2023-09-18 15:57:32
American musician Katy Perry has sold part of her music rights to Litmus Music. As the industry magazine “Billboard” reports, the company, financed by the financial investor Carlyle, is paying around $225 million for the shares due to Perry from the marketing of her five albums “One of the Boys”, “Teenage Dream”, “PRISM”, “Witness” and “Smile” and their author rights. There was no information from Litmus about the financial details of the catalog purchase. The rights to the recordings themselves, which were released between 2008 and 2020, are likely to remain with Capitol Records, a Universal Music label – for which Dan McCarroll, one of the two founders of Litmus Music, also once worked.
With the 38-year-old Perry, a comparatively young act is once again selling rights. Only at the beginning of the year did the Blackstone-financed Hipgnosis Songs Capital fund acquire Justin Bieber’s royalties on the marketing of his recordings, the neighboring rights and the author’s rights of the 29-year-old Canadian. At the time there was talk of a price tag of more than $200 million. Like Justin Bieber, Perry has also written several of her hits (“Last Friday Night”, “Dark Horse”, “Teenage Dream”) together with other artists, who therefore also hold author rights to the works and are financially involved.
Lots of multi-million dollar rights deals
In recent years, various artists have sold shares in their work. These included, for example, Bob Dylan, Tina Turner, Sting, Paul Simon and Stevie Nicks as well as John Legend, David Guetta and the bands Mötley Crüe and Imagine Dragons. Bruce Springsteen achieved the highest price to date – at least as far as is known – with the sale of his recording and author rights to Sony Music and Eldridge Industries. Springsteen is said to have received more than $500 million as part of the deal.
Older catalogs usually have relatively higher prices, based on the annual royalty income of a package (multiples), as the annual income can be easily calculated based on the data available over many years. For younger ones, a so-called “decay curve” is included. The aim is to factor out the influence of current developments. Both Perry and Bieber have been active for more than ten years and are still very popular. Their streaming numbers are therefore also likely to be considered very stable – although the data base is not comparable to that of Springsteen and Co. On the music streaming market leader Spotify, Bieber currently has 73 million monthly listeners, Katy Perry has 51.4 million. Bieber is even in the top 10.
Catalogs of sought-after artists are attractive with the prospect of regular and easy-to-plan income, especially from streaming. Especially since the market for music recordings continues to grow, and income can be increased through further marketing through the sale of physical recordings or the placement of works in films, series, advertising or video games. Through author rights, a buyer also shares in the income from cover versions, which is certainly relevant in the case of Perry’s “Teenage Dream”.
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In addition to music companies, many financial investors such as Blackstone, KKR and Apollo Global Management have recently set their sights on music rights. The interest rate turnaround cooled the market somewhat last year, and some buyers also faced challenges as debt payments became more expensive.
Last week, the Hipgnosis Songs fund announced the sale of 29 catalogs in order to, among other things, service debts. Of course, there have been and continue to be expensive deals: Phil Collins, Tony Banks and Mike Rutherford sold an extensive rights package to the US music company Concord Music at the end of September 2022. According to the Wall Street Journal, the price was more than $300 million. The sale of Bieber then followed at the beginning of this year. Meanwhile, Litmus Music took over the rights to Keith Urban’s recordings around four months after it was founded in August 2022. There was no information about the price at the time, but Litmus initially started with more than $500 million in capital.
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