WITHOUT TOURS, PUBLISHING PROVIDES A BANK

The inability to tour has bolstered the marketplace for music royalties, already a hot-spot for investors thanks to the popularity of streaming.

As the Wall Street Journal noted in a recent article, artists can sell or lease their rights and there’s currently no shortage of buyers, with the likes of Sound Royalties, which operates like a bank providing cash advances on future royalties, and the acquisition-focused Merck Mercuriadis’s Hipgnosis Songs Fund leading the way.

Catalog titles, seen as the safer investments, have seen prices go up since the COVID-19 pandemic set in: A songwriter's share of Rihanna’s “Don’t Stop the Music” pulled in $203,000 and a producer’s slice of REO Speedwagon, which recently received a PPP loan, on their hit 1980 album Hi Infidelity went for $179,500.

“When you look at ‘Don’t Stop Believin’ or ‘Livin’ on a Prayer,’ consumption of these songs has gone through the roof during the pandemic,” Mercuriadis told the Journal.

Songwriters’ catalogs are receiving multiples of 10 to 18 times annual royalties, a rise from eight-13 pre-coronavirus, the Journal reported. Loan deals are reportedly as low as $5,000 and can reach $10m; duration is anywhere from six months to five years.

“The world has finally recognized music rights as a sound alternative asset,” Primary Wave Chief Executive Larry Mestel told the Journal. “The market was very strong before COVID for deals. It got even stronger because artists have a limited way of making money.”

For Journal subscribers, the story can be accessed here.