Planet Money Indicator: NPR




This is THE PLANET MONEY INDICATOR. I am Stacey Vanek Smith. And today, I’m very excited because my friend and extraordinary NPR cultural correspondent, Anastasia Tsioulcas, is here with us. Hi, Anastasia.

ANASTASIA TSIOULCAS, BYLINE: Hello, Stacey. I’m so happy to be here, and I have a question for you. What’s the very first song you remember liking?

VANEK SMITH: (Laughs) I really liked John Denver when I was little. My parents took me to one of his concerts, and so “Rocky Mountain High” was, like, the first song that I really remember loving.


JOHN DENVER: (Vocal) Rocky mountain in Colorado.

TSIOULCAS: Incredible.

VANEK SMITH: And you, Anastasia? It’s going to be something very sophisticated, isn’t it? It will be, like, Vivaldi.

TSIOULCAS: Stravinsky.

VANEK SMITH: (Laughs) And what song did it?

TSIOULCAS: ‘Rite of Spring’ – and to be honest, I bought it on the same trip that I also received New Order’s collection of singles, ‘Substance’.

VANEK SMITH: Okay. I always stand next to “Rocky Mountain High”. It’s an excellent song.

TSIOULCAS: You should.

VANEK SMITH: We all have these very emotional attachments to songs. And these days, musicians and investors are betting big on those emotional attachments. In fact, many well-known artists have made headlines recently for selling their songs for big bucks. Exact numbers aren’t always public, but we have an idea in many cases — like Bruce Springsteen, $500 million, Bob Dylan, $350 million, Stevie Nicks, $100 million — thinks she’s under -invoice.

TSIOULCAS: And it’s not just older boomer artists who are now over 70 who are considering what’s next and selling their songs. John Legend, for example, is only 43 years old. But last month he also sold the rights to his hits.

VANEK SMITH: It’s an expensive conversation in the dark.

TSIOULCAS: (Laughs).

VANEK SMITH: Sorry (laughs). So today on the show, we’re looking at who is buying these musicians’ work and why, and how the songs are now presented to investors as, you know, stable assets that are kind of like gold.


VANEK SMITH: Historically, the economy of the recording industry is messy and quite complicated, and a lot of artists will tell you that’s actually on purpose. I mean, it was an industry that had ties to gangsters since at least the 30s and 40s.

TSIOULCAS: And the thing to know right now is that in a lot of these gargantuan agreements, we’re talking about the rights to the composed music and the lyrics, not the recordings that artists make of that music.

VANEK SMITH: Musicians who have written their own material are selling their songwriting copyrights to investors. They’re all acutely aware that these days they’re earning far less on Spotify and other streaming services than they did when fans bought CDs or vinyl.

TSIOULCAS: And some of the rights can be a really good deal for them. Maybe they’re older now. Maybe they’re not so interested in being on the road on tour anymore.

VANEK SMITH: Yes, exactly. And for most artists, touring was their main way of making money. And the pandemic, of course, has put a stop to a lot of that. And so it became a pretty natural time for musicians to pick up a pace, so to speak, and figure out what they want to do now. So Anastasia, you went to some of the biggest players in the music industry to find out why music has become so attractive to investment companies and venture capitalists all of a sudden cut ?

TSIOULCAS: That’s right. One of them is Merck Mercuriadis. As a long-time figure in the music industry, he’s worked with what seems like everyone – Culture Club, Iron Maiden, Elton John, Guns N’ Roses, Beyonce.

VANEK SMITH: And Merck’s company, Hipgnosis Songs, now has about $2.2 billion in assets. And Merck makes, you know, a nice amount of money. But he says he also tries to make sure songwriters get a fair share of those deals, because it’s a business, the music industry, that often tends to pass the songwriters last.

MERCK MERCURIADIS: As a manager, I also started taking songwriters under my wing. So people like the amazing Diane Warren who wrote “I Don’t Want To Miss A Thing” for Aerosmith or The-Dream who wrote “Single Ladies (Put A Ring On It)” for Beyonce and “Umbrella” for Rihanna.


RIHANNA: (singing) You can get under my umbrella.

