Thanks to streaming, the music industry has been growing at a rapid rate. According to the Global Music Report from the International Federation of the Phonographic Industry, in 2023 the global music market was worth over $28 billion, expanding more than 10% from the prior year.
It’s not only artists who are reaping the benefits of a blooming industry. Music labels, publishers and investors have found ways to profit from its growth. One such way is by buying up artists’ music catalogs.
“The idea recently is that, because of streaming, you can kind of predict how songs are going to perform in the future,” said Ashley Carman, a music and podcasting industry reporter at Bloomberg. “So, investors, whether it be private-equity investors or the labels themselves, have started buying up catalogs with the idea that they can make returns on these investments.”
Carman joined “Marketplace” host Kimberly Adams to discuss her recent piece on the business of buying music catalogs. Below is an edited transcript of their conversation.
Kimberly Adams: So explain the basics. How does this business of buying music catalogs work?
Ashley Carman: The idea recently is that, because of streaming, you can kind of predict how songs are going to perform in the future. So, investors, whether it be private-equity investors or the labels themselves, have started buying up catalogs with the idea that they can make returns on these investments and also find new ways to build the revenue beyond even just the streaming revenue.
Adams: What ways are those?
Carman: So, for example, they can create brand deals depending on the types of rights they have. So they can create brand deals where they put an artist’s face on a different product or license their name for a product. They can put songs in movies and TV, which has its own payment, but then also has the added bonus of oftentimes driving up streams. So that helps in that way as well. There are a few different ways they can do it.
Adams: Yeah, this has been around for a little bit. You write about how Kurt Cobain’s catalog was purchased back in 2006, and it was pretty groundbreaking at the time.
Carman: Yeah. So, what was interesting about that is, when that catalog sold to Primary Wave Music, it was sold for a reported $50 million. And really, once they acquired the rights to this catalog, they got to work pretty quickly. They started putting Nirvana’s music in movies and TV programs. They licensed Kurt’s writing to Converse so they could go on some sneakers. So, it really turned into this idea of, OK, we have this catalog. We know people are going to listen to this music in the future, but how can we further exploit it so that we can continue to make even more money on it?
Adams: So what’s contributing to the sort of explosion of these deals right now?
Carman: So there have been a few things. For one, this kind of took off during the pandemic. The idea was that it was a low-inflation period. Interest rates were low. Investors really wanted to find higher-yielding assets. And again, with the advent of streaming, music became kind of this asset that, although it existed previously, was now a bit more proven out. And that’s why you began to see some of these really flashy deals, like Bob Dylan selling his catalog to Universal Music Group for more than $200 million in December 2020.
Adams: So once these companies get a catalog, how then do they go about kind of marketing that and making these older songs relevant to new audiences?
Carman: Really what they begin to do, at least when I spoke to Primary Wave, one of the companies who does this type of work, is they start building out social media accounts. And part of the reason they have to maybe even start doing that is because if they’re working with older artists, they might not have ever been on TikTok or Instagram. So, for example, they work with Smokey Robinson, and when he signed a deal with them in 2016, he didn’t have any social media accounts. But now, he’s 84 years old and he has more than 270,000 followers on Instagram and over 150,000 on TikTok. So, the idea is to really get the digital audience well acquainted with this older artist, and then ideally, brands will be more interested in working with Smokey, working with whoever, and putting their name behind them.
Adams: So how is this changing the music industry?
Carman: It’s changing the music industry in so much as we’re seeing a lot more as consumers of music, interpolations, where if you own the publishing rights to a song, you can’t use the master recording. The master is the original song you hear on the radio. But with interpolations, for example, you can use the lyrics and the song music itself. And so what folks will do is they’ll rerecord that song and the lyrics and use it in a new song. So you can hear a lot of these examples. One is “Blue,” that popular Eiffel 65 song turned into a Bebe Rexha hit in 2023. Once you start paying attention to these, you can kind of hear them everywhere.
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