From Sold Out to Selling Out

Analysing the mass migration of music artistes

And then one day you find

Ten years have got behind you

No one told you when to run

You missed the starting gun

(Time, Dark Side of the Moon, Pink Floyd)

Sometime last week I woke up to the news that Pink Floyd had joined a long and ever-growing list of legendary artistes who have sold their music catalogs for astronomical sums. Prior to Pink Floyd arriving at a consensus of selling their catalog, Roger Waters was a vocal opposer of selling out. A few years ago when Mark Zuckerberg wrote to him to buy the rights for Another Brick in the Wall for a campaign, Waters had famously said,

"So it's a missive from Mark Zuckerberg to me... with an offer of a huge, huge amount of money and the answer is, 'f*** you! No f***ing way! And I only mention that because it's the insidious movement of them to take over absolutely everything. So those of us who do have any power, and I do have a little bit—in terms of control of the publishing of my songs I do anyway. So I will not be a party to this bull****, Zuckerberg."

So, what changed?

$400 million.

It’s a figure that is hard to say no to. It brought about a never seen before consensus in a band that had acrimoniously split back in the 80s. In that sense, the band lived up to the lyrics extracted above. They realised that more than ten years had gotten behind them. And they surely didn’t want to miss the starting gun.

Not just for Pink Floyd, but it is a realisation that many legendary artistes have come to terms to in their twilight years. The list of artistes who have sold their catalogs is a veritable galaxy of superstars, a who’s who of the music world … sorry, music industry (with figures running into several hundreds of millions, it is an industry and not just a world). Another Pink Floyd song from the same album as Time is titled Money. These two lines from it sum it up brilliantly:

Money … it’s a gas

Grab that cash with both hands and make a stash

Sample some of these figures:

There are at least another 160 odd artistes who have cashed out – check out the list here. You will find that it is not just ageing rockstars who are selling their catalogs. Even the likes of Justin Timberlake and even Justin Bieber (all of 28 when he sold his catalog!) are on the list.

Why this current gold rush on both sides – the artistes wanting to sell their catalogs and the music companies wanting to buy the rights?

To understand it requires a brief history in time.

The Ancient Past, i.e. 70s to 90s

Rock stars and pop stars used to work their way up the proverbial ladder. Artistes played the long game of booking recording studios to get their vinyls out for local radio play, making demo tapes to be handed out to club and pub owners to land gigs, which though they paid peanuts (to go along with the free booze and peanuts) were actively sought out for because they were hunting grounds for A&R (Artistes and Repertoire) talent scouts who were equally eager to land the next big thing for their record companies. Over a period, this was supplemented by gigs on TV, till the advent of MTV. That is when, to borrow the title of the first ever video to be aired on MTV, Video Killed The Radio Star. Driven primarily by MTV, the attitude and the imagery of the musician through their music videos contributed in no small measure to the off-takes of their albums from the stores.

The Distant Past, i.e. the new millennium

Once the paranoia of the Y2K bug threatening to upend daily life was rendered inconsequential, digital really took off in a big way. The first internet boom also contributed heavily to how entertainment was being consumed. MP3, MP4, MPEG, and other such sundry short-forms became part of everyday conversations. Consuming music went from owning albums (LPs, CDs, audio cassettes) to downloading (MP3s, FLAC).

Modern day pirates (without the eye patch) who commandeered their (musical) ships over waves of sound (not water) without having to wield a sword became cool. Napster was the first website to open the eyes of millions of music lovers to sharing and co-owning digital music files at no cost, much to the chagrin of music company executives and musicians themselves. They protested, came down heavily, sued Napster into bankruptcy and oblivion, and made watertight laws that restricted digital music to audio CDs. But not for long.

Steve Jobs came along and found a legal way of a happy co-existence where everyone benefited – the artistes, the music companies, and most importantly Apple. iTunes made it possible for music to be consumed in individual songs, instead of albums. It gave rise to playlists that comprised collections of thousands of songs instead of collections of hundreds of albums. All neatly fitting into a cigarette pack sized gadget called the iPod.

