of popularity, and therefore value; even the steepest precipitous decline as their core audience nears retirement age.
“Catalogs of this nature must be actively managed to be monetized, and in many cases this is beyond the capabilities of heirs,” says attorney Alex Weingarten, chairman of the entertainment litigation practice at Willkie Farr & Gallagher LLP. . and worked with the families of Tom Petty and former Paramount CEO Brad Gray. “Furthermore, turning the catalog into cash, regardless of its after-tax amount, is an opportunity to diversify estate assets.”
As with so many things in life, everything in this area is negotiable. One can sell a catalog from a certain time period, or slice and dice publishing revenue streams, recorded music rights, songwriter shares, performing rights, production points, merchandise, name and likeness – everything what can be sold.
And if that sounds harsh, it’s offset by the fact that almost anyone who sells a creation they’ve poured countless hours of sweat and tears into wants assurances that it won’t be used in a way that would turn them around in their lives. proverbial graves.
“The tension between art and commerce is as old as art,” says Weingarten. “Most artists are extraordinarily concerned not only that their art is exploited and monetized, but that it’s done in a way that respects their artistic heritage and isn’t off-brand: whether a song will be used for Super Bowl commercials, in movies, or scenes where it there’s violence or nudity, alcohol ads, things like that. All of this can be resolved by negotiating the deal.
Inevitably, on the other side of this transaction, there are people whose job it is to get their money’s worth. “We need to show growth when we make these deals,” says a senior executive at a company that has acquired numerous catalogs. “We cannot have our hands tied.
While the details of these matters seem like a potentially bottomless pit, most major artists have licensed their songs at one time or another, and contracts can be structured so that the new owner’s exploitation is “consistent with past practice,” the executive says. “We’re basically buying the house as is – if it doesn’t have an indoor pool, we can’t build one.”
Another option is for the artist or their estate to actively partner with the buyer, creating a joint venture that allows them to endorse and participate in projects and enhances the brand with an official seal of approval. Primary Wave Music and its 80 employees thrive on such transactions. “This is where we differ quite radically from our competitors: we almost always associate ourselves with the artist or his heirs”, explains Mestel. The company’s offerings range from standard film, TV and commercial syncs to official Kurt Cobain Converse sneakers and even a partnership between Alice Cooper and Cooper Tires. “We want to market with the artist,” he says. “For example, we have a 50-50 partnership with the estate of Whitney Houston. Most of our competitors buy [artists] because they don’t have the means to market or associate.
In recent years, artists like Dylan, Springsteen and Young have monetized their archives while still at the height of their careers, releasing elaborate box sets, autobiographies, photobooks and, in Springsteen’s case, even a month-long Broadway nine-figure autobiographical show. .
David Bowie, who passed away in 2016, spent quite a bit of time putting together an exhaustive and tastefully curated series of archival releases that should last for many, many years; his estate sold his edition earlier this year to Warner Chappell Music for an estimated price of over $250 million. Additionally, rather than selling his personal archive, as Dylan did, Bowie essentially toured his vast vault of clothing, photos, artwork, and other personal items: the traveling exhibition “David Bowie is” visited 12 museums in five years and sold more than 2 million tickets.
The artists above are or were savvy businessmen – each with decades-old close advisers – who had learned the value of their creative work the hard way and retained ownership of it. But not all superstars have such discipline. Any major artist who dies intestate – without a will – leaves their heirs with a financial ticking time bomb. Prince and Aretha Franklin’s estates racked up untold millions in legal and tax bills that their families had to figure out how to pay, amid the countless other sprawling and disorganized asset sorting problems; it is particularly shocking that Prince, who fought obsessively and at times self-destructively for the ownership of his work, should be so careless. But even the best-laid estate plans can go awry: Tom Petty and James Brown likely thought they had planned well, but legal disputes and unexpected complications still arose. (Brown’s ex-wife, it turns out, was legally married to another man when they married in 2001, eliminating her from his will.)
“The quality of planning depends on the planners,” says Weingarten. “If what should have been clear is less so because of errors that were made in the drafting of the documents, that creates ambiguity, which leads to problems. Sometimes there are different spouses and children of different spouses, and it creates tension and drama when the heirs are not aligned with what they want. Plus,” he sighs, “anytime you give someone a lot of money or control that they have nothing to do with gaining, it can create a sense of entitlement.
Also, Mestel notes, “You can have any document – a will, a trust, etc. – and people will always find a way to challenge it. So I would advise an artist to have excellent legal representation and to create a will and trust out of that will, so that his wishes as to how his assets and money will be held, marketed, managed and distributed are carried out as they wish, and to educate the heirs about what is those desires. He points to Michael Jackson, who may have spent money lavishly in his life, but left a strong will and team for what was beyond, like the gold standard. superstar estate planning.
Yet despite all the practicality and professionalism involved, it is implicit to understand that selling one’s life’s work is a sensitive business.
“It can be very emotional for the seller,” says the senior executive, who notes that he has only experienced one contentious moment in multiple catalog negotiations. “We want to make it as simple as possible and want them to be comfortable throughout the process – and do nothing to change their minds.”