Why do artists sell their music rights? And what exactly are they selling?

David Guetta is the latest addition to a growing number of artists that sell their music rights. The French superstar allegedly earned around $100 million from the sale to Warner Music.

Why have many artists been selling their rights for such great sums of money recently? And what exactly are they selling?


Who sells, who buys?

Bob Dylan ($300 – 400 million), Neil Young ($ unknown), Stevie Nicks ($100 million), Paul Simon ($250 million), Imagine Dragons (>$100 million), Shakira ($ unknown), Lindsey Buckingham ($ unknown), Calvin Harris ($100 million), Red Hot Chili Peppers ($140 million), and the list goes on. And more deals are to be expected; Noel Gallagher may very well be the next to sell his rights.

In recent years, many famous artists have sold (part of) their rights. Some sold their rights to existing publishers (e.g. Bob Dylan and Paul Simon), while others sold them to investment funds such as Vine Alternative Investments (e.g. Calvin Harris) and Hipgnosis (e.g. RHCP).

Especially the last fund (Hipgnosis) frequently appears in the limelight. If not because of yet another purchase of a rights catalogue of some international music legend, then because of the announcement of new capital injections to be able to acquire even more rights. Since its establishment in 2018, Hipgnosis has spent more than $2 billion on rights catalogues. Allegedly, the fund is already worth more than $2,21 billion.

The market for music rights is also of interest to private equity investors. Earlier this year, one of the largest private equity funds in the world, KKR, announced a collaboration with BMG to make its debut in the world of music rights investments. Both KKR and BMG immediately reserved an investment budget of at least $1 billion.

The trend of music investment funds has also blown over to the Netherlands, where Pythagoras Music Fund (founded by famous composer John Ewbank and others) has been active since the beginning of this year.

What exactly do the artists sell?

The burning question is: what exactly are all these artists selling for these large amounts of money? The media often report that artists have sold their ‘music rights’ or their ‘music catalogue’. Sounds nice, but what does that entail? In practice, that seems to differ from artist to artist to quite some extent.

It seems that, so far, most cases concern the sale of copyright (or at least, the entitlement to profits resulting from the exploitation thereof). In other words: the rights of composers regarding the music composed by them and the right of songwriters concerning lyrics written by them. This, for example, seems to be the case for Bob Dylan, Paul Simon and Shakira.

In other cases, artists are only selling a certain part of their music rights, namely the publishing rights. This means that they remain owner of a part of the copyright, namely their so called writer’s share.

In yet other instances, it’s not about copyright, but about the sale of neighbouring rights, or related rights. These are the rights to a certain performance of the musical work (for performing artists) and the rights to the recording of the musical work (for music producers or record labels). The last rights mentioned are also referred to as the master rights. It seems to be the case that David Guetta has sold his neighbouring rights to Warner Music.

Well-known record producer Jimmy Iovine (producer and engineer of records of artists such as Bruce Springsteen, Tom Petty and U2, plus co-founder of Beats by Dre) sold his rights as record producer (most likely the neighbouring rights that were attributed to him).

Moreover, some artists are not only selling the rights to already existing music, but also the obligation to attribute the rights of future music to the buyer (Lindsey Buckingham will attribute 50% of future copyrights to Hipgnosis and David Guetta and Warner Music have also agreed to certain arrangements for future recordings). Often additional agreements are entered into as well, such as the agreement between Stevie Nicks and Primary Wave on the basis of which they entered into a joint venture to sign new song writing talent. Imagine Dragons sold their writer’s share in their copyrights, but also a part of their publishing rights, while the other part of their publishing rights remains in the possession of Universal Music Publishing.

What often happens, is that the artists do not sell all rights they own. Some artists only sell a part of their catalogue, while other artists only sell a certain percentage of their rights. Neil Young for example only sold 50% of his rights and kept 50% to himself. Stevie Nicks sold 80% and kept 20%.

How is the purchase price established?