The Recent Past, i.e. upto mid-2010s

Constantly improving internet capabilities and speeds of downloads reaching unheard of speeds brought in the era of streaming. iTunes suddenly became passé with the advent of the likes of Spotify, Tidal, Deezer, et al. The pioneer of legalising digital music found itself lagging till it shut down iTunes and introduced Apple Music. Streaming democratised music listening to the world like even iTunes couldn’t. Subscriptions to streaming services now came at a fraction of a cost that made even piracy redundant. Being able to access music through the ubiquitous phones ensured that one didn’t need to carry two gadgets. Even the iPod product line and other MP3 music playing devices were soon extinct.

The Now – A Boon called Streaming

Streaming also changed listening habits of users. One could just stream the same song over and over and over. It gave complete freedom to the listener for them to consume music the way they wanted to. In the days of yore – by yore I mean just about a decade and a half ago – album ownership was a sure shot means of establishing your coolness quotient and credentials. Friendships and relationships were borne out of your individual collections. Streaming changed all that. Owning a playlist and being known for owning eclectic, highly curated playlists among peers is the new age status symbol.

The Now – A Curse called Streaming

While it may be the best thing that has happened to listeners, for artistes, though, streaming is a four letter word (reasons elaborated in the next section). Many musicians complain that music-streaming services from Spotify, Apple, and Amazon are undermining the value of recorded music by driving the payments per play lower and lower. Today's new rock stars aren't working their way up through radio play and local gigs. They're more likely to hit it big with a couple of viral TikTok or YouTube videos or Reels. The game has changed, and looks like it has changed for keeps.

Royalties vs Rights vs The New Realities

One of the biggest deciding factors for artists considering cashing in on the rights to their music is whether the lump sum payment outweighs the royalties they receive whenever their songs are streamed.

Streaming music isn’t free – for personal listeners or businesses boosting buying habits with tailored tunes (it’s true – the behavioural science behind music proves playlists influence customers). While solo streamers pay for popular music platforms, businesses must also own a music license to play in public. So, musicians make money each time their songs are streamed, whatever the setting.

The question, therefore, is whether these regular royalties are more or less valuable than a one-off sale of their rights.

Consider this: every time you stream a song, the artiste stands to make a max of $ 0.005. Which basically means a song will need to be streamed 25 billion times – yes, you read that right – it is 25 billion times - for the artiste to make $100 million in royalties! One needs to be really, really, really, really good to make those kind of royalties in today’s day and age.

It doesn’t take a genius or a math wiz to figure out which deal a music artiste will go for - own the rights and wait for 25 billion streams, or sell the rights and pocket a cool $100 million, set up a trust fund, do some philanthropy and multiply it by investing.

The erstwhile journey described above of how an artiste makes it big by climbing up the rungs of the ladder for their music to go public also doesn’t hold water any more. Thanks to Tik Tok, YouTube and Reels, music consumption is now in 30-second videos where the artiste fervently hopes the music playing in the background will get noticed. Because of this, the way music is being produced has also changed.

The likes of DJ Khaled are living proof of having made their name, as well as their millions, purely thanks to social media. Billie Eilish is proof that all that one needs is insane amounts of talent, a talented sound engineer-cum-producer brother, some decent equipment, an empty room in the house and social media to break out and become HUGE.

Imagine telling old-school rock stars to keep churning out 30-second videos to the social media masses to promote their latest song (not album)! No chance.

“Gradually, then suddenly”!

This quote from Ernest Hemingway’s The Sun Also Rises succinctly captures the predicament that music artistes find themselves in when it comes to how far the socio-cultural, technological and business dynamics of their business have changed. The brief history in time right up to the new realities that I have stated above have given rock stars plenty of reasons to turn their publishing rights into cold, hard cash right about now.

