Artists selling MUSIC RIGHTS CATALOGUES – Most important developments of 2022
In 2021, I wrote this article about why so many artists sell their music rights catalogues and I explained what kind of rights those artists actually sell. In 2022, the market for music rights catalogues remained (over)heated.
Among others, Justin Timberlake, Phill Collins and Sting cashed in a large lump sum payment in exchange for (part or all) of their copyrights and/or neighbouring rights in 2022. In addition, several new players entered the market and billions were again raised to invest in the purchase of music rights catalogues.
Furthermore, one of the most notable matters in 2022 was a deal that did not go through (for now): the sale of Pink Floyd’s catalogue that was put on hold.
I listed the, in my view, most notable deals and developments regarding the sale of music rights catalogues in 2022.
Most notable deals
The most notable music rights catalogue deals in 2022 (in my opinion) were: the following:
- Phill Collins and his fellow Genesis band members: this sale to Concord reportedly raised over USD 300 million and involved the gentlemen’s shares in copyright and neighbouring rights to Genesis music as well as solo work;
- Huey Lewis and The News: Primary Wave reportedly paid USD 20 million for the rights in the band’s music catalogue since its inception through 1994;
- Avicii: the family of Avicii, who died in 2018, sold 75% of his publishing and master rights to Pophouse (founded by ABBA star Björn Ulvaeus);
- Chuck D (Public Enemy): Reach Music bought the US rapper’s writer’s share of more than 300 songs;
- Alice in Chains: Round Music Hill reportedly spent USD 50 million on the copyrights and neighbouring rights of four Alice in Chains band members, while the heirs of the band’s original singer and bassist sold their music rights to Primary Wave;
- Simple Minds (Jim Kerr and Charlie Burchill): BMG bought the publishing rights and neighbouring rights from the Scots, among other rights;
- Swedish House Maffia (and Axwell^Ingrosso): Pophouse took over the copyrights and master rights from the popular Swedish producers;
- Neil Diamond: Universal Music Group bought Neil Diamond’s catalogue;
- Sting: the popular British singer sold the copyrights in his solo work as well as in respect of his music for The Police to Universal Music Publishing Group for an estimated USD 300+ million;
- David Bowie: the heirs of David Bowie reportedly earned USD >250 million from the sale of the singer’s publishing rights to Warner Chappell Music;
- Luis Fonsi: the Despacito singer sold his publishing catalogue worth an estimated USD 100 million to HarbourView Equity Partners.
Eye-catching transaction that was not signed (yet)
Perhaps one of the most notable (proposed) sales in 2022 was one that ultimately did not materialise (for now): that of Pink Floyd’s music rights. The rights to Pink Floyd’s catalogue (including the rights to recorded music, but excluding publishing) were reportedly up for sale for around USD 500 million. Many major players in the music rights catalogue investment market were said to be interested in Pink Floyd’s catalogue and involved in the bidding process, including Sony, Warner, BMG, Hipgnosis, Concord, Primary Wave and Blackstone. But disagreements between band members David Gilmour and Roger Waters are said to have paused the bidding process (for now), although the bidding process had already been going on for five months at the time. Several bidders are rumoured to be hoping that a deal is still in the offing, but by now it has been quiet for four months around this potential mega deal.
In an article about selling music rights catalogues to investors, Hipgnosis cannot go unmentioned. Hipgnosis is probably the best-known music rights investment fund.
Hipgnosis consists of Hipgnosis Song Management (HSM), which acts as an “investment adviser” and two investment funds, namely Hipgnosis Songs Fund (HSF) and Hipgnosis Songs Capital (HSC). HSF has been listed on the London Stock Exchange since 2018. HSC, on the other hand, is a private investment fund established in 2021 together with private equity investor Blackstone. HSM is tasked with seeking investment objects, or more in particular: interesting music rights catalogues, for both HSF and HSC. Blackstone is also a shareholder in HSM.
HSF did not purchase any catalogue in 2022. This seems odd, but the simple explanation is: it ran out of money. HSF has already spent USD 2.2 billion since its inception. That is money that has come from, inter alia, equity offerings and bank loans. However, HSF’s value did rise to USD 2.67 billion by mid-2022, according to HSF’s interim report for the six months until 30 September 2022.
HSC has not been idle in 2022. In 2021, the fund started with USD 1 billion in seed capital. At least USD 100 million of that was reportedly spent on Justin Timberlake’s copyrights in 2022. Furthermore, in 2022, HSC invested in music rights of Leonard Cohen and country star Kenny Chesney, among others.
Through its vehicle Hipgnosis Songs Assets, Hipgnosis also issued bonds worth USD 222 million in 2022. These bonds are backed by royalties derived from a catalogue of more than 950 songs, including songs by Justin Timberlake, Nelly Furtado and Leonard Cohen. In doing so, Hipgnosis followed the example of Northleaf Capital Partners and KKR, among others, which issued music rights bonds worth USD 304 million (NCP) and USD 1.1 billion (KKR) in December 2021 and February 2022, respectively.
Other noteworthy developments
Some other noteworthy developments in the music rights catalogue investment industry are the following:
- Swedish singer Zara Larsonn went against the grain, not by selling her rights, but rather buying (back) the rights to her recorded music from her label TEN Music Group;
- Primary Wave entered into a USD 2 billion deal with Brookfield Asset Management, of which USD 1.7 billion is intended to invest in music rights catalogues;
- Private equity investor Fransisco Partners bought a majority stake in Kobalt Music Group (reportedly 90% for USD 750 million);
- Asset manager Pimco, which manages USD 2,200 billion, partnered with BMG to enter the world of music rights investments;
- New player Litmus Music entered the music rights investment market with a bag of money from Carlyle Global Credit worth USD 500 million;
- Apollo Global Management entered the music rights bond market, backed by royalties from Concord’s catalogue, by issuing bonds worth USD 1.65 billion;
- Domain Capital Advisors set up a new fund to invest in film, television and music rights worth USD 700 million;
- There is also interest from music investment funds in the Asian market: South Korea-based Beyond Music planned to have invested USD 800 million in music rights catalogues by the end of 2022. In addition, Singapore-based Blackx Music Fund entered the Asian market with an initial capital of USD 100 million;
- Concord was almost sold for more than USD 5 billion, but major shareholder the State of Michigan Retirement System wanted at least USD 6 billion (which would mean a multiple of 30x profits);
- Mega-investor Blackrock partnered with Warner Music Group and Influence Media Partners by creating an investment fund with USD 750 million in seed capital.
The market for investments in music rights catalogues is (still) not saturated (yet). New players keep coming in and large sums of money are still being paid for some catalogues. Of course, whether all these investments actually pay off, remains to be seen. The Financial Times made this interesting podcast in October 2022, including some critical comments on Hipgnosis’ financial prospects.
2023 is now a month on the way and the first major transactions have already been announced. For instance, Dr. Dre sold part of his rights to Shamrock and Universal for USD 200+ million, Warner bought part of YES‘ recorded music catalogue, Justin Bieber sold his rights to Hipgnosis Songs Capital for USD 200 million, and John Fogerty just bought (back) a majority stake in Creedence Clearwater Revival’s publishing catalogue from Concord.
So, despite changing market conditions, the market for investments in music rights catalogues does not seem to be at a standstill, for the time being.
More information? Please contact Syb Terpstra