The inability to tour has bolstered the marketplace for music royalties, already a hot-spot for investors thanks to the popularity of streaming.
As the
Wall Street Journal noted in a recent article, artists can sell or lease their rights and there’s currently no shortage of buyers, with the likes of
Sound Royalties, which operates like a bank providing cash advances on future royalties, and the acquisition-focused
Merck Mercuriadis’s
Hipgnosis Songs Fund leading the way.
Catalog titles, seen as the safer investments, have seen prices go up since the COVID-19 pandemic set in: A songwriter's share of
Rihanna’s “Don’t Stop the Music” pulled in $203,000 and a producer’s slice of
REO Speedwagon, which recently received a PPP loan, on their hit 1980 album
Hi Infidelity went for $179,500.
“When you look at ‘Don’t Stop Believin’ or ‘Livin’ on a Prayer,’ consumption of these songs has gone through the roof during the pandemic,” Mercuriadis told the
Journal.
Songwriters’ catalogs are receiving multiples of 10 to 18 times annual royalties, a rise from eight-13 pre-coronavirus, the
Journal reported. Loan deals are reportedly as low as $5,000 and can reach $10m; duration is anywhere from six months to five years.
“The world has finally recognized music rights as a sound alternative asset,”
Primary Wave Chief Executive
Larry Mestel told the
Journal. “The market was very strong before COVID for deals. It got even stronger because artists have a limited way of making money.”
For
Journal subscribers, the story can be accessed
here.