The sums some investors are willing to pay for the rights catalogues are enormous. The purchase price is often calculated by using a so called multiple, or in other words: X times the (average) yearly income that the exploitation of the relevant rights generates. Regarding Bob Dylan, Neil Young, Stevie Nicks and RHCP, the multiple is allegedly 25 to 28 times the yearly income. In case of Paul Simon the multiple is even said to be 30. Presumably, the multiples are calculated over the average income of several years (probably the last few years); in the end the validation is based on a combination of results from the past and expected success in the future. Before the purchase price is established, artists will therefore have to give insight into their administration and profits over the last few years. The buyer will have to conduct a due diligence investigation in order to be able to establish how much income certain songs have generated in the past.

Why are all these artists suddenly selling their rights?

The sale of rights catalogues has become booming business over the last few years. This has several reasons, of which I will name a few:

  1. Instant income: the first reason is the most obvious. The sale of (a part of) your rights, means instant cash in the bank for the artist. This means you do not have to await fluctuating profits year after year. You receive one large lump sum payment, which provides you with certainty in the short term. You will never know beforehand if you would have received the same amount of money when keeping ownership of the rights (the market might crash, your music could become less popular, etc.). The downside to this is of course that, after the sale, you are not able to profit from any potential rise in popularity or income. That is, if you have not kept a share of the rights to yourself, of course. An artist might now gain millions of dollars in one instance, while it remains unsure for him/her if he/she might achieve the same over a longer period of time. Besides, age might be a factor for some artists; perhaps you would rather gain a quick $100 million while you are eighty years old than wait for a large portion of the profit to arrive while you are already dead.
  2. Prevent battles over legacy: a second reason is that artists want to prevent that their heirs will argue over the exploitation of the rights. By selling their catalogue before their death, the potential conflict is limited to the distribution of money. That may be easier to resolve in a will, than an abundance of rights scattered all over the place. Besides, the artist is then able to decide for itself what exactly happens to his/her rights. For example, Noel Gallagher has jokingly said the following about the negotiations with Hipgnosis about selling his rights: “My fear is leaving it to my kids and they’ll swap it for a choc ice or Playstation.
  3. Profits from the exploitation of music rights are rising: a third reason is that profits from music rights have increased rapidly over the last few years, especially since the introduction of streaming. After the revolution in (illegal) downloading and the slow death of CDs, a part of the music industry was declared dead. However, the revival has been so strong, that the profits from recorded music are now higher than ever. The Covid-19 pandemic has contributed to this, as has been demonstrated by the most recent substantive rise in streaming (and vinyl sales) in the US. Higher profits mean more interest from investors, who see music rights as a relatively safe long-term investment.
  4. Tax benefits: a fourth – and not unimportant – reason seems to be that the sale of music rights (at least in the US) could amount to tax benefits. Apparently, the sale of rights is considered to be a source of long-term financial profit in the US, which is taxed significantly lower than profit generated by royalties, which are considered to be ‘regular’ profit. Also, Joe Biden has proposed changes to the tax legislation, which could lead to higher taxes for artists. By selling their music catalogue now, artists can prevent that their incomes become subject to these higher tax rates.
  5. Money issues: a fifth reason is related to the first: it could be that some artists are experiencing trouble with their cash flow, possibly related to the Covid-19 pandemic and/or spending habits, etc. After all, the profit generated by live performances has seized to exist almost completely and for many artists, that was precisely the biggest source of income. In such circumstances, an artist might be compelled to sell his/her rights at once to establish financial security.

Many artists will follow

For now, no end to these developments is in sight. Presumably, even more artists will sell (a part of) their rights to investors in the coming years. I also expect the first public announcement of the sale of a rights catalogue in the Netherlands any time soon.

Noel Gallagher already knows what to do with the profit of a potential sale, when it does happen:

What do you do? Leave it to your kids? They don’t value music. Or do you take the £200million and buy the superyacht and the Learjet and go, ‘F***ing have it, come on! I think the latter. I’m getting a superyacht, I’m gonna call it ‘Mega Mega White Thing’. I’m gonna spend a year at sea. People can come and visit. I’ll be flying out my hairdresser, Neil, and paying £40,000 for a haircut. I’ll have a chef.


Want to know more? Contact Syb Terpstra, senior associate IP & Entertainment at bureau Brandeis, Amsterdam.



Competition Flashback Q2 2021

This is the first Competition Flashback by bureau Brandeis, featuring a selection of some of the key competition law developments of the past quarter (see the original version here).

