Musicians selling their catalogs has become an increasingly popular trend over the past year. Icons like Bob Dylan, Neil Young, Stevie Nicks, and Shakira, are among those that have been selling this past year, but what factors determine whether this is an ideal move for others? We are here to give you insight into the world of music catalog sales and what to consider if you are looking to sell.
How much is a music catalog worth?
There are many factors to consider when determining a catalog’s value. The depth of the catalog, royalty rates, and evolving industry trends are a few of the important times that need to be evaluated.
Royalty rates are on the rise. Last year’s ruling by the Copyright Royalty Board is slated to raise streaming royalty rates by at least 44%. With this increase, combined with the projected growth of music streaming globally, the revenue to be generated by streaming services is expected to grow from $8.8 billion in 2019 to $27.5 billion by 2030. With this and the new MMA legislation, artists’ annual royalty revenues are anticipated to skyrocket.
Musicians need to fully understand the true worth of their creative works and be thoughtful when it comes to the idea of selling, and potentially undervaluing, their catalog.
Example: If an artist is offered $1.5 million on a catalog that has been providing a $100,000 annual revenue stream, they might jump at the offer believing that they are being offered 15x their current annual revenue for the catalog. However, as the artist begins to receive previously uncollected royalties as a result of the MMA plus more streaming revenue due to increased global use, the catalog may begin to generate $300,000 in annual revenue compared to the $100,000 it was receiving before. If the same $1.5 million deal was made based on this new income, the catalog’s sale price would actually represent a 5x multiple rather than a 15x multiple.
How do I sell my music catalog?
Selling a music catalog can be a time and money consuming process. Finding the right buyers and shopping your catalog around can seem like a daunting task. If you’ve been approached buy a purchaser, or searched the web for music catalog buyers, you aren’t likely to know where to take your catalog and how to present it. It’s better to work with a trusted resource who has established relationships in the market.
This “shopping” process can take months or drag on for years if you don’t fully understand the value of your copyrights, who the best buyers are for your particular catalog, and how to negotiate the best deal. Keep in mind, accepting less than what you deserve is always a risk when selling your catalog, as well as missing out on the potential revenue to be made on those copyrights in the future.
If you are looking to sell, but want a short-term cash advance to bridge the considerable amount of time it takes to go through all the steps in a sale, check out our Interim Catalog Financing.
If you are considering selling and don’t know where to start, we can help you determine what your catalog is worth and connect you with the best buyers for your specific music.
What are the alternatives to selling?
If you are on the fence about selling music royalties, but still want upfront access to your music royalty earnings, we may be able to help.
Sound Royalties offers customized advances that are based on the performance of royalty streams, without ever taking ownership of those music copyrights. Our non-credit based options and collaborative process make our financing services unique and creative-friendly. Plus, you can receive funding and keep regular royalty income with our pass-through income.
See what some of our family of creatives have to say about us here.
Whether you’re interested in selling your music catalog, or interested in leveraging your royalty streams, Sound Royalties has a solution for you. Call us today at 844-4ALL-MUSIC or fill out a contact form for more info.