The record was broken Bruce Springsteen when in December he sold his musical catalog for 500 million dollars to Sony Music, but many artists have recently made the same decision. What bob dylanwhich after selling the copyright to his compositions to Universal for more than $300 million, in January transferred his catalog of recordings and the rights to his future releases to Sony for an additional $200 million. Shakira he sold all the rights to his 145 songs (for how much is unknown) to the Hipgnosis Song Fund in January 2021, and one of the last has been Stingwhich this February sold its entire catalog in an operation valued at more than 250 million dollars to Universal.
Music catalogs have been the object of commercialization for years, but as of 2020 these transactions have become a common practice for three main reasonsas explained by Legal & Arts lawyer Paula Sánchez: the cancellation of live events due to the pandemic, the disappearance of physical album sales replaced by streaming and the delay in collecting royalties in this format. “For the artist it is beneficial in general terms, since the taxes paid for royalties, the so-called artistic taxes, are higher in the long term in each settlement than the taxes paid for a transaction of this magnitude,” he says.
As for the risks, the lawyer acknowledges that, in general, they are assumed by the record company or the investment fund. “They bet on artists on the rise that may disappear from the main lists over the years and not generate the expected income, given the changing nature of this industry,” Sánchez summarizes.
In the case of hypnosiswhich in addition to Shakira’s complete discography has also been made with the repertoire of Neil Young, Enrique Iglesias, Red Hot Chili Peppers or 50 Cent, among many others, the forecasts are not only being met, for the time being, but have even been exceeded. “The VAF [variación contra el pronóstico, por sus siglas en inglé] for all catalogs owned as of September 30, 2020 was +0.4%, which means that royalty state revenues are, in the aggregate, higher than forecast at the time of acquisition. Web page. In total, the British company founded by Merck Mercuriadis has 146 catalogs and 65,413 songs that lead the charts around the world.
This type of investment funds, according to the director of the legal firm specializing in the music industry Sympathy for the Lawyer, Manuel López, are a new player in the music business and have an independent position vis-à-vis collective management entities. “That is going to influence the pressure they will exert to negotiate a change in the economic conditions for their catalogs, especially in the distribution of the money that comes from streaming (how much goes to the owner of the master and how much goes to the rights of author of the composition)”, he warns.
In any case, López insists that intellectual property linked to music is a valuable business because it allows the generation of stable income from consolidated catalogs to be projected in the future: “There are many options to open new channels of income for songs that were gathering dust without anyone moving them through the audiovisual, commercial, video game or other sectors that could be interested in music as an element of value”.
Even so, in Spain it is difficult for that to happen. On the one hand, the Intellectual Property Law does not allow the exploitation rights of creations to be sold, only to assign them for a certain time and territory, and, furthermore, to form part of the SGAE, authors must acquire at least 50% of the income that is generated with the exploitation of his work. “This complicates the appearance of this type of transaction, but there are already numerous voices advocating a change in the law that makes the situation more flexible and opens the door to another type of transmission and commercialization of the rights to the works,” Sánchez confesses. .
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