What once offered a damn good, time-tested and steady road to success, fame and riches (of differing levels) for budding musicians is now a dark street dominated by algorithms that have sucked the joy out of a wonderful profession and made it into a game of chance, much like Russian roulette.

It’s not personal, Sonny. It’s strictly business.

Michael Corleone said that to Sonny in The Godfather. Present day managers, lawyers and accountants of artistes seem to be saying that quite often to their clients. However much one can wax eloquent on how creative folks take things personally, that they don’t understand business and don’t actually care for the money, that they are in it for the love of what they do, the purity and sanctity and integrity of their creations, etc etc, we need to remember that while they live in echo chambers, they are still connected with the outside world.

And the outside world informs them that there ain’t a better way or a better time to realise your true worth while it is still being valued. I’ve read that some older artists are partially doing it to protect their legacies. Sell it while they’re alive to someone of their choosing and they can feel better about who’s making decisions about their songs. 

Sometimes it can be more beneficial to sell their rights. They get a large down payment on songs that might otherwise not be very profitable. Here is the math of it:

Springsteen sold his back catalogue for $500 million. If he lives another 20 years he's going to have to pull in $25 million a year to match that and after a quick google last year he only made $15 million ignoring concerts and shows (I assume he can still do them even if Sony own the rights to the songs). Seems like the half a billion right now is a much better deal and it’s easier to leave money to your family than it is to leave rights to albums.

Another part of it is many of these acts do not get paid nearly what they used to for sales as the industry has changed, and much of their money has been made going on tour. Covid shut down touring, and many of these artists are getting to a point in age where it is difficult for them to be on the road. And while the world has galloped back to normal, no one wants to risk the downturn of another pandemic or a World War.

Last but not the least is the hard core business aspect of tax breaks, especially in the U.S. A Bush administration-era law allows musicians to use catalog sales as capital gains, rather than income, which is taxed at a higher rate. Rolling Stone offers the example of Bob Dylan, who sold his entire publishing catalog for $400 million. At a tax rate of 20% for the catalog sale, he’s due to pay $80 million to the U.S. government. On the other hand, at a tax rate of 37%, he’d have to shell out an additional $65 million. Pure business.

So who is buying all these catalogs?

Various companies have started purchasing and investing in music catalogs, from music publishers to investment firms and even individual investors. For music publishing companies, buying music catalogs allows them to expand their portfolio and generate revenue from royalty collection, while investment firms see the potential for stable returns from royalties, even during turbulent economic times.

High-net-worth individuals purchase music catalogs as an alternative investment, as they see potential for passive income and music licensing opportunities. Many of these individual investors are avid fans and they invest in music catalogs sold by artists they love, as a trophy, if you will. 

Investment funds and private equity firms see music catalogs as a way to diversify their portfolios, adding assets that are relatively uncorrelated with traditional financial markets. KKR, one of the buyers in the ZZ Top sale, is one of the largest investment firms in the world. They have $252 billion Assets Under Management. They are always looking for opportunity. With streaming on the rise, they see future value in this segment. This mix of stable income, growth potential, and strategic value makes music catalogs an attractive investment. 

Many top-dollar deals were closed during the pandemic, because interest rates were low, making it a win-win situation for both investors and artists, who were not making as much money because of lockdowns. In 2021 alone, companies reportedly spent more than $12 billion on music rights acquisitions. While the frenzy over music catalogs has somewhat dwindled in 2023 and 2024, there is still elevated interest in this niche, and major investors will continue to keep an eye on the market and grab opportunities as they come.

An added bonus is that music rights often appreciate over time, providing long-term financial benefits and acting as a hedge against market volatility and inflation. Owning music catalogs also offers investors strategic business advantages. They can leverage these assets for licensing opportunities in films, TV shows, commercials, and video games, which can be highly lucrative. 

Is it all only business? Is nothing personal?

Not really. But only to an extent.

The likes of Dua Lipa, Rihanna and Taylor Swift have bought back the rights of their music. This is their way of regaining control over what they create, as against some suits in a music label company, or worse still someone in an investment firm. Taylor Swift’s is the most classic case where instead of pursuing legal battles or paying money to get back her rights, she chose to re-record her first six albums for which she didn’t initially own the rights. She called them Taylor Swift’s versions. They flew off the shelves. The owner of the rights of her original albums is possibly twiddling thumbs right now. But not everyone is Taylor Swift.

But even behind these very personal reasons for buying out or owning rights to their music are very business reasons because there is enough money to be made from licensing it out to marketers and merchandisers. So yes, it’s not all personal. There is a business angle to it. Unless, of course, you are John Densmore.

John Densmore and the (not so) small matter of Principle

A principle is not a principle unless it costs you money.

Bill Bernbach

In July 2002, John Densmore wrote a scathing piece titled ‘Riders on the Storm’ in The Nation. Do read it – it’s inspiring, to say the least.

In it he wrote extensively on how various companies keep approaching the three surviving members of the mid-60s rock band The Doors to buy the rights to use some of their tracks for their advertising campaigns. Here is an excerpt:

I’m pretty clear that we shouldn’t do it. We don’t need the money. But I get such pressure from one particular bandmate (the one who wears glasses and plays keyboards). “Commercials will give us more exposure,” he says. I ask him, “so you’re not for it because of the money?” He says “no,” but his first question is always “how much?” when we get one of these offers, and he always says he’s for it. He never suggests we play Robin Hood, either. If I learned anything from Jim, it’s respect for what we created. I have to pass. Thank God, back in 1965 Jim said we should split everything, and everyone has veto power. Of course, every time I pass, they double the offer!

With Jim Morrison’s passing in 1971, the remaining members have, by and large, lived off the legacy of the band that has seen its albums continue to sell in the millions. As is evident from the excerpt, Densmore’s living band mates – Robby Krieger and Ray Manzarek (the one who wears glasses and plays keybords) have been tempted. Even Krieger showed some integrity as this excerpt from the article shows:

“Many kids have said to me that ‘Light My Fire,’ for example, was playing when they first made love, or were fighting in Nam, or got high–pivotal moments in their lives.” Robby jumped in. “If we’re only one of two or three groups who don’t do commercials, that will help the value of our songs in the long run. The publishing will suffer a little, but we should be proud of our stance.” Then Robby hit a home run. “When I heard from one fan that our songs saved him from committing suicide, I realized, that’s it–we can’t sell off these songs.”

Densmore held them at bay using his veto power from 1971 till 2023.

In January 2023, two of the three surviving members of The Doors succumbed. Krieger and Manzarek finally sold their interests in the rights to the entire music catalog of The Doors for an undisclosed sum. When sums are undisclosed, it is safe to assume that they run into several hundreds of millions. Densmore wasn’t part of the deal. He still holds on to and cherishes the purity of the band’s creations simply as a matter of principle. It is a (not so) small matter of principle that has cost him ample amounts of money. But he has lived up to Bernbach’s dictum, and continues to do so. God bless him.

Be braver. Be kinder.

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For Keep Watching this time I am sharing the review of a Hindi web series called The Broken News. It’s a series that explores the dilemma that news channels face these days - of either toeing the line of the establishment, or standing up for the principles of bringing out the truth in the news. It is essentially a show that tackles selling out vs standing up.

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A series based on two popular news networks - one led by Jaideep Ahlawat (inspired by Arnab Goswami) and the other by Sonali Bendre (a female version of Prannoy Roy). Supported by Shriya Pilgaonkar (Barkha Dutt?). Clearly inspired by real life events - MMS scandal, me too, Pegasus, bankruptcy of broadcast media in content as well as balance sheet performance, rise of social media news channels, rising influence of tech barons in controlling the narrative, and a whole bunch of current issues, The Broken News manages to keep you riveted. Performances are top notch by the lead cast as well as the supporting cast.

The Broken News | 2 Seasons (so far) | Zee5