Why David Bowie, Bruce Springsteen and more are selling their music catalogues | CBC News
When David Bowie’s estate sold his entire music catalogue for $250 million US last week, the late British rocker joined a group already bursting at the seams with new members.
Bob Dylan, Stevie Nicks and Neil Young have all sold theirs in recent years, while newer artists — including Shakira and Calvin Harris — have also jumped on the trend. And just days after Bowie’s sale singer/songwriter John Legend parted with his catalogue for an undisclosed amount.
But the payouts aren’t cheap. Bruce Springsteen hammered that home when he made the largest-known single-catalogue sale in December for $500 million US.
Why are corporations willing to spend so much to acquire these musicians’ catalogues? And why are some of the biggest superstars of the past 50 years parting with the bodies of work they spent a lifetime building?
CBC News explains why catalogue sales have become a defining part of today’s music industry.
The timing of a U.S. tax loophole
“The reason why you’re hearing about this right now, and why it seems to be happening quickly is a U.S. tax situation,” said Patrick Rogers, CEO of Music Canada. “The opportunity to do this at the best financial time is right now.”
Due to what many call a “loophole” in American tax law, musicians making a large sale right now pay less than half as much as they might a few years from now, when that loophole is closed.
When United States President Joe Biden was elected, he pledged to alter the country’s capital gains tax law so that it would fall in line with income tax for high-earners. Or in other words, it would ask — as stated on his website — “those making more than $1 million to pay the same rate on investment income that they do on their wages.”
That means the taxes musicians pay on their catalogue sales could jump to around 37 per cent from roughly 20. For sales in the hundreds-of-millions, that represents a huge amount of money, Rogers said, and it’s pushing musicians who are considering the move to get it done.
Pandemic effect on live music
Another factor is a direct result of the pandemic: the loss of live music, which forced an already struggling industry to adapt quickly.
“Live music obviously has gotten impact[ed] really extremely by the pandemic, more than any other aspect of the music industry,” said Tim Jones, founder of music label Vnclm_ and management company Pipe and Hat. “So, you know, we’ve had to really move everything to digital over the last couple of years.”
After decades of musicians being able to rely mostly on record sales for income, the rise of file-share sites followed by the rise of streaming all but destroyed that source of revenue. Performers were forced to turn more and more to unending touring schedules to make a living — a last-resort option that was then taken away by COVID-19 closures and social distancing.
Without live-music revenue, musicians — even top-earners — have been forced to adapt.
And while some have been able to transition to digital mediums nearly seamlessly (like Travis Scott did with the virtual-reality (VR) Fortnite concert, early on in the pandemic), that’s not a viable option for every genre, Jones said.
“Artists that are kind of on the cusp and trying these new technologies … are going to need to have an audience that’s also on the cusp,” Jones said. “Because, you know, the average person isn’t going to just go out and spend hundreds or thousands of dollars on a VR headset if they don’t already have one, just to watch a concert, right?”
So artists who have been in the industry for decades and musicians in less cutting-edge genres are motivated to find income somewhere else. And many musicians have publicly complained that the amount they make from streaming platforms like Spotify and Apple Music is far too low to live on.
Nostalgia-driven streaming
Meanwhile, corporations are motivated to buy these catalogues now because there are repeated and ongoing opportunities to gain revenue from each additional listens with the outsized place streaming has taken in the industry.
According to a report by Billboard, Springsteen’s music brings in an estimated $17 million a year. It’s a commanding figure, but not completely divorced from other musicians’ experience.
The pandemic, rise of streaming and the influence of TikTok have come together to supercharge the success of catalogue music — music that was released years in the past — over new releases.
Many musicians in Canada have struggled to make a living during the pandemic because of closed venues and streaming services that average only half a cent per stream. 2:04
According to a year-end report by U.S. market monitor MRC Data and Billboard, the market share of new music actually decreased in 2021 for the first time since monitoring began in 2008. Catalog sales, meanwhile, increased by 23.8 per cent to 73.7 per cent of total album consumption.
While corporations and musicians can both see value in the catalogues now that they are more popular, it just makes more sense for some artists to cash in on the opportunity to sell.
“What you’re seeing is those people deciding to take … one big payment now and giving those rights to people,” Rogers said, “rather than waiting for them to come in piece-by-piece.”
Canada and music repatriation
Outside of raw revenue, there’s another motivation behind acquiring catalogues and song rights for one music industry veteran: patriotism.
Michael McCarty founded Kilometre Music Group (KMG) early last year to acquire the song and catalogue rights of Canadian music — from both Canadian performers and songwriters.
Canada is “punching above our weight more than Britain did during the British invasion,” in the music industry, and has been for decades, McCarty said.
Musicians Drake, Justin Bieber and the Weeknd dominate the charts week after week, he said, and Canada outperforms countries like England and Sweden in terms of the amount of globally successful music versus the size of the country.
“There’s probably a hundred people in in the Greater Toronto area that are co-writers on globally successful records right now,” McCarty said. “And the actual Canadian presence on the [Spotify] worldwide top 10 chart for every week is easily 50 per cent of the chart, which is unbelievable thing.”
But, he said, the rights to most of that music is owned by foreign companies, which means Canada is potentially missing out on a huge revenue stream.
KMG has so far made six acquisitions, including partial rights to the Weeknd’s Blinding Lights and Save Your Tears, and Dua Lipa’s Levitating, which was co-written by Canadian record producer Stephen Kozmeniuk. Those tracks were the top three of Billboard’s Hot 100 songs for 2021.
McCarty said, by acquiring the rights to this music, he hopes to support the “delicate ecoystem” that fosters musicians in Canada. Because, he said, the future of the industry is rights ownership.
“The natural resource of the future is information and the ownership and control of information,” McCarty said. “And unless we wake up and start to retain control over our intellectual property, we risk moving from resource barons, to info-serfs.”
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