catalog sales
A California appeals court has sided with The Offspring in a long-running court case filed by former drummer Ron Welty, rejecting his claims that he was owed millions more from the punk band’s $35 million catalog sale.
Welty’s lawsuit alleged that lead singer Bryan “Dexter” Holland had tried to “erase” his contributions to the Offspring, including by shorting him on the proceeds of the band’s 2015 catalog sale to Round Hill Music. But a Los Angeles judge rejected those accusations last year.
In a ruling Wednesday, California’s Court of Appeals upheld that ruling, saying there had been “no reversible error” in the lower judge’s decision. Welty raised numerous challenges to how the lower judge had handled the case, but the appeals court was not convinced by any of them: “The judgment and order are affirmed.
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Welty joined The Offspring in 1987 and served as the band’s drummer during its heyday, including on its 1998 album Americana that reached No. 2 on the Billboard 200, before leaving the band in 2003 on undisclosed terms.
In his sweeping 2020 lawsuit, Welty accused Holland and the other members of numerous forms of wrongdoing: “This lawsuit seeks, among other things, redress for The Offspring’s failure to pay Mr. Welty his rightful share of the band’s proceeds and a prohibition against their ongoing efforts to harm Mr. Welty, his legacy with the band, and his ongoing career.”
Among other allegations, Welty claimed he had been entitled to a bigger cut of the Round Hill deal, in which the company paid $20 million for the rights to the band’s recorded masters — split among the band’s key performers — and another $15 million for the publishing rights, paid directly to Holland.
Welty claimed he deserved some of that publishing money, and argued in his lawsuit that he was owed at least $2.8 million more from the Round Hill transaction. But at a bench trial in 2022, Judge William F. Fahey largely rejected those accusations, calling some them “completely illogical.” During the proceedings, other members of The Offspring had testified that the structure of the deal was fair since Holland had written all of the band’s music.
In a written decision last year, Fahey ruled that the deal had been “structured in accordance with industry standards” and that Welty had failed to prove that he was entitled to a cut of Holland’s $15 million: “It is hard even to envision a reason why these two other band members would agree to such a structure unless they believed that Holland was the creator and owner of the music compositions.”
In March, the judge issued a final judgment in favor of the band, finalizing the earlier rulings and rejecting the rest of Welty’s claims. It was that ruling that was affirmed by Wednesday’s decision at the appeals court.
Following the ruling, Welty’s attorney, Jordanna G. Thigpen, said her client had “great respect” for the appellate court but was “contemplating the next step of appellate review.” Howard King, an attorney for The Offspring, declined to comment.
Now that Pink Floyd has finally managed to sell its recorded music assets, merchandising and name, image and likeness, the songwriting members of the group have another big payday still outstanding — its music publishing assets.
Sony has bought some of Pink Floyd’s music assets for about $400 million, sources confirm of the news that first appeared in the Financial Times. But sources also confirm that the band’s music publishing assets were not a part of the deal.
Nevertheless, the Pink Floyd sale was a long time coming, as the group started shopping its recorded music assets about two years ago. For a while, the assets were pulled off the block due to some infighting between group members, according to published reports.
As sources said at the time, the assets were shopped to all the big players — the other majors, BMG, Concord, Primary Wave and other private equity-backed music buyers — but Sony always had the inside hand on the deal given that it serves as the group’s distributor. This deal marks the third big music asset deal Sony has made in the last 12 months, having previously bought 50% of Michael Jackson’s music assets in a deal that valued them at $1.205 million; and Queen’s music assets for about $1.2 billion.
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Combined, that means Sony — and any financial partners that were, or may have been, involved in the deals — has spent about $2.2 billion buying music assets in the last 12 months. In July, Apollo Global Management announced that it was the lead in pulling together $700 million in commitments to provide a “capital solution” to Sony Music Group. Back in 2021, Sony partnered with another financial partner, Eldridge Industries, when buying Bruce Springsteen’s master recordings.
Sony declined to comment. Apollo and Eldridge didn’t respond to e-mails seeking comment.
Pink Floyd’s filings in Companies House — the U.K. equivalent of the SEC database — show that for the year ended June 30, 2023, the band’s revenue totaled, as first reported by Music Business Worldwide, 40.4 million pounds (which at the 2023 average of 1.244 per pound totals $50.3 million, according to exchange-rates.org). This total combines revenue from master recording, merchandising and possibly other licensing opportunities; and also combines the two Pink Floyd corporations that appear to have been set up to oversee those assets: the original band after Syd Barrett’s departure and the group that carried on after Roger Waters’ departure.
