Every week, headlines announce famous musicians auctioning off their song catalogs for staggering sums of money. From rock legends like Bruce Springsteen and Bob Dylan to members of lesser-known bands, selling song rights for one big payday has become a prevailing trend. However, while aging rockers dominate the headlines, the hip-hop genre is also beginning to show interest in this financial opportunity. This blog explores the role of hip-hop in the music catalog sales phenomenon and the reasons behind artists’ decisions to sell.
What is a Music Catalog, and How is Hip-Hop Faring in This Trend?
A music catalog consists of songs that are 18 months or older and already account for the majority of music consumed in the United States. The companies investing in song catalogs primarily seek legendary and iconic tracks that have proven their value over decades. While the trend has been fueled by singer-songwriters and rock bands from the ’60s and ’70s, a subset of the market focuses on “shallow catalog” hits, which appeals more to hip-hop and R&B artists.
Streaming’s Impact on the Music Business:
Streaming services have revolutionized the music industry, introducing a new revenue model where every listen brings payment. This has brought new money and optimism to the music business, leading to the growth of the “shallow catalog” market, which caters more to hip-hop and R&B.
Hip-Hop’s Involvement in the Catalog Sales Ecosystem:
Hip-hop’s influence in the catalog sales trend goes beyond the artists’ catalogs being sold. An increasing number of new rap songs feature interpolations of older material, often from catalog deals. Catalog owners work with artists, managers, and A&R teams to incorporate their songs into current tracks, creating a win-win situation.
The Catalyst for the Catalog Sales Trend:
The trend of catalog sales can be traced back to the historically low-interest rates following the 2007-2008 financial crisis. As investors sought riskier bets, music rights became a tangible asset. The launch of companies like Hipgnosis, founded by Merck Mercuriadis, ignited the frenzy for catalog acquisitions. This mass investment has made songs a financial commodity with considerable value.
Reasons Behind Artists Selling Their Catalogs:
The motivations for artists selling their catalogs vary. Firstly, the COVID pandemic and its impact on live touring forced musicians to seek alternative revenue streams. Secondly, the increased number of buyers has driven prices up, making deals attractive for songwriters. Thirdly, for older artists planning their estate, selling their catalog can be more straightforward than passing on copyrights to heirs. Lastly, favorable tax rates on catalog sales compared to royalties have incentivized artists to sell.
The Future of Music and its Effect on Listeners:
As catalog consumption surpasses that of new music, investment firms’ financial backing for catalog sales may continue to favor older songs. This trend may reduce the cultural footprint of new music. While this raises concerns about the impact of creating new IP, the music industry has a history of sudden and massive changes, leaving room for optimism.
As the music catalog sales trend continues to soar, hip-hop artists are joining the fray alongside rock legends. The combination of streaming’s influence, historically low-interest rates, and favorable tax rates have created an environment where songs are seen as financial assets. While concerns remain about the effect on new music creation, the industry has shown resilience to adapt to changing dynamics. Whether hip-hop’s involvement will grow in this trend remains to be seen, but the impact of music catalog sales on the future of music is undeniable.
David Lotwin is an influential figure in the music industry, renowned for his expertise in artist development, business innovation, and recording studio business. David has left an indelible mark on the industry through his work alongside iconic artists and as co-founder of the legendary D&D Studios. David possesses a deep understanding of the intricacies of the music world. With his wealth of experience, David has become a trusted advisor and mentor to aspiring artists, sharing his wisdom and guiding them on their creative journeys. His profound insights and passion for nurturing talent make him a respected voice in the music industry.