2021 was many things for the music business – where everything throughout the year was sharpened and heightened because of the pandemic – but it was most certainly never boring. Catalogues were still being sold for phenomenal sums, but alongside this came moves to ensure that the songwriters themselves had a greater share in the upside of these boom times.
While not exhaustive, below are some of the key themes and trends (as well as the deals) that defined the year and that will directly shape what happens in 2022 and beyond.
1: The acquisition bonanza did not slow down
The initial worry in 2020 when the pandemic hit was that publishing income would nosedive. For many, and in many sectors, it did; but this did not spook those looking to buy into, or buy out, huge catalogues.
2020 ended with perhaps the blockbuster deal of a generation, when Universal Music Group bought out Bob Dylan’s entire songwriting catalogue for a rumoured $200 million, although some reports suggested the actual figure could have been anywhere between $300 million and $400 million. It was going to be hard to trump that.
While no deals in 2021 eclipsed the Dylan deal, a number of other individual deals came pretty close – like Neil Young selling 50% of his catalogue to Hipgnosis in January and Paul Simon selling up to Sony Music Publishing for a reported $250 million in March. On top of this, the sheer number of deals that happened make it clear that we are still some way off from the catalogue acquisition market hitting its peak.
The sheer number of deals that happened make it clear that we are still some way off from the catalogue acquisition market hitting its peak.
There were, frankly, too many deals happening in 2021 to mention them all here. Listing every one would turn this article into the War & Peace of catalogue acquisition. To give a flavour of the year, just some of the many notable deals concluded this year include:
- Concord buying up Downtown’s catalogue for $400 million
- BMG buying Tina Turner’s artist share of her recordings, her music publishing writer’s share and neighbouring rights and – perhaps more interestingly – her name, image and likeness rights, suggesting the buyers in such mega-deals are going to increasingly expect more IP beyond the actual music to justify the hefty price tags that big catalogues now command
- Similarly, Primary Wave buying a stake in Luther Vandross’s publishing, his master recording income stream and his name and likeness rights
- Iconic Artists Group buying David Crosby’s publishing and recorded music rights
- Hipgnosis buying up 100% of Shakira’s publishing, 100% of Lindsey Buckingham’s publishing and 100% of Red Hot Chili Peppers’ catalogue
- Warner Chappell buying into part of Bruno Mars’s catalogue
It might be a cliché to say it, but that does not make it any less true: there has never been a better time to sell catalogues. Whether or not there are any to come that could rival some of these blockbuster deals this year and last year is unclear. That said, the rumours that the David Bowie estate is planning to sell his publishing refuse to go away. Also rumoured to be selling up part or all of their catalogues are Bruce Springsteen and Sting.
Some, however, like Elton John have stated their catalogues are categorically not for sale. Yet when only a handful of blockbuster catalogues (made up of major international hits spanning several decades) are left and the numbers being offered keep rising, some of these holdouts may start to revise their position.
2: The keenest buyers were shoring up their financial war chests ahead of a new purchasing onslaught in 2022
In order to secure these huge deals, of course, those wishing to buy had to swell their coffers considerably so as to not miss out on a catalogue in a bidding war or find themselves being outflanked by a rival.
With one of the busiest cheque books in the business, Hipgnosis was keen to stay far ahead of the curve. In July this year, it was revealed the company had spent $1.1 billion buying up/buying into 84 separate song catalogues in the 12 months ending 31 March and it had raised $215 million in its stock offering.
Others were looking to bulk up their spending power, fully aware that the near future will see sharp-elbowing to buy up the juiciest of all the catalogues that come onto the market. Hence BMG partnering with investment company KKR in March (symbolising the increasing melding of music rights knowledge with high finance expertise) as it seeks to scoop up a wider range of recorded music and publishing catalogues.
KKR is clearly aiming to be a hot new player here, having partnered with Dundee Partners to buy Kobalt’s Fund II Music Rights publishing catalogue for $1.1 billion in October. We are also seeing others that were previously outside the publishing world set up publishing arms, such as distributor Ditto Music who set up Ditto Music Publishing in June.
The biggest news here, organisationally at least, came in October when (them again) Hipgnosis set up a new partnership with investment management company Blackstone, with suggestions they will have upwards of $1 billion to pump into acquiring and managing new catalogues. The deal also saw Blackstone take a stake in Hipgnosis.
