DThe American musician Katy Perry has sold a portion of her music rights to Litmus Music. According to the industry magazine „Billboard,“ the company, financed by the financial investor Carlyle, will pay approximately $225 million for Perry’s shares in the marketing of her five albums: „One of the Boys,“ „Teenage Dream,“ „PRISM,“ „Witness,“ and „Smile,“ as well as her authorship rights. Litmus has not provided any information regarding the financial details of the catalog purchase. The rights to the recordings released between 2008 and 2020 are likely still held by Capitol Records, a label under Universal Music, where Dan McCarroll, one of the co-founders of Litmus Music, used to work.
The 38-year-old Perry is once again selling rights, which is relatively young for an act. Earlier this year, the fund Hipgnosis Songs Capital, financed by Blackstone, acquired the royalties owed to Justin Bieber for the marketing of his recordings, as well as the neighboring rights and performance rights, and the author rights of the 29-year-old Canadian. At that time, it was reported that the price was over $200 million. Like Justin Bieber, Perry has also co-written several of her hits („Last Friday Night,“ „Dark Horse,“ „Teenage Dream“) with other artists who therefore hold author rights to the works and are financially involved.
Viele millionenschwere Rechte-Deals
In recent years, various artists have sold shares in their work. Among them were 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. The highest price to date – at least as far as known – was achieved by Bruce Springsteen with the sale of his recording and publishing rights to Sony Music and Eldridge Industries. Springsteen is said to have received over $500 million as part of the deal.
Older catalogs usually have higher prices in relation to the annual royalty revenues of a package (multiples), as the annual earnings can be well calculated based on the data available over many years. For younger catalogs, a so-called „decay curve“ is taken into account to remove 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, for example, are likely to be considered very stable – although the data basis is not comparable to that of Springsteen and Co. On music streaming leader Spotify, Bieber currently has 73 million monthly listeners, while Katy Perry has 51.4 million. Bieber is even among the top 10 in terms of listeners.
Catalogs of popular artists are attractive due to the prospect of regular and well-planned income, especially from streaming. Moreover, the market for music recordings continues to grow, and revenue can be increased through further marketing via the sale of physical media or the placement of works in films, series, advertisements, or video games. In addition, a buyer is also involved in the income from cover versions through copyright, which is relevant in the case of Perry’s „Teenage Dream“.
Neben Musikunternehmen hatten so zuletzt auch viele Finanzinvestoren wie Blackstone, KKR oder Apollo Global Management Musikrechte ins Visier genommen. Die Zinswende hat den Markt im vergangenen Jahr etwas abgekühlt, manche Käufer sahen sich auch mit Blick auf die teurer werdende Begleichung von Schulden vor Herausforderungen gestellt.
Last week, the Hipgnosis Songs fund announced the sale of 29 catalogs to, among other things, service debts. Expensive deals continue to take place: in late September 2022, Phil Collins, Tony Banks, and Mike Rutherford sold a comprehensive rights package to US music company Concord Music. According to the Wall Street Journal, the price was over $300 million. Bieber’s sale followed earlier this year. Meanwhile, Litmus Music acquired the rights to Keith Urban’s recordings about four months after its founding in August 2022. There was no information available about the price at that time, but Litmus initially started with over $500 million in capital.