In 1972, a struggling New Jersey musician hustled into Manhattan for an audition at Columbia Records, using an acoustic guitar borrowed from his former drummer.
“I had to haul it ‘Midnight Cowboy’-style over my shoulder on the bus and through the streets of the city,” the rocker, Bruce Springsteen, later recalled in his memoirs.
Half a century later, he can afford plenty of guitars. Last week Sony, which now owns Columbia, announced that it acquired Springsteen’s entire body of work — his recordings and his songwriting catalog — for what two people briefed on the deal said was about $550 million.
The price, which may be the richest ever paid for the work of a single musician, caused jaws to drop throughout the music industry. But it was only the latest mega-transaction in a year in which many prominent artists’ catalogs have been sold, fetching eye-popping prices.
The catalog market was already bubbling a year ago when Bob Dylan sold his songwriting rights for more than $300 million, but since then it has maintained a steady boil. The list of major artists who have recently sold their work, in full or in part, includes Paul Simon, Neil Young, Stevie Nicks, Tina Turner, Mötley Crüe, Shakira and the Red Hot Chili Peppers, many for eight-figure payouts or more. The industry is abuzz about impending deals for Sting and the songwriting catalog of David Bowie.
“Almost everything now is transacting,” said Barry M. Massarsky, an economist who specializes in calculating the value of music catalogs on behalf of investors. “In the last year alone, we did 300 valuations worth over $6.5 billion,” he added.
Not long ago, music was seen as a collapsing business, with rampant piracy and declining sales. No longer.
Streaming and the global growth of subscription services like Spotify, Apple Music and YouTube have turned the industry’s fortunes around. One result is a spike in the pricing of catalogs of music rights to both recordings and to the songs themselves.
New investors, including private equity firms, have poured billions of dollars into the market, viewing music royalties as a kind of safe commodity — an investment, somewhat like real estate, with predictable rates of return and relatively low risk.
For major music conglomerates like Sony and Universal, which bought Dylan’s songs, such deals help them consolidate power and gain negotiating leverage with streaming services and other tech companies, like social-media, exercise services or gaming platforms, that often make blanket deals to use music.
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Despite the popularity of young acts like Drake and Dua Lipa, older material dominates online. According to MRC Data, a tracking service that powers the Billboard charts, about 66 percent of all music consumption — of which streaming is by far the largest part — is for material that is older than 18 months, and that number has been growing rapidly.
And for artists, the sale can bring tax advantages. Royalties are typically taxed as ordinary income, while a catalog sale can qualify as capital gains, which typically have lower rates.
Artists like Springsteen, 72, are part of the generation of music stars that, starting in the 1970s, first came to gain control of their work in large numbers, in ways that preceding generations did not.
“A lot of artists were taken advantage of in the ’50s and ’60s,” said John Branca, Michael Jackson’s longtime lawyer, who is now one of the executors of Jackson’s estate. “With the emergence of better legal and management representation in the ’70s and ’80s, there was a push for the artists to obtain more power, more leverage, and ultimately to own their own work.”
Many of those stars are now pulling the last lever of that control by deciding to sell, in numbers that were unthinkable even a decade ago, many executives and artists’ advisers say.
The desire for control is now reflected in younger stars like Taylor Swift, who has campaigned in public about the importance of artists owning their work and criticized the marketplace in which catalogs of songs are bought and sold without the creators’ participation or approval. In Swift’s case, she has gone so far as to rerecord her own songs, in part to control the earnings from those tracks.
“Part of the power of being an owner of your assets is that you get to decide when to cash out and how to cash out,” said Bill Werde, the director of Syracuse University’s Bandier Program on the music industry and a former editor of Billboard, the music trade publication.
In general, selling out means giving up control, and buyers typically want to exploit assets fully to earn back their investment.
In Springsteen’s case, the negotiations for the Sony sale included discussions about limiting how his work could be used in the future, with particular concern about any ads featuring two of Springsteen’s most iconic songs, “Born in the U.S.A.” and “Born to Run,” according to three people briefed on the deal who declined to be named because they were not authorized to speak publicly about it.
Throughout his career, Springsteen consistently refused to license his music for ads, though in February he made his first-ever commercial appearance in a Jeep ad for the Super Bowl, delivering a message about the need for a “common ground” in the United States. (The soundtrack was not one of Springsteen’s hit songs but an atmospheric score composed by Springsteen and Ron Aniello.)
Representatives for Sony and Springsteen declined to comment on the terms of the deal.
Springsteen, one of the most successful singer-songwriters in pop history, essentially made two deals with Sony. One was for his so-called master recordings, the sounds of his music as captured on albums and single tracks. The other, sometimes described as music publishing, is for his songwriting rights — the words, melodies and musical structure of the hundreds of songs he wrote. With both sets of rights, Sony will have full control over the future use and earnings of Springsteen’s music and lyrics, except for any restrictions that were part of the deal.
According to an estimate by Billboard, Springsteen’s two catalogs of music — his recordings and songwriting — earn about $17 million a year, after costs.
Many older artists see this as a good time to sell — while their music remains popular, and market conditions are favorable.
But behind the scenes, there has often been vigorous debate among artists and their advisers about whether to sell. For many of the most astute players, a key question is not so much the price but who is offering it, as private equity players and other financial specialists — which sometimes buy catalogs outright and sometimes merely provide the financing for specialist companies — wade into the tricky waters of protecting artists’ legacies in a world of commerce.
“What does an artist mean over half-century career,” said Jeff Jampol, who manages the estates of the Doors, Janis Joplin and other stars, “if all of a sudden those assets just disappear into the maw of some huge hedge fund that has no connection to art, music or legacy?”
While headlines highlight those who have decided to sell, there have been some dissenters.
Diane Warren, the songwriter of hits like Celine Dion’s “Because You Loved Me” and Aerosmith’s “I Don’t Want to Miss a Thing,” told Rolling Stone that selling her catalog “would be like selling my soul.” When asked whether the Michael Jackson estate would consider selling Jackson’s rights, which may be worth well over $1 billion, Branca said, “I don’t think I would ever sell.”
But as the prices rise, it may become harder for holdouts to resist.