The buying bonanza is not cooling down any time soon.
3: New markets = new opportunities
The major publishers also started to expand internationally, moving into new territories, suggesting where they see the growth markets and genres in the coming years. Universal Music Group Publishing opened a new office in Shanghai in November after having opened a new office in Israel in July. Meanwhile, Sony Music Publishing launched a new division in Indonesia in March and Warner Chappell expanded in Asia by opening its first office in Vietnam in July.
The Anglo-American domination of the global music business recedes further and further in the rearview mirror with every passing day.
4: Publishing rates found themselves at the centre of a parliamentary inquiry in the UK…
Propelled by the #BrokenRecord campaign, streaming rates and artist remuneration were at the centre of a major UK parliamentary inquiry.
Championed and fronted by MP Kevin Brennan, the culture select committee’s inquiry saw DSPs, artists and label executives quizzed at length about deal terms, royalty flows and rights ownership. Much of the focus – and the headlines – were around recorded music, with many of the debating points making it into a private members’ bill that ultimately was not passed, but its supporters have vowed to continue their campaign on streaming reform.
The record labels may have caught most of the flak in the inquiry, its recommendations and the media coverage of it all, but there were also issues of great importance for publishers and publishing rights here. The most significant being calls for a larger share of streaming income to go to songwriters and publishers and the need for the establishment of a “comprehensive musical works database” (akin to the nascent Mechanical Licensing Collective in the US).
It has unquestionably captured a moment that will increasingly see rights and royalties debated in public like never before.
It is all still to play for here, so it would be desperately premature to hail this as a victory for performers and songwriters by ushering in a new age of egalitarianism; but it has unquestionably captured a moment that will increasingly see rights and royalties debated in public like never before, with the potential to radically reshape the very architecture of the music business in the coming years.
5: … while mechanical rates for streaming became a new battleground in the US
In the autumn, major DSPs in the US (among them huge names like Spotify, Apple, Amazon, Pandora and Google) outlined to the Copyright Royalty Board (CRB) what they would prefer to pay songwriters to stream their music between 2023 and 2027.
These rates, you will not be surprised to learn, did not exactly dovetail with what songwriters and publishers were expecting/demanding/hoping for.
The last time things went through the CRB, the rate was set at 15.1% in 2018 (up from 10.5% in the years before that). The different DSPs all wanted to freeze or slash the rates: Spotify wanted a reversion to 10.5%; Google suggested that they should “remain unchanged”; Apple also wanted them to effectively stay as they are; Pandora echoed Spotify with its call for 10.5%; and Amazon tabled a very precise 10.54%.
The National Music Publishers’ Association, however, wanted a jump to 20%, with its CEO David Israelite telling Music Business Worldwide that he “completely rejects the idea that [music streaming companies] can’t afford higher rates”.
This will all be wrestled over in the coming months, but the publishers will push hard against a freezing of the rate and raise hell to prevent a decrease in the rate. Nothing less than deciding the shape and direction the business of 2023-2027 takes is at stake.
6: Some, but not all, unrecouped balances were wiped, suggesting a rare form of altruism emerging
A few years back, Beggars Group took a bold step and stated that all acts on is books who are still unrecouped after 15 years would have that wiped from the slate and streaming royalties (at a rate of 25%) paid through. It was seen as a bold move by a label group as much as a magnanimous one. But against the backdrop of the UK parliamentary inquiry, this dynamic of financial altruism moved into the major publishing world.
Sony Music announced in June that it would take a similar approach to wiping unrecouped balances of certain heritage acts for recorded music income to enable the payment of streaming royalties direct to the artists, calling it the Legacy Unrecouped Balance Program. The following month, this initiative was extended to Sony’s publishing arm, saying it was for “eligible songwriters signed prior to the year 2000 who have not received advances since”.
It is not a pan-industry solution just yet. But as labels and publishers seek to land some positive stories while caught in a maelstrom of negative press, we can expect that other publishers, to varying degrees, will start to follow suit.
In conclusion, the year was really about the value of copyrights: in terms of their sale value in an increasingly competitive marketplace; but also in terms of the value being paid through to publishers and songwriters for the use of their work (especially on streaming services).
Oscar Wilde defined a cynic as someone “who knows the price of everything and the value of nothing”. The hope in the coming years is that, as the price for catalogues continues to go through the roof, their value is not forgotten.