Bob Dylan, John Legend, Stevie Nicks, Bruce Springsteen, Future, Chuck D. All built their careers on different genres of music, but there’s one thing the artists have in common.
Dylan and the others have sold their music publishing rights for millions of dollars in recent years. Dylan for example sold his 600-plus songs library to Sony Music Entertainment in 2020 for a reported $300 million. Nicks sold her catalog last year to Primary Wave for a reported $100 million. Legend and Springsteen sold their rights earlier this year.
Taking A Tax Break
Some musicians are rushing to sell their catalogs to take advantage of a tax benefit that could soon vanish under a proposal by President Joe Biden, a music business expert told Finurah. Under the 2006 Songwriter’s Capital Gains Equity Act, any money generated from a sale of music rights is taxed at 15 percent or the capital gains rate. That is a more favorable rate compared to the 22 percent or 24 percent rate Americans pay for income, said John Kellogg, an entertainment lawyer who teaches music management at Berklee College.
Biden’s proposed 2023 budget includes, among other things, eliminating the songwriters act and making sales of catalogs more than $1 million taxed at the income rate. The proposal is part of the Biden administration’s larger goal of imposing higher taxes on wealthy individuals. It’s unclear if Biden’s proposal will pass Congress, but musicians are selling their rights in case it does, Kellogg said.
Readying for Retirement
Kellogg said older musicians like Dylan and Phil Collins of Genesis are also selling their catalogs to use the cash for retirement or “so they can put it in trusts for their kids — kind of like estate planning.”
Songs have two copyrights linked to them — one for publishing and another for the musical master. The most recent flurry of sales comes from musicians selling their publishing rights.
Entertainment companies are paying tremendous amounts of money for music catalogs, in part because executives are confident they’ll make the money back in digital streams of songs, Kellogg said.
“They’re so bullish on it and they feel it’s really going to pay off,” he said.
Hip-Hop Following Suit
In early September hip-hop legend Chuck D sold a major stake in his songwriting catalog to his longtime publisher Reach Music. The deal included more than 300 songs written by Chuck D for Public Enemy, Rolling Stone reported. The songs 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 wrote.
“[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.”
Also in September, Future also has sold the publishing rights to his recorded output from 2004 to 2020 to the investment firm Influence Media Partners, Variety reported. The 612 tracks, including collaborations with Drake, Kendrick Lamar, Rihanna, and the Weeknd. Rumor has it that Future was paid “high eight figures.”
Irv Gotti, co-founder of the once high-riding Murder Inc., revealed in July that he made $300 million deal with Iconoclast’s Oliver Chastan where the music company will receive 50 percent of Murder Inc.’s masters. This portion of the catalog includes Ja Rule, Ashanti, Lloyd, and Charlie Baltimore.
Why Some Artists Selling, Others Are Buying
But as some musicians scramble to sell off rights, the younger generation of artists is looking to buy back their masters from recording labels. Beyoncé, Dua Lipa, Rihanna and Iggy Azalea have all renegotiated their contracts in recent years so they could own their masters. Some artists have said buying the master back represents full control of their artistic expression.
“I’m so happy to own my master for this new album,” Azalea said in a 2019 tweet about her In My Defense album. “They really do people crazy dirty on ownership of their intellectual property in the biz.”
Azalea and the others are also recapturing their masters because “everybody is recognizing the value of the copyrights,” Kellogg said. Some artists want their master in case one day a lucrative deal comes along and they can sell at a premium, while other musicians see the potential money streaming music can bring in, Kellogg said.
Music streaming is projected to grow into a $30 billion industry by 2030, up from $18 in 2018, according to a Goldman Sachs estimate.