VANEK SMITH: Merck has also promised its investors that it can make these songs make real money, so it’s bought the rights to songs from everyone from Justin Bieber to Kenny Chesney.

TSIOULCAS: Merck likes to compare songs as an asset comparable to gold and oil, and that’s music to investors’ ears.

MERCURIADIS: Because when songs become hits, they become part of the fabric of our lives and then the fabric of society. So, you know, if you’re a 14-year-old boy or girl in 1982 and you’re listening to Eurythmics’ “Sweet Dreams (Are Made Of This)” and you have your first crush, this song stays with you. And it stays with you, you know, 40 years later.


EURYTHMICS: (Singing) Sweet dreams are made of it.

WEDNESDAYS: In good times, in bad times, it makes earnings from these songs very predictable and reliable, which is why we look to assets like gold and oil and why they’re so investable . But actually, you know, if there’s a political upheaval, then the price of gold and oil is affected. Likewise, when, you know, we’ve been through a pandemic that none of us could see coming for the last two years, the price of gold and oil is affected, but the songs are something who comforts you and you ‘I escape with these great songs, so they are always consumed.

TSIOULCAS: It’s sort of a mix of old-fashioned entertainment and investment talk. But investors are clearly liking the returns they’re seeing, according to Larry Miller. He is a professor and director of the music business program at New York University.

LARRY MILLER: As we sit here at the start of 2022, the value of music rights is at an all-time high. If you were a songwriter who wrote a really big catalog and maybe you were planning to sell it a decade ago in 2011 or 2012, you might be able to get something between 12 and 15 times the annual net income for this catalog. Today, this same writer, they are able to get more than 25 to 30 times or more annual income.

VANEK SMITH: It’s good money.

TSIOULCAS: And these companies are making a return on their investment by putting these classic songs back into the public ear. They allow them to use them in commercials, movies, video games, TV shows, on Peloton and earn revenue through streaming services as well. Of course, we live in the age of all-you-can-eat streaming. But paying royalty rates for services like Spotify and YouTube is much lower than for CDs and vinyl.

VANEK SMITH: Yes. So, for example, the songwriting royalty payment for a CD would be around a dollar. In contrast, Spotify pays, for example, a fraction of a penny per song stream.

TSIOULCAS: And Merck argues that many people now view streaming subscriptions, not as a luxury or even a discretionary expense, but as a utility.

VANEK SMITH: And that means that even though the royalty payments are made in a very incremental way, it all adds up to some revenue. And if you’re a company that now owns thousands of the most popular songs in history, that can be a big chunk of money.

TSIOULCAS: And some of these companies go even further to make money for their investors. Take the primary wave. It’s another one of those publishing houses, and it was founded by another long-time music executive, Larry Mestel. Yeah. It’s another Larry for you.

VANEK SMITH: (Laughs).

TSIOULCAS: He buys the writing rights. But for his company, it’s about presenting a musician as a brand. Primary Wave also does business for artist names, images and their life stories. He wants the musicians he works with to be everywhere.

LARRY MESTEL: Take the Styx group. Our brand team came out and entered into a brand alliance with Styx. We created a beer called Oh Mama beer, you know, based on the song “Renegade”.


STYX: (singing) Oh mom, I’m scared for my life.

VANEK SMITH: I mean, if you were fearing for your life because of the long arm of the law, it’s definitely time for a beer.

TSIOULCAS: (Laughs) And it’s also the unofficial theme song for the Pittsburgh Steelers, and they have very serious feelings about that song.


STYX: (Singing) The jig is up.

MESTEL: That’s true. And so now Styx, Tommy Shaw, have their own line of beer. It’s sold in box stores – I think 200 locations now sell Oh Mama beer.

VANEK SMITH: Oh mom (laughs).

TSIOULCAS: It’s definitely the brand image.

VANEK SMITH: It’s catchy.

TSIOULCAS: So expect all of these classic songs to become even more ubiquitous thanks to Wall Street.

VANEK SMITH: This episode of THE INDICATOR was produced by Brittany Cronin and engineered by Isaac Rodrigues. Corey Bridges checked the show. Viet Le is our lead producer and Kate Concannon is editing the show. THE INDICATOR is an NPR production.


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