Financial media is recently reporting a surge in operations related to the sale of music catalogs: from Neil Young to Shakira and Bob Dylan (who sold about 600 songs for a sum that could reach 300 million dollars). This phenomenon has taken off in recent years but it is not new: already in the 80s, Michael Jackson bought part of the Beatles catalog. However, what we see today is a professionalization of this type of acquisitions, which are being carried out by specialized investment funds, such as the Hipgnosis Fund, created by the former manager of Iron Maiden and Guns n 'Roses and which is listed on the London stock exchange.
But what exactly do you get when you buy "a catalog of songs"? The "catalog investors" are usually dealing with specifically the publishing rights over the composition. But let us explain. The intellectual property of songs is more complex than it seems and more complex than that of a painting or a sculpture. A song has two main elements: the composition and the recording, each of which is covered by copyright. The composition in turn can be owned by several people: while Bob Dylan's were penned (lyrics and music) by himself alone, current pop hits have an average of 5 writers. Compositions are generally managed and exploited by publishing labels. The recording, or master, is generally owned by the music producer. That is why, for example, to get a license to use a song in an advertisement (called synchronisation license), you'll might end up exchanging documents and signatures a dozen people or entities.
Music catalogs are considered an interesting investment for a number of reasons. Music is consumed in a stable way regardless of economic ups and downs. Similarly, streaming has turned music into a commodity whose profitability is much easier to measure and manage than before. Usage in social media (such as TikTok challenges) is also become a profitable of late. Lastly, musicians who were unable to tour in this year and a half may also be more interested in pursuing this type of income source. On the other hand, although music will always be popular, technology and consumer habits do vary. It remains to be seen if these types of operations are a passing fad or if they have come to stay.
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Esquivel & Martin Santos
Trademark, Patent and IP law firm in Spain
www.emps.es
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