Breakingviews - Dylan sale suits him, but not changin' times

  • 12/7/2020
  • 00:00
  • 3
  • 0
  • 0
news-picture

NEW YORK (Reuters Breakingviews) - A hard rain may be falling on many musicians during the pandemic, but not on Bob Dylan. Universal Music said on Monday that its publishing division bought the 79-year-old songwriting legend’s entire 600-plus catalog. The deal could be worth hundreds of millions of dollars. Selling now makes sense for the aging Nobel laureate, but his deal with an established industry player is unique. Greener artists getting offers for their work should think twice. Investors are increasingly interested in music royalties as an alternative asset. Shamrock Capital Advisors snapped up Taylor Swift’s early master recordings for over $300 million in November, according to the Wall Street Journal. And $2 billion Hipgnosis Songs Fund has been shelling out an average of nearly $15 million a week since July 2018 for rights to songs by artists like Rihanna, accelerating its activity after Covid-19 hit. The investment case hangs partly on a continuing turnaround. Streaming services from Spotify Technology, Apple and others have revitalized the industry. U.S. recorded music sales posted a 13% compound annual growth rate from 2015 through 2019, according to Deloitte, with last year’s revenue hitting a 10-year high. Royalty income can also be appealingly stable. For artists, there’s pressure to sell. Important touring revenue has dried up in 2020. This has surely left many needing shelter from the storm in the form of liquidity. And like U.S. equities and many other assets, music rights have been changing hands for higher-than-average multiples: around 10 to 18 times annual royalties versus 8 to 13 times in previous years, according to the Journal. Dylan isn’t likely to benefit long-term from the streaming upturn, so it makes sense for him to cash out in a hot market. Fellow septuagenarian rocker Stevie Nicks recently sold an 80% interest in her catalog at a roughly $80 million valuation, according to the New York Times. But younger or less famous acts need to be wary about unloading future income, not to mention finding their songs controlled by people they don’t like, as Swift has. Selling a few songs can meet immediate cash needs, but settling for a lump sum in a hurry could lead to serious regret. The present value now will later be past and, for the finances of music, the times they are a-changin’.

مشاركة :