Rod Stewart Sells Song Catalog as Music-Rights Fundraising Surges

Investors pour billions of dollars into companies pursuing music-rights deals

By Anne Steele of The WSJ. Excerpts:

"Rod Stewart, the star behind such hits as “Maggie May” and “Da Ya Think I’m Sexy,” has sold his song catalog as the music-rights market draws a flurry of fresh capital. 

Stewart sold his interests in his publishing catalog and recorded music, as well as some name and likeness rights"

"The sale and Iconic’s [Irving Azoff’s Iconic Artists Group] fundraising are signs of a continued appetite for music rights and show how the once white-hot market has matured. 

Music catalogs, which generate relatively predictable, steady returns, became an attractive investment amid the low-interest rate environment of the pandemic."

"Major stars from Bob Dylan and Bruce Springsteen to Stevie Nicks and Neil Young cashed in."

"They [Iconic] say it builds value by better managing catalogs’ income streams and making documentaries and other projects focused on their artists and music." (this might explain why artists make this deal since they are giving up control of their future income streams-see a related reason below)

Related post:

Katy Perry Sells Catalog to Litmus Music (2023)

Why Are More Performers Selling The Rights To Their Music? Maybe Tax Laws  (2022) 

Excerpt from that post:

"Bruce Springsteen, for example, recently sold his master recordings and music publishing rights to Sony for $500 million. I assume an artist would not sell their music for less than the amount of future income it would generate.

But that future income would get taxed at 37%. Selling it now means they only get taxed 20%. So that is a good deal for the artists.

The company buying the music could come out ahead if they pay a little less than what the music is worth because the artist does not need the full price. Why not? Because they are getting such a good tax deal they can sell it for less than it is worth.

If your music is worth $100 but you sell it for, say, $90, you still come out ahead. If you earned $100 by keeping the music, you pay $37 in taxes and you are left with $63. But if you sell it for $90 and only get taxed 20%, you pay $18 in taxes. That leaves you with $72, more than $63."