Nobody Knows What's Up With Catalog Sales
Like everything, the ups and downs are happening all at once.
In case you haven’t heard, there’s a bit of a doldrums going around the whole wide world. With the current uncertainty comes a lot of conflicting information. How is it possible for Live Nation to hit a quarterly high in Q2 earnings while acts like Santigold and Animal Collective have to call off their U.S. and UK tours, respectively, because they can’t make the numbers work?
Similarly, if the recorded music business grew 9% in the first half of 2022, then why would music stocks drop 44% in the same time (keeping in mind that global stocks are only down roughly half that amount)?
The current economic storm has reduced visibility for pretty much every industry. So instead of making blind predictions, we’re embracing the ambiguity with a new occasional section we’re titling Temperature Check, where we’ll share conflicting news on a specific subject without trying to give an overall prognosis. We hope it helps.
TEMPERATURE CHECK -
The hot and cold of CATALOG ACQUSITIONS.
HOT: Primary Wave Strikes $2 Billion Deal With Financial Giant Brookfield to Acquire Music Copyrights
The asset management giant bought a minority stake in Primary Wave while giving the PW team $1.7B to buy up plenty more music IP, which they’re going to spend with the help of another new minority partner, CAA.
WARM: Hipgnosis Stock Plunges to All-Time Low, But Analysts Remain Relatively Upbeat Following Refinancing
The poster boys for extra high multiples hit some hard times in the down market. But banks and investors are optimistic following some refinancing moves.
COLD: After Shepherding Deals for Bowie, Sting and Springsteen, Joe Brenner Calls Catalog ‘Feeding Frenzy’ Over
The deal-making lawyer behind some of 2021’s mega-sales says there aren’t many headline making catalogs left to acquire.
TAKEAWAYS
Salient statements from this week’s music news.
1. Performance Rights Organization BMI Shifts to For-Profit Business Model
Following a failed sale plan in August, the country’s biggest PRO is shifting it’s status to prepare for future endeavors.
Takeaway: With a non-profit mode, the PRO retains only the operating costs and other expenses while most of the revenue is distributed to its members. A for-profit model enables the PRO to operate like a traditional business while remaining — like ASCAP — under the consent decree governed by the Department of Justice, which restricts some of its business opportunities.
2. Warhol’s Prince Photo At Center of Supreme Court Debate Over the Future of Creativity
The high court seems content to relitigate decades-old IP issues while AI is coming for everyone’s job.
Takeaway: When the Supreme Court releases its decision on the Warhol case early next year, it will be the first time in more than three decades the justices have ruled on how creative works are covered by fair use.
3. Too Many Songs, Not Enough Hits: Pop Music Is Struggling to Create New Stars
The fragmentazation of everything has left labels and managers scratching their heads at what to do for new artists.
Takeaway: The number of new acts vaulting into the top 10 of the Hot 100 has declined precipitously in the last few years. From 2001 to 2004, over 30 first-timers cracked the top 10 annually. In 2019, however, only 15 first-timers reached the top 10, and 2021 had the lowest number of new entrants this millennium: just 13.
