On Monday, Universal Music Publishing Group announced that it will buy up Bob Dylan’s entire songwriting catalog—over 600 songs spanning six decades from 1962’s influential Blowin’ In The Wind to this year’s well-reviewed Murder Most Foul—in a landmark deal estimated to be around $400 million. It's a sale that the New York Times speculates "may be the biggest acquisition ever of the music publishing rights of a single act." In a statement announcing the sale, Jody Gerson, the chief executive of Universal’s publishing division, said, “To represent the body of work of one of the greatest songwriters of all time—whose cultural importance can’t be overstated—is both a privilege and a responsibility.” Dylan has yet to publicly comment on the sale.
At first glance, the deal is quite a shock. Why would Dylan, a 79-year-old music legend who has long owned the copyrights for his discography and already has an estimated net worth of hundreds of millions, cash in now? But after looking at recent trends in publishing rights acquisitions, projections for how the music industry will look in the future, and Dylan's unique position as a songwriter, it begins to make sense. Though this sale is the biggest of its kind, it's one entry in a year filled with deep-pocketed buyers acquiring musicians' full discographies. Just this year, Stevie Nicks sold 80 percent of her catalog to Primary Wave Music for $100 million. Hipgnosis Songs Fund, a fast-rising investment company, paid top dollar for the rights to catalogs from Jack Antonoff, Blink 182's Tom Delonge, Barry Manilow, Blondie's Debbie Harry and Chris Stein, and many more.
There's a reason for this influx of big purchases: music royalties and intellectual property (IP) have become investment opportunities due to the fact that royalty payments can remain steady despite fluctuations in the stock market. For buyers, artists' catalogs are commodities that can be traded like gold or oil. "If the investment is good, if you're investing in proven back catalogs, they tend to perform really well independent of any stock movements," music business writer Cherie Hu told VICE in March. "If you're investing in a tech stock, a lot of the bigger tech stocks move in the same direction a lot of the time. Investing in music royalties escapes that codependence. It's pure passive income. You'll make money in your sleep from it. It doesn't require any proactiveness." That, coupled with historic lows in both interest rates and inflation means that they can pay a premium for publishing rights. While it's arguably bleak to think of songs as investment assets, Goldman Sachs did predict music revenue will more than double to about $131 billion by 2030 so putting money in songs might actually work to diversify a stock portfolio.
For a legacy artist like Dylan, cashing out now also makes sense. After decades of receiving yearly royalty checks and making considerable money off the music he's owned, getting a lump sum payment with multipliers accounting for future royalties at 79-years-old probably more than doubled his wealth. Unlike annual royalties, which are taxed as ordinary income, the estimated $400 million or so he's getting from Universal is taxed as capital gains, which would save him millions on his tax bill even when adding state and net investment income (NII) taxes. While Dylan has given up his entire catalog, any future recordings he makes are not included in the Universal deal. At the twilight of his career, taking the money and running doesn't seem like a horrible option for Dylan. When you take into account that a music marketing giant like Universal has a vested interest in and dedicated teams for promoting, securing commercial syncs, and preserving the artist's legacy, there are worse places for an artist to be.
These major acquisitions aren't a sure bet as they rely on the music industry's continued growth, which isn't guaranteed. The vast majority of artists aren't in a similar position as Bob Dylan when it comes to personal wealth or cultural influence so selling their entire catalog wouldn't make sense: leave it to Wall Street to find a new way to leave the little guy out. There's something disconcerting about the fact that someone's songs are being thought of as quantifiable commodities and sold as investments but it's the reality. While artists selling their publishing rights is nothing new (just take Michael Jackson's surprise purchase of the Beatles' oeuvre in the '80s for $47 million), the drastic rise in these marquee deals is novel to 2020. Good for Bob Dylan getting paid, but the financialization of music could spell trouble for art.