Hip-hop legend Chuck D has made a deal to sell a major stake in his songwriting catalog to his longtime publisher Reach Music.
More than 300 songs written by Chuck D for Public Enemy are included in the deal between the leader and frontman of the veteran hip-hop group and the independent music publishing company, Rolling Stone reported.
The deal does not include all of Chuck D’s songs but it does include the classic Public Enemy albums “It Takes a Nation of Millions to Hold Us Back” (1988) and “Fear of a Black Planet,” (1990) which he almost entirely co-wrote.
Chuck D Explains Why
“[D]oing this deal was the right timing for a forward and logical evolution of [their] business together in an ever changing industry.” the rapper told Rolling Stone. “Reach has always been ahead of the curve on establishing respect for the hip-hop genre songwriting and publishing-wise, and they will continue taking care of my works.”
Selling the songwriting catalog means Chuck D’s royalties, full writer’s share and half of his copyright interest as a publisher in the songs in the catalog have been sold. The only exemption Chuck D gets to keep is that he still has half of the copyright interest in his publishing royalties.
Chuck D, whose net worth is estimated to be $14 million, sold his catalog for undisclosed amount.
Other Artists Who Have Sold Catalogs
In terms of musicians, Chuck D is not the only one to sell his part, and in some cases, an entire song catalog to big publishers.
There is a difference between music publisher and labels; music publishers own the rights to songs and control distribution of written compositions on behalf of songwriters. Record labels, meanwhile, control a particular recording of a song, track, or sound performance.
As Rolling Stone noted, artists from Bob Dylan, Bruce Springsteen, and Stevie Nicks to John Legend, Justin Timberlake, and Red Hot Chili Peppers have all sold their classic songs recently. However, Chuck D happens to be the only rapper to have struck a big deal of this caliber.
Why the Sell Off
Every artist has a reason why they want to relinquish their rights to their creative work. Some want the money now and up front rather than spread out over years and years.
It’s also a good time to sell, seasoned music industry exec Serona Elton, who has worked with complex music royalties and licensing, “All of a sudden, the market is crazy, and everybody’s paying ridiculous sums of money – the kind of stuff you never thought you’d see. And people worry it’s a bubble. Maybe it will stay that way. You know, maybe that’s the right time to sell,” she told NPR.
Sony Music, for example, reportedly paid more than $500 million for Bruce Springsteen’s entire back catalog.
Also, as artists get older they are no longer touring as much, they may want the money to retire and start planning their estates. Chuck D is 62.
Folk music icon Bob Dylan, 81, sold more than 600 songs to Universal Music Group for an estimated $300 million to $400 million.
“And let’s be honest. Not only are these powerful musicians negotiating favorable deals, but many are senior citizens. They’re planning their estates,” NPR reporter Neda Ulaby pointed out.
Another reason is for tax purposes. Musicians save more money when they sell their songs because they get a reduction in their tax rate.
Performers and composers tend to royalty payments in a lump sum once a year and it is taxed as ordinary income. For high-earners, that’s at a top 37 percent individual income tax rate. When they selling their catalogs, as a capital asset they face a one-time capital gains tax on the profits at a maximum of 20 percent.