Just looking at Pink Floyd’s recorded masters catalog over the last three years in the U.S., the band has generated an annual average of 1.135 million album consumption units from the sale of 497,000 LP, CD and digital download albums and 160,000 track downloads and almost 675 million on-demand streams. While Luminate doesn’t track global album sales, Pink Floyd’s on-demand global streams averaged 2.37 billion over the last three years. Consequently, if the group owns all of its publishing, Billboard estimates that the band’s recorded masters bring in about $11 million in publishing royalties annually. If the band sells and can achieve a 20-times multiple — the going rate for superstar songwriters — it could bring in another $200 million-plus for the band’s songwriters. In general, music publishing asset trade at a higher multiple than recorded music assets, although the latter is catching up on that front.
An e-mail to the manager of one of the band members didn’t receive a reply by press time.
Sony’s acquisition of Pink Floyd’s name, image and likeness is good for merchandising. But if any opportunities arise for film, TV or a theatrical production — and there likely will be considering that since 1991 the band’s fanbase has consumed nearly 51 million album consumption units in the U.S. alone — Sony would need, as its executives well know, licenses from the Pink Floyd publishers and/or administrators, which in the U.S., according to SongView and depending on the song, consist of TRO Essex Music Group, BMG and Concord.
Michael Jackson’s estate has won a tentative court ruling that would allow it to proceed with a $600 million sale of the singer’s catalog to Sony Music, overcoming objections from his mother that aimed to block the deal.
Katherine Jackson had argued that the gargantuan deal violated the terms of Michael’s will, but a California appeals court tentatively ruled Wednesday (July 17) that she had “forfeited” that argument by failing to make it before a lower probate court.
Even if she had properly raised that argument, the appeals court said the estate’s executors had the power to make the deal. The court said Jackson’s will had vested the executors (John Branca and John McClain) with the authority to “sell, invest, or otherwise manage estate property” while they were in charge.
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“The court is tentatively inclined to affirm the probate court’s order granting the executors’ request to proceed with the proposed transaction,” the appeals court wrote in its ruling, obtained by Billboard. “We tentatively conclude that Katherine’s challenge fails on the merits because the probate court’s order does not violate the terms of Michael’s will.”
Such “tentative” rulings must be finalized before they are formally entered, but they strongly indicate the way the court is planning to rule. An attorney for Katherine did not return a request for comment on Thursday. A rep for the Jackson estate declined to comment. News of the tentative ruling was first reported by Rolling Stone.
As reported by Billboard earlier this year, the Jackson estate and Sony Music have reached a deal that will see the music giant buy half of the singer’s publishing and recorded masters catalog for more than $600 million.
But because the Jackson estate is still pending before a Los Angeles probate court more than 15 years after his 2009 death, his executors took the then-confidential deal to Judge Mitchell Beckloff for approval. When they did so, Katherine filed objections — among them that the sale “violated Michael’s wishes” and that the catalog would likely continue to gain value over time if retained.
In April 2023, Beckloff rejected those objections and ruled that the deal could move forward. Katherine then filed an appeal, resulting in Wednesday’s tentative decision.
The wrangling over the Sony deal has exposed rifts among Jackson’s heirs. In March, Jackson’s son Blanket asked the judge to stop his grandmother from using estate money to fund her efforts to block the Sony deal. Though both had initially opposed the sale, Blanket and Jackson’s other children accepted the probate judge’s decision allowing it to move forward.
Later that same week, the estate responded to claims from Katherine’s attorneys that she needed estate money to pay for her legal battle, arguing she had received more than $55 million since the singer’s death. The estate’s executors argued that “virtually no request of Mrs. Jackson for her care or maintenance has been declined,” including more than $33 million in cash.
Primary Wave will acquire the music publishing and select master recording assets of Nuno Bettencourt, the guitar player for Extreme, the company announced Thursday (June 27). The deal — which excludes the band’s aptly titled sixth album, 2023’s Six — includes all of Bettencourt’s publishing, such as administration rights; his share of Extreme’s master recordings in which the […]
Sony is the undisclosed suitor that Queen was in an exclusive period with in negotiating the sale of its catalog and other music assets, as reported by Bloomberg today. There have been multiple reports that the catalog was up for sale since Music Business Worldwide first broke the news last May.
So far, Queen is believed to have had initial conversations about the potential deal with Disney, which owns the band’s masters for North America, and Universal Music Group. According to sources, the deal is being shopped by the band’s lawyers.
