Why David Bowie, Bruce Springsteen and more are selling their music catalogues - Action News
Home WebMail Monday, November 11, 2024, 05:22 AM | Calgary | -1.6°C | Regions Advertise Login | Our platform is in maintenance mode. Some URLs may not be available. |
Entertainment

Why David Bowie, Bruce Springsteen and more are selling their music catalogues

David Bowies catalogue, which just sold for $250M US, only represents the latest in a long string of celebrity musicians cashing out of a struggling industry. But why are some of the biggest superstars of the past fifty years clamouring to part with the bodies of work they spent a lifetime building?

A tax loophole, pandemic restrictions and streaming fads all play a part in the trend

Why big-name musicians are selling their catalogues

3 years ago
Duration 2:01
Musicians such as Bob Dylan and Neil Young are cashing in on their catalogues for millions of dollars. Some of the reasons behind these sales include a U.S. tax loophole, pandemic restrictions and streaming fads.

When David Bowie's estate sold his entire music catalogue for $250 million US last week, the late British rocker joined a group already bursting at the seams with new members.

Bob Dylan, Stevie Nicks and Neil Young have all sold theirs in recent years, while newer artists including Shakira and Calvin Harris have also jumped on the trend. And justdays after Bowie's sale singer/songwriter John Legend parted with his catalogue for an undisclosed amount.

Butthepayouts aren't cheap. Bruce Springsteen hammered thathome when he made the largest-known single-catalogue sale in December for $500 million US.

Why are corporations willing to spend so much to acquire these musicians' catalogues?And why are some of the biggest superstars of the past 50years parting with the bodies of work they spent a lifetime building?

CBC News explains why catalogue sales have become a defining part of today'smusic industry.

The timing of a U.S.tax loophole

"The reason why you're hearing about this right now, and why it seems to be happening quickly is a U.S. tax situation," said Patrick Rogers, CEO of Music Canada. "The opportunity to do this at the best financial time is right now."

Due to what many call a "loophole" in American tax law, musicians making a large sale right now pay less than half as much as they mighta few years from now, when that loophole is closed.

When United States President Joe Biden was elected, he pledged to alter the country's capital gains tax law so that it would fall in line with income tax for high-earners. Or in other words, it would ask as stated on his website "those making more than $1 million to pay the same rate on investment income that they do on their wages."

That means the taxes musicianspay on their catalogue sales couldjumpto around 37 per cent from roughly 20. For sales in the hundreds-of-millions, that represents a huge amount of money, Rogers said, and it's pushing musicians who are considering the move to get it done.

Rock legend David Bowie performs on stage at the Forum in Copenhagen, Oct. 07, 2003. The late musician's estate recently sold his entire music catalogue for $250M US. It's only the latest in a long string of similar moves. (Nils Meilvang/AFP/Getty Images)

Pandemic effect on live music

Another factor is a direct result of the pandemic:the loss of live music, which forced an already struggling industry to adapt quickly.

"Live music obviously has gottenimpact[ed]really extremely by the pandemic, more than any other aspect of the music industry," said Tim Jones, founder of music label Vnclm_ and management company Pipe and Hat. "So, you know, we've had to really move everything to digital over the last couple of years."

After decades of musiciansbeing able to relymostly on record sales for income,the rise of file-share sitesfollowed bythe rise of streaming all but destroyed that source of revenue. Performers were forced to turn more and more tounending touring schedules to make a living a last-resortoption that was then taken away by COVID-19 closures and social distancing.

Without live-musicrevenue, musicians even top-earners have been forced to adapt.

And while some have been able to transition to digital mediums nearly seamlessly (like Travis Scott did with thevirtual-reality (VR) Fortnite concert, early on in the pandemic), that's not a viable option for every genre, Jones said.

Virtual players watch Travis Scott the Fornite concert Astronomical, which was viewed by over 12 million people. (Fortnite)

"Artists that are kind of on the cusp and trying these new technologies ... are going to need to have an audience that's also on the cusp," Jones said. "Because, you know, the average person isn't going to just go out and spend hundreds or thousands of dollars on a VR headset if they don't already have one, just to watch a concert, right?"

So artists who have been in the industry for decades and musicians in less cutting-edge genres are motivated to findincome somewhere else. And many musicians have publicly complained that the amount they make from streaming platforms like Spotify and Apple Music is far too low to live on.

Nostalgia-driven streaming

Meanwhile, corporations are motivated to buy these catalogues now because there are repeated and ongoing opportunitiesto gain revenue from each additional listens with the outsized place streaming has taken in the industry.

According to a report by Billboard, Springsteen's music brings in an estimated $17 million a year. It's a commanding figure, but not completely divorced from other musicians' experience.

The pandemic, rise of streaming and the influence of TikTok have come together to supercharge the success of catalogue music music that was released years in the past over new releases.

WATCH | Canadian musicians struggle to earn a living during pandemic:

Canadian musicians struggle to earn a living during pandemic

4 years ago
Duration 2:04
Many musicians in Canada have struggled to make a living during the pandemic because of closed venues and streaming services that average only half a cent per stream.

According to a year-end report by U.S. market monitor MRC Data and Billboard,the market share of new music actually decreased in 2021 for the first time since monitoring began in 2008. Catalogue sales, meanwhile, increased by 23.8 per cent to 73.7 per cent of total album consumption.

While corporations and musicians can both see value in the catalogues now that they are more popular, it just makes more sense for some artiststo cash in on the opportunity to sell.

"What you're seeing is those people deciding to take one big payment now and giving those rights to people," Rogers said, "rather than waiting for them to come in piece-by-piece."

Canada and music repatriation

Outside of raw revenue, there's another motivation behind acquiring catalogues and song rights for one music industry veteran:patriotism.

Michael McCartyfounded Kilometre Music Group (KMG) early last year to acquire the song and catalogue rights of Canadian music from both Canadian performers and songwriters.

Canada is"punching above our weight more than Britain did during the British invasion," in the music industry, and has been for decades, McCarty said.

Musicians Drake, Justin Bieber and the Weeknd dominate the charts week after week, he said, andCanada outperforms countries like England and Sweden in terms of the amount of globally successful music versus the size of the country.

"There's probably a hundred people in in the Greater Toronto area that are co-writers on globally successful records right now," McCarty said. "And the actual Canadian presence on the [Spotify] worldwide top 10 chart for every week is easily 50 per cent of the chart, which is unbelievable thing."

The Weeknd performs during the halftime show of the NFL Super Bowl 55 football game between the Kansas City Chiefs and Tampa Bay Buccaneers, on Feb. 7, 2021, in Tampa, Fla. Kilometre Music Group acquired partial rights to two of his songs, in an effort to bring revenues back to Canada. (Ashley Landis/The Associated Press)

But, he said, the rights to most of that music is owned by foreign companies, which means Canada is potentially missing out on a huge revenue stream.

KMG has so far made six acquisitions, including partial rights to the Weeknd'sBlinding LightsandSave Your Tears, and Dua Lipa'sLevitating, which wasco-written by Canadian record producer Stephen Kozmeniuk.Those tracks were the top three of Billboard's Hot 100 songs for 2021.

McCarty said, by acquiring the rights to this music, he hopes to supportthe "delicate ecoystem" that fosters musicians in Canada. Because, he said,the future of the industry is rights ownership.

"The natural resource of the future is information and the ownership and control of information," McCarty said."And unless we wake up and start to retain control over our intellectual property, we risk moving from resource barons, to info-serfs."

With files from Teghan Beaudette