Why David Bowie, Bruce Springsteen, and more are selling their music catalogs

When David Bowie’s estate sold their entire music catalog for US $ 250 million last week, the late British rocker joined a group already chock full of new members.

Bob Dylan, Stevie Nicks and Neil Young have all sold theirs in recent years, while new artists – including Shakira and Calvin Harris – have also jumped on the trend. And just days after Bowie’s sale, singer / songwriter John Legend parted ways with his catalog for an undisclosed amount.

But the payments don’t come cheap. Bruce Springsteen hammered this house when he had the biggest single catalog sale known in December for US $ 500 million.

Why are companies willing to spend so much to acquire the catalogs of these musicians? And why are some of the biggest superstars of the past 50 years separating from the works they’ve spent a lifetime building?

CBC News explains why catalog sales have become such a defining element of today’s music industry.

The timing of an American tax loophole

“The reason you’re hearing about this right now, and why it seems to be happening quickly, is a tax situation in the United States,” said Patrick Rogers, CEO of Music Canada. “The opportunity to do it at the best financial time is now. “

Due to what many call a “loophole” in US tax law, musicians making a big sale right now are paying less than half of what they could in a few years, when that loophole is closed.

When US President Joe Biden was elected, he pledged to change the country’s capital gains tax law to be in line with the top earner income tax. Or in other words, he would ask – like indicated on its website – “those who earn more than a million dollars must pay the same rate on investment income as on their salary”.

This means that the taxes musicians pay on their catalog sales could drop from around 20% to around 37%. For sales of the hundreds of millions, that’s a huge amount of money, Rogers said, and it’s pushing musicians considering it move to do so.

Pandemic effect on live music

Another factor is a direct result of the pandemic: the loss of live music, which has forced an already struggling industry to adapt quickly.

“Live music obviously had an impact[ed] really extremely by the pandemic, more than any other aspect of the music industry, ”said Tim Jones, founder of music label Vnclm_ and management company Pipe and Hat. “So, you know, we really had to move everything to digital. the last two years. “

After decades in which musicians could rely primarily on record sales for their income, the rise of file-sharing sites, followed by the rise of streaming, has all but destroyed this source of revenue. Artists were forced to increasingly turn to endless tour schedules for a living – an option of last resort that was later removed by COVID-19 closures and social distancing.

Without live music income, musicians – even the highest earners – have been forced to adapt.

And while some were able to transition to digital media almost seamlessly (as Travis Scott did with the Fortnite virtual reality (VR) concert at the start of the pandemic), it’s not a viable option for all. genres, Jones said.

Virtual gamers watch Travis Scott’s Fornite Astronomical concert, which has been viewed by over 12 million people. (Fortnite)

“Artists who are kind of on point and trying out these new technologies… are going to need an audience that is also on point,” Jones said. “;

Thus, artists who have been in the industry for decades and musicians of less avant-garde genres are motivated to find income elsewhere. And many musicians have publicly complained that the amount they earn from streaming platforms like Spotify and Apple Music is far too low to live on.

Nostalgia-focused streaming

Meanwhile, companies are motivated to buy these catalogs now, as there are repeated and continuing opportunities to generate revenue with each additional viewing with the outsized place streaming has taken in the industry.

According to a report by Billboard, Springsteen’s music grosses around $ 17 million a year. He is an imposing figure, but not completely separate from the experience of other musicians.

The pandemic, the rise of streaming and the influence of TikTok have come together to boost the success of catalog music – music released years ago – on new versions.

WATCH | Canadian musicians fight for a living during the pandemic:

Canadian musicians fight for a living during pandemic

Many musicians in Canada have struggled to make a living during the pandemic due to the closure of venues and streaming services that average only half a cent per stream. 2:04

According to a year-end report by US market monitor MRC Data and Billboard, the new music market share actually declined in 2021 for the first time since tracking began in 2008. Catalog sales, as of to them, increased from 23.8% to 73.7%. of total album consumption.

While businesses and musicians can both see the value of catalogs now that they are more popular, it just makes more sense for some artists to take the opportunity to sell.

“What you see are these people who decide to take… a big payment now and give those rights to the people,” Rogers said, “rather than waiting for them to come piece by piece.”

Canada and musical repatriation

Aside from gross income, there is another motivation behind acquiring catalogs and song rights for a music industry veteran: patriotism.

Michael McCarty founded Kilometer Music Group (KMG) early last year to acquire the rights to Canadian music songs and catalogs, both from Canadian performers and songwriters.

Canada “strikes over our weight more than Britain did during the British invasion” in the music industry, and has done so for decades, said McCarty.

Musicians Drake, Justin Bieber and The Weeknd dominate the charts week after week, he said, and Canada surpasses countries like England and Sweden in terms of amount of global hit music relative to size. from the country.

“There are probably a hundred people in the Greater Toronto Area who are currently co-authors of world hit records,” McCarty said. “And the real Canadian presence on the [Spotify] The world top 10 for each week is easily 50 percent of the rankings, which is amazing. “

The Weeknd performs during halftime of the NFL Super Bowl 55 football game between the Kansas City Chiefs and the Tampa Bay Buccaneers on February 7, 2021, in Tampa, Fla. Kilometer Music Group acquired partial rights to two of its songs in an effort to bring revenue back to Canada. (Ashley Landis / The Associated Press)

But, he said, the rights to most of that music belong to foreign companies, which means Canada risks missing out on a huge source of revenue.

KMG has completed six acquisitions so far, including partial rights to Weeknd’s Blinding lights and Save your tears, and Dua Lipa levitating, which was co-written by Canadian record producer Stephen Kozmeniuk. These tracks were the top three of Billboard’s 100 songs for 2021.

McCarty said that by acquiring the rights to this music, he hopes to support the “delicate ecosystem” that encourages musicians in Canada. Because, he said, the future of the industry is rights ownership.

“The natural resource of the future is information and the ownership and control of information,” McCarty said. “And unless we wake up and start to take control of our intellectual property, we risk moving from resource barons to information serfs.”

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