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In fact, each band member was said to have their own lawyers for the deal; early this year, some sources suggested that John Deacon’s share of the band’s assets might not be included in any potential agreement. Putting a deal like this together is a very complex process and with all the personalities involved, it’s still a question of whether one will ultimately be struck. In fact, that very issue — band members with different agendas — is said to have derailed a deal for the Pink Floyd assets a while back. That deal was expected to go for $500 million before it collapsed sometime in 2022.
Sources previously told Billboard that Queen was seeking $1.2 billion for its music assets, a price tag that limited the number of prospective suitors. In order to swallow the hefty price tag, Sony is reportedly partnering with an undisclosed financial player. Previously, Sony had help in acquiring the Bruce Springsteen master recording catalog from Eldridge Industries, which at one time owned Billboard.
Queen’s lawyers and Sony Music representatives were not immediately available for comment.
The Queen catalog includes iconic hit songs such as “Bohemian Rhapsody,” “Killer Queen,” “Another One Bites the Dust,” “Radio Ga Ga,” “Somebody to Love,” “Crazy Little Thing Called Love,” “You’re My Best Friend, “We Will Rock You” and “We Are the Champions.” Since 1991, the catalog has generated slightly more than 38 million album consumption units in the United States and has nearly 46 billion in global on-demand streams, according to Luminate. Go here for a full breakdown of the band’s catalog and financial performance.
If Sony completes the deal, it could very well be the biggest music asset deal ever made, even if it does not command the highest valuation for an artist’s music assets. Late last year, Sony bought half of the Michael Jackson estate for about $600 million, according to sources, though Sony never confirmed the acquisition.
Primary Wave has partnered with Neil Sedaka to acquire a stake in the star’s master and publishing rights. Regarded as perhaps the world’s first-ever teen pop star, Sedaka began his career in 1957 and went on to pen hits like “Love Will Keep Us Together,” “Breaking Up Is Hard to Do,” “Laughter in the Rain,” “Calendar Girl,” “Oh! Carol” and “Happy Birthday Sweet Sixteen.”
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Sedaka has earned his fair share of accolades over the years, including five Grammy nominations. He has been inducted into the Songwriters’ Hall of Fame, received a star on the Hollywood Walk of Fame, and was one of the first musical guests on Saturday Night Live.
After getting his start as one of the top acts of the late 1950s, he pivoted to focusing his efforts on writing hits for other artists, including Frank Sinatra, Tom Jones, The Monkees and The Fifth Dimension.
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During the height of the British Invasion, he continued to hone a strong fanbase in the UK, and in the early 1970s was re-introduced to American audiences by Elton John, who signed Sedaka to his new label Rocket Records. As he gained acclaim through songs like “Bad Blood” and “Laughter in the Rain” under the Rocket deal, one of his early songs, “Breaking Up Is Hard To Do,” was re-released as a ballad to great success, becoming the second song in history to make the top 10 of the Billboard Hot 100 for two versions of the same song. Plus, Captain and Tennille won Record of the Year for “Love Will Keep Us Together,” which was co-penned by Sedaka.
A classically trained Juilliard graduate, Sedaka embraced his roots in the 21st century, composing symphonies and piano concertos like “Joie De Vivre” and “Manhattan Intermezzo,” both of which were recorded with the Philharmonia Orchestra of London.
This deal encompasses Sedaka’s entire catalog, including all compositions written by him and all recordings performed by him. Other legendary artists have also performed and recorded his works, including Elvis Presley, Connie Francis and Abba. While these recordings are not part of the deal, Primary Wave still benefits on the publishing side, given Sedaka’s writing credits.
Primary Wave, known as an active and creative catalog buyer and publisher, will help boost Sedaka’s works with the help of its in-house marketing, digital strategy, licensing, synch and film/tv production teams.
“I am thrilled to be entering into this partnership with Primary Wave – an organization that I have long-admired for their unwavering commitment and dedication to the artists they represent,” says Sedaka of the deal. “After almost 70 years in the music business, I’ve gotten pretty good at separating the big talkers from the real deals, and Larry and his team at Primary Wave are about as real deal as it gets. I look forward to a long and prosperous relationship that will allow me to work side by side with this amazing organization and finally give my extensive collection of songs the attention and exposure it deserves.”
Madeline Boyd, Primary Wave’s finance & investments manager adds, “We are thrilled to welcome Neil Sedaka into the Primary Wave family. As both a singer and songwriter, Neil has created an iconic catalog that has transcended decades and genres. We look forward to continue creating new opportunities for his timeless songs