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Overview Q2 2021

  • Notarial deed paper cartel; fine reduced from €2 million to €10,000
  • CJEU Recyclex: antitrust immunity only in the case of an extended infringement
  • Fine of €40 million for Dutch railway company NS struck down by Court
  • Private equity firm can recover cartel fine for incorrect information during due diligence
  • State Aid to KLM and Condor called into question as a result of inadequate reasoning
  • New ACM merger decision Sanoma/Iddink on the way after appeal by Noordhoff
  • Preliminary findings in the truck cartel damages case: claimants may go ahead
  • European Commission takes on Apple after Spotify complaint


ACM publishes notarial deed paper cartel four years later; fine reduced from €2 million to €10,000

ACM, press release of 1 July 2021 | Rotterdam District Court, judgment of 11 May 2021

Almost four years after the first fine decision, a long-running cartel case has been made public with the publication of a news release and a number of decisions by the Dutch Competition Authority (“ACM”). At the same time, the Rotterdam District Court also published two judgments in this cartel case (Rotterdam District Court judgments of 6 December 2018 and 11 May 2021, as published on 30 June and 1 July 2021).

At the centre of this case were (alleged) price and market sharing agreements on the market for notarial deed paper. This case revolved around agreements between one producer (of which the subsidiary that implemented the cartel agreements was separated from the parent company during the infringement period) and two distributors. All three parties supplied notary’s offices with notarial deed paper.

For the agreements concerning these sales the ACM imposed a fine of almost €2.8 million on the producer in a decision dated 17 February 2017 (whereby the parent company was held jointly and severally liable for the entire sum and the subsidiary for €2.06 million). One natural person, the de facto manager of the producer, was (initially) fined €200,000 (reduced to €80,000 after an objection). One distributor was fined €3,000 and the third distributor received full immunity from fines under the 2006 Notice on immunity from fines and reduction of fines in cartel cases (“Leniency Notice“).

Initially, the interim relief judge of the Rotterdam District Court suspended the decision of the ACM to publish the fine decision (judgment not yet published). The interim relief judge considered that the contentious agreements were vertical in nature and not horizontal. The Rotterdam District Court saw this differently and ruled that Article 2 (4) (a) of the Block Exemption for Vertical Agreements is not applicable. Based on this provision, agreements between competing companies (i.e. agreements of a horizontal nature) can also fall under the Block Exemption if there is a “non-reciprocal vertical agreement”, whereby the supplier is both a manufacturer and a distributor and the buyer is only a distributor. According to the Court, however, the agreements are (purely) horizontal in nature.

The Court also considered that in the case of object restrictions, no analysis of the counterfactual is required. The counterfactual refers to the market situation as it would have been without the alleged agreements. The producer had argued that without the distribution agreements it had entered into there would have been no competition at all. Indeed, until recently, the market for notarial deed paper was strictly regulated on the basis of rules of the Royal Dutch Association of Civil-law Notaries.

The District Court did not follow this line of reasoning. The Court, however, did rule that the ACM had set the gravity factor too high and lowered it from 2.75 to 1, and set the fine for the producer at €1 million and for the de facto manager at €60,000. A previously published judgment by the Trade and Industry Appeals Tribunal (“CBb“) shows that the producer’s fine was eventually reduced to €10,000. The difficult financial situation in which the company found itself as a result of the Covid 19 crisis was partly the basis for this reduction.

CJEU Recyclex: (partial) immunity from cartel infringement only if the scope of the infringement is extended

Court of Justice, judgment of 3 June 2021

On 3 June 2021, the Court of Justice (“CJEU”) delivered a judgment on the interpretation and application of the conditions set out in the third paragraph of point 26 of the Leniency Notice.

Recyclex had relied on the third paragraph of point 26 of the Leniency Notice when it provided the European Commission (“Commission“) with information about a particular meeting within the Car battery recycling cartel in which it participated. Recyclex submits that the Commission would have been unable to provide sufficient evidence of this particular meeting and therefore claims to be entitled to partial immunity. In this respect, according to Recyclex, it is irrelevant that the Commission was already aware of the fact that the meeting had taken place.

The CJEU does not share this view and holds that undertakings concerned can claim partial immunity only if they provide the Commission with evidence which “complement or supplement those of which the Commission is already aware and which alter the material or temporal scope of the infringement, as found by the Commission.

