Some big names in the music world in the last few years have sold the rights to their songs for mega bucks. In 2020, Bob Dylan sold his back catalogue to Universal Music Publishing Group for a reported $400m. Then more recently last month, Bruce Springsteen sold the rights to his songs to Sony for half a billion dollars. Other names like Neil Young and the estate of David Bowie have also sold their song rights or at least a percentage of their rights for big money.
I’ve thought a lot about all this. On one hand, these may be shrewd moves especially with that kind of money offered. Yet alternatively, one could argue that song rights/publishing may over time end up being an increasingly desirable asset class. The last decade has been very rough on artists and the music industry in general. The growth of the internet and streaming platforms has had a huge dent on physical record sales. Even though there has been a revival in vinyl sales it is a small market and gone are the days one could make a comfortable living on CD sales or any physical record sales alone. To exacerbate this, the disruption created by COVID-19 over the last couple of years, has dealt a huge blow to arguably the most crucial source of income for music artists, which is playing live. All in all, the last few years have been pretty rough for music artists.
Yet I believe that the future is bright for music artists and the music world in general. I think the last decade was the nadir point, but I am optimistic that things will get better. And this all comes back to my point about the value of song rights. When the music industry was really growing in the 70s, 80s and 90s, record sales made up a huge part of the total revenue of this industry. So much so, that it would not be uncommon for the record label of a major artist (or sometimes even a new artist) to spend hundreds of thousands of dollars on a new album.
When upstart streaming sites like Napster started to appear and be increasingly adopted in the late 90s with the then recent rise of the internet, it was already a sign that in the future consumers would turn increasingly more to digitally downloading and streaming their music over buying physical records. By the early 2010s, it was clear that this trend had already had a huge effect on physical record sales.
Yet what the internet may have taken away, it may also give back generously. I believe that the full potential of song rights as a serious source of money generation has only barely been scraped. There will be so many new ways for songs via the internet to generate money. It is well known that streaming platforms such as Spotify pay artists very little every time a song of theirs’ is played on their site. And there may eventually be growing pressures or new laws passed to ensure that these platforms pay artists more fairly. However, music streaming sites will just be one way out of many other new ways for artists to make money from their songs.
Whenever a song is played on the radio or in a film/TV programme or advert, the songwriter receives royalties. With the growth of film and TV series streaming sites like Netflix and Amazon Prime Video, there are new opportunities for songs to be licensed to shows and films on those platforms.
I think for new and up and coming music artists, sites with oceans of video content by all kinds of people and entities (known and unknown) like Alphabet owned YouTube offer lots of opportunities for songwriters to earn additional royalties on their songs when content creators on those platforms use their songs in their videos. In the case of YouTube, some of the statistics are off the charts; 720,000 hours of content is uploaded to YouTube daily of which 500 hours of content is uploaded every minute. This simply phenomenal and abundant growth and with that immense opportunities for songwriters to earn income from their songs if their are used in any of these videos.
It is also important to see where the internet may be going and how it will develop in the future. Currently, there is a lot of hype over something called the ‘Metaverse’. And I can see why. To put it simply, this is a kind of ‘Virtual Reality’ stage of the internet. We already spend a large portion of our lives on the internet, yet it is a 2D experience – via our smartphones and laptops. In the so called ‘Metaverse’ it is a more immersive 3D experience. Although there is a lot of noise about the Metaverse and it is generally impossible to make predictions, it is possible to spot trends and I think the next stage of the internet will be a much more immersive one were people will be living in more virtual worlds via Augmented Reality (AR) and Virtual Reality (VR) technologies. I think this could grow exponentially, especially once it experiences mass adoption.
This will again create lots of new opportunities for songwriters as well as music artists/performers in general. In the case of the latter, I can see a huge growth in revenues for so called ‘hologram’ concerts where the artists don’t have to be present but the viewers receive a fully realistic and immersive live music experience where they can even interact with the artists and others in the virtual audience. But I digress. To get back to the point of song rights, I see lots of new income streams from songs to be made in these new worlds every time a song is used. Plus there will be lots of new opportunities and demand for songs to be licensed.
This is why companies like Universal, Sony and Warner Brothers have been paying huge sums of money for the catalogues of these blue chip artists as well as lesser known artists too. They are playing a long term game. Even though the sums they paid may seem like a lot of money, when these new digital platforms and worlds develop and grow exponentially, these catalogues could be worth even more money. So much so that it may end up being much more expensive for those artists to buy back the rights to all those songs they sold in the future.
By Nicholas Peart
27th January 2022
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