Aggressive New Rights Owners Take Control

Bruce Springsteen noted in his 2016 autobiography that he was one of the few artists who owned everything he ever created. “All my records are mine. All my songs are mine. It’s rare and it’s a good feeling”. Last year he cashed in a $500 million dollar cheque from Sony Music in exchange for his song recordings and publishing rights, which must have had the Boss feeling pretty good as well.

Sony also paid $250 million for Paul Simon’s songs. Universal forked out $300 million for Bob Dylan’s works. Hipgnosis acquired half of Neil Young's publishing for $150 million and Primary Wave, one of the first music acquisition agitators, has bought a multitude of catalogs since 2016, including works by Smokey Robinson and Johnny Cash.

These new rights owners are using new tools - mega music buy-outs - to replace traditional music licensing structures that see slices of the revenue pie shared with artists as the money comes in. But now that they have paid for and own the entire pie, will they get their just desserts?

There is no questioning the quality and value of these legendary bodies of works. But just how long will it take for those huge investments to be recouped and ultimately yield profits for their new owners? One can only assume that they see the music market as a still largely untapped opportunity for the optimization of the global management of the rights they now own.

But current signals are mixed. The rising tide created by the growth of streaming has significantly lifted the revenues of all boats. However, 2022 saw only single-digit growth in some of the more mature markets, possibly indicating a slowing trend. At the same time, the music “bulls” will certainly have found reasons for their optimistic outlook in Goldman Sachs’s 2023 Music in the Air report. The long-term forecast for publishing has even been increased despite the overall music figures anticipated to be lower than estimated in the previous version.

To be successful, the new music owners will have to be more proactive in managing rights and improving their use of the international Collective Rights Management Organizations (“CMOs”). Care will have to be taken in selecting “preferred” collectives or use special purpose licensing vehicles, notably for digital licensing. Some collectives provide preferential treatment to big-name rights holders via special schemes and licensing platforms, which can include reduced administration rates, no cultural or social deductions, more frequent distributions, and more granular data. At times these vehicles have even obtained better rates from the licensees because of the “premium” nature of the repertoire they represent (“must-have” music).

However, they will also have to be more vigilant if they wish to capture ALL the revenues associated with the use of their works. QRS’s experience shows that there continues to be leakage in the system, which at times can be significant. Financial audits remain necessary but are no longer enough. Data audits have become just as important because incorrect music data registrations continue to plague the system, leaving significant amounts of money on the table or in the wrong hands.

As is often the case in business, size matters and the bigger the player, the more choices it has and the more concessions it can extract. But even smaller rights owners need to do their homework, ask questions, and consider making moves.

Big or small, rights holders need the most up to date information on the use of their repertoires. The aim should be proactive global management: choosing their rights management partners well and ensuring that their data are registered correctly to optimize the collection of their revenues.

Rightsholders have never experienced as many opportunities and choices as they have now, but the landscape has never been so complex and hard to navigate without expertise and knowledge.

Through our consulting services, QRS can help rights owners and rights managers leverage their assets, extract more value from them, and thrive in the sometimes intimidating global and digital world of possibilities that is ahead of us.

Ask what our Insight Consulting services can do for you by emailing us at info@qwantumrights.com