Therefore, in order to successfully claim (partial) immunity on the basis of the third paragraph of point 26 of the Leniency Notice a cartel participant must provide the Commission with information on new facts which alter the original scope of the infringement.

Fine for Dutch railway company NS struck down by Court because dominance was not proven

CBb, judgment of 1 June 2021

In its judgment of 1 June, the CBb struck down a fine of more than €40 million that the ACM had imposed on Dutch railway company NS. The ACM had adopted this fine in a decision of 22 May 2017 alleging that NS had abused its dominant economic position.

According to the ACM, NS used its economic dominance on the main rail network (“HRN“) of the Netherlands to hinder its competitors Arriva and Veolia in the province Limburg. Specifically, in 2016 NS had submitted what the ACM considered to be a loss-making bid in the tender for a 15-year public transport concession in Limburg.

The Rotterdam District Court ruled in its judgment of 27 June 2019 that the ACM had not convincingly proven that NS actually had a dominant economic position. In addition, according to the District Court, the link between NS’ position on the HRN and the concession in Limburg was uncertain after 2024 (the concession for the HRN expires in 2024).

The CBb largely confirmed the ruling of the Rotterdam District Court. The ACM did not prove that NS has a position of economic dominance. According to the CBb, there is (potential) competition as the barriers for entering the HRN market is not too high. The fine of more than €40 million that the ACM had imposed on NS has therefore been permanently struck down.

Private equity can recover cartel fine in case of incorrect information during due diligence

Rotterdam District Court, judgment of 26 May 2021

Between November 2004 and July 2011 private equity firm Bencis held 92% of the shares in flour producer Meneba (now acquired by Dossche Mills). During this period Meneba was fined by the ACM for its participation in the flour cartel. This decision was confirmed by the ACM after administrative objection, by the Rotterdam District Court on appeal and by the CBb on further appeal.

Almost four years after the first decision and under the influence of European developments, the ACM (also) imposed a cartel fine of over €1,2 million on Bencis because of Meneba’s participation in the flour cartel. The basis of Bencis’ liability was that it had decisive influence on Meneba due to their close economic, organisational and legal ties. Therefore, according to the ACM, the infringement could also be attributed to Bencis.

Bencis is later seeking to recover this fine from Meneba in a case heard by the Rotterdam District Court. To this end, Bencis primarily argued that only Meneba factually participated in the cartel agreements. In its judgement of 26 may the Rotterdam District Court did not uphold Bencis’ claim. It considered that there is no room for recourse on the basis of a joint obligation (Article 6:10 Dutch Civil Code (“BW”)) since Bencis and Meneba were not fined jointly and severally. It also considered that there is no room for a claim based on tort (Article 6:162 BW). The tort claim failed on the basis of the relativity requirement, since the right to compensation for cartel violations does not extend to the protection of other cartel participants (see Courage/Crehan).

However, the judgement of the Rotterdam District Court is unlikely to be the end of this matter. At the hearing, Bencis argued that Meneba, within the context of a due diligence investigation prior to the acquisition of the shares by Bencis, had allegedly stated that no infringements, including infringements of competition law, had taken place. If Bencis succeeds in proving this with documents, this could, according to the Court, constitute an unlawful act by Meneba towards Bencis.

State aid to KLM and Condor called into question as a result of inadequate reasoning

General Court, judgments of 19 May 2021 and 9 June 2021

On 19 May 2021, the General Court in Luxembourg held that the Commission wrongly approved the €3.4 billion state aid granted to KLM on the basis of Article 107(3)(b) TFEU. This article provides for the possibility to grant aid to remedy a serious disturbance in the economy of a Member State, such as caused by the COVID-19 crisis. In its decision, the Commission did not provide sufficient reasoning by failing to adequately take into account the fact that KLM and Air France, both part of the same group, have been the recipient of two aid measures.

In its decision the Commission states that the Dutch authorities ‘confirmed’ that the financing granted to KLM would not be used by Air France. However, in the General Court’s view, the Commission failed to provide sufficient reasons as to how this would be guaranteed. In that regard, the relationship between KLM and Air France within the group – and the aid granted to them – was not sufficiently taken into account. Although the decision has been annulled, the aid granted does not have to be recovered immediately. KLM may keep the aid at least until the Commission has adopted a new decision.

