The Booming World of Music Catalog Sales
Katy Perry sold rights to her initial five albums for $225 million in 2023, surpassing Justin Bieber's $200 million deal for his song catalog. Learn how their transactions add to a trend of artists selling catalogs for hundreds of millions in recent years.
In 2023, Katy Perry sold the royalty and music publishing rights to her first five albums in a deal reportedly worth $225 million. This eclipsed Justin Bieber’s $200 million deal for his song catalog.[1] Ms. Perry and Mr. Bieber join a long list of artists who have sold their music catalogs in the past several years, many of these deals in the hundreds of millions of dollars category.
What is driving catalog sales? Why and how should individuals consider investing in music catalogs?
Catalog Sales Are Booming
Over the past several years, sales of artists’ music catalogs have been booming. In 2021, more than $5 billion in music catalog sales were recorded.[2] This included a $500 million sale by Bruce Springsteen. Startle Music’s website lists some of the largest catalog deals, including Phil Collins and Genesis, Bob Dylan, Sting, Tina Turner, David Bowie, and Motley Crue, all in the nine-figure category.[3]
As of 11/9/23, the website A Journal of Musical Things, listed nearly 150 music catalog sales over the past several years.
Wall Street in On the Action
Large Wall Street firms, including Blackstone, KKR, Morgan Stanley, and JP Morgan Chase have been participating in music catalog sales.[4] They are also teaming up with music royalty companies and trusts like Hipgnosis, Primary Wave, Round Hill Music, and others.
What is the potential appeal of music catalog sales?
Potential Source of Stable Income
When an artist’s song is played, a royalty must be paid to the artist or songwriter. Streaming has become the dominant way in which recorded music is consumed.[5] This shift allows listeners to choose what music they want to hear and when, something that previously was dictated by radio stations.
As a result, catalog sales may provide a steady and reliable income stream to their holders, especially if the catalog consists of proven hitmakers.
Better Tending of Catalogs
Large music publishing companies often have conflicting objectives, including finding and nurturing new talent. As a result, they may not manage their catalog of older music in the most efficient way. Royalty companies work with a smaller catalog of music and may be in a better position to give each song the individualized attention it deserves, potentially finding more opportunities to license the music and bring in more revenue.
Catalog Sales Skewing Older
Many of the largest catalogs have been sold by older, more established artists or groups with a substantial, proven portfolio of music. This may enable music royalty companies to better extract value from a music catalog.
Also, it mirrors the fact that there is a substantial number of older individuals consuming music on streaming platforms. In fact, there are twice as many people over 35 than under 25 on streaming platforms.[6]
Consider MUSQ for Exposure to Music Catalog Sales
The MUSQ Global Music Industry ETF (MUSQ)
The MUSQ Global Music Industry ETF (MUSQ) seeks to provide investment results that, before fees and expenses, correspond to the total return performance of the MUSQ Global Music Industry Index (MUSQIX). The MUSQIX Index is designed to provide exposure to global, publicly traded companies and royalty funds with a core business interest in the global music industry.
MUSQ may provide individuals with an attractive vehicle to gain exposure to the companies and royalty trust involved in music catalog sales.
For a complete list of MUSQ holdings, please click here.
[1] Brow, Jason, Katy Perry, Justin Bieber, Pat Benatar and More Artists Who Sold Their Music Catalogs, US, 10/27/23
[2] Stassen, Murray, AT Least $5 Billion Was Spent on Music Rights Acquisitions in 2021. Could 2022 Be Even Bigger? Music Business Worldwide, 1/10/22
[3] Dawson, Abbie, Sold! The Artists with the Most Valuable Back Catalogues, Startle, 10/10/23
[4] Music Is a Hot New All Street Asset, Axios, 4/21/21
[5] Please see the MUSQ white paper for a discussion on music streaming.
[6] Gilbert, Ben, The Winner Takes It All: What Does Catalog’s Dominance Mean for the Future of the Music Business, SynchTank, 2/12/22
MUSQ Global Music Industry Index ETF is offered by prospectus. Carefully consider the investment objectives, risks, charges, and expenses. This and other important information can be found in the MUSQ ETF prospectus, which should be read carefully before investing and can be obtained by visiting https://musqetf.com or by calling 1-855- MUSQ-ETF(687-7383).
Risk Disclosures
There is no guarantee the Fund will achieve its stated objectives.
In addition to the normal risks associated with investing, international investments may involve the risk of capital loss from unfavorable fluctuation in currency values, differences in generally accepted accounting principles or social, economic or political instability in other nations.
Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.
In addition to the normal risks associated with investing, investments in small- or mid-capitalization companies typically exhibit higher volatility.
The Fund’s concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors.
The Fund is non-diversified.
The Fund is new and has a limited operating history for investors to evaluate. A new and smaller fund may not attract sufficient assets to achieve investment and trading efficiencies.
The Fund may invest in securities denominated in foreign currencies. Because the Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if currencies of the underlying securities depreciate against the U.S. dollar or if there are delays or limits on repatriation of such currencies. Currency exchange rates can be very volatile and can change quickly and unpredictably.
All investing involves risk, and asset allocation and diversification do not guarantee a profit or protection against a loss. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, might be worth more or less than their original cost. ETFs are subject to risks similar to those of stocks, as well as other risks specific to the particular ETF.
ETF shares are traded on exchanges, and are traded and priced throughout the trading day. ETFs permit an investor to purchase a selling interest in a portfolio of stocks throughout the trading day. Because ETFs trade on an exchange, ETF shares are bought and sold at market price (not NAV). The prices of ETFs may sometimes vary significantly from the NAVs of a ETFs’ underlying securities. Brokerage commissions will reduce returns.
Exchange Traded Concepts, LLC serves as the investment advisor. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates.