Song management firms amass publishing catalogs to create a new asset class

Evidence

A recent form of financial speculation in the music industries is that of so-called “song management” investment firms, such as Hipgnosis, Round Hill, Concord, Primary Wave, Reservoir, and others (see table 3.4). These firms amass capital to purchase copyrights, ranging from hit songs to entire catalogs. With massive war chests of capital, they pay musicians a large lump sum for their copyright, which they can then license or resell. Songwriters are the typical target, since publishing rights are not as contractually complicated as recording rights, which are dominated by the Big 3 labels. For musicians, these buyouts can be enticing: the new streaming regime pays little to any but the most popular musicians, a disordered global system of digital services makes tracking down payments difficult, and new tax proposals are advising higher tax rates on capital gains. Then the COVID-19 pandemic happened, robbing musicians of the ability to tour, often their most lucrative revenue stream, despite Live Nation’s monopolistic practices. Many musicians took the payday, including aging stars such as Stevie Nicks, Paul Simon, and Madonna, as well as younger, still-charting musicians such as Bruno Mars, Imagine Dragons, Mark Ronson, and The Chainsmokers. … Individual deals and amounts are less important than the overall financial strategy, which aims to build a massive portfolio of songs in order to turn them into a new asset class. — Andrew deWaard, Derivative Media, 224

Categorization

• DEFINE: Defines the song-management/catalog-buyout firm model the reader needs to trace from Wall Street to aesthetic form.
• XREF: Echoes the private-equity rollup logic of catalog acquisition described in other industry chapters — the mechanism repeats across sectors.
• SEED: The pandemic-contingent sing-along list of stars who sold could anchor an article on how streaming royalties plus touring collapse pushed catalogs into financial hands.
• QUESTION: Whether the buyout lump-sums and future license streams count as the securitization step, or whether that lies further along.