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The Future. The last few years have seen a wave of top artists selling stakes in their music catalogs for major windfalls. The investments have become a significant asset class for labels and PE firms. As the gold rush continues, some innovative companies may look to offer their own version of an ETF in individual music catalogs to craft a new kind of alternative asset.
Rock the slots
Companies like Primary Wave and Universal Music Group have found several ways to monetize the music catalogs of legacy acts.
- Sync deals like licensing songs for film, TV, and video games can bring in millions of dollars and inspire people to find the music on streaming platforms.
- Biopics are a longer investment but with major upside; UMG CEO Lucian Grainge said they can lead to “cumulatively, over the three years following the film’s release, a 94% catalog streaming uplift.”
- Remixes, interpolations, and reimaginings can inject new life into a song and generate significant royalties when played, as companies can own 5 to 100% of a finished track.
- Brand collaborations stamp the face of living and deceased artists on everything from makeup kits to slot machines to beer. Primary Wave said these likeness deals can bring in anywhere from $50,000 to $2 million.
- Holograms and AI are the newest ways to exploit both publishing likeness rights, with the ABBA show in the UK becoming a massive hit, and Judy Garland’s estate allowing her voice to be used by an AI startup.
How lucrative is this? Bloomberg notes that Primary Wave took a 50% stake in Whitney Houston’s estate in 2019 for $7 million. Her work now generates $8 million annually. Talk about a return on investment.
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