The decision in which the Commission approved the German aid to airline Condor was also annulled by the General Court on the ground that it contained insufficient reasoning. The aid, based on Article 107(2)(b) TFEU, was intended to compensate Condor for the damage caused directly by the COVID-19 pandemic.

However, the German authorities included approx. €17 million in additional costs in the aid for Condor, because the latter was under an insolvency procedure following the liquidation of its parent company (Thomas Cook). This procedure started well before the outbreak of the COVID-19 pandemic, though. The Commission did not explain how (the costs surrounding) the failed sale of Condor in the insolvency procedure were related to the COVID-19 pandemic.

In this case, too, the aid granted will not be recovered immediately. In order to avoid direct damage to the German economy, Condor is allowed to keep the amount until the Commission has taken a new decision.

New ACM merger decision in Sanoma/Iddink coming after successful appeal by Noordhoff

ACM, announcement of 17 May 2021

On 28 August 2019, the ACM decided that Sanoma Learning (publisher of Malmberg schoolbooks) may acquire Iddink Group, distributor of educational material, conditional upon commitments. Iddink Group owns Magister, an electronic learning management system that many secondary schools in the Netherlands use. The commitments ensure that competitors have equal access to Magister and data from Magister after the merger. In addition, the merging parties must guarantee that no commercially sensitive information from competing publishers will be shared with Malmberg via Iddink.

Noordhoff, a competitor of Malmberg, did not agree with the ACM and appealed the decision. In its ruling of 4 March 2021, the Rotterdam District Court annulled the ACM’s decision.

According to the Court, the ACM had not sufficiently substantiated that post-merger Sanoma/Iddink has no possibility to foreclose competitors by means of bundling and that therefore no conglomerate effects existed. The ACM has announced that it will take a new decision and has also appealed against the District Court’s ruling.

Interim position truck cartel damages case: green light for the time being

Amsterdam District Court, judgment of 12 May 2021

On 12 May 2021, the Amsterdam District Court rendered an interlocutory judgment in the damages claim proceedings instituted by, among others, CDC against participants in the Truck Cartel. This judgment is limited to (i) an assessment of the scope of the Commission’s penalty decision, and (ii) the truck manufacturers’ defence that the exchange of information did not have a price-increasing effect and that the infringement therefore did not result in any damage.

With regard to the first point, the Court finds that it is bound by (the operative part of) the Commission’s decision regarding (the temporal and geographical scope of) the infringing behaviour as well as the persons liable for it. However, this does not exclude plaintiffs from providing further factual interpretation of the infringing behaviour.

With regard to the second point, the Court considered that the truck manufacturers must demonstrate that it is generally impossible that the infringement could have resulted in damage. Based on the expert reports, the Court finds that this has not been established. It is therefore up to the plaintiffs – for the remainder of the proceedings – to make it plausible that they have possibly suffered damage as a result of the unlawful actions of the truck manufacturers. This is needed to meet the threshold for referral to the damages assessment procedure.

Commission takes on Apple after Spotify complaint – national authorities follow

European Commission, press release of 30 April 2021

In March 2019 Spotify lodged a complaint with the Commission accusing Apple of distorting competition on the market for music streaming services offered through the App Store. Spotify claims that Apple is abusing its full control over the iOS mobile operating system and the App Store to impose unfair terms on competitors, such as Spotify, and to favour its own music streaming service Apple Music.

On 16 June 2020, the Commission launched an investigation into Apple’s policies on the App Store. In its press release of 30 April 2021, the Commission stated that in the Statement of Objections it had reached the preliminary view that Apple was abusing its dominant position. The Commission accuses Apple of forcing competing music streaming services to use the App Store’s ‘in-app’ purchase mechanism and charging a 30% commission in return.

In addition, the Commission’s objections relate to so-called ‘anti-steering provisions’ that restrict app developers in their ability to inform customers of alternative purchasing options. National authorities such as the ACM and the British CMA have also started investigations into these practices by Apple.


For all your questions regarding (EU) competition law, bureau Brandeis would be happy to assist you. You can reach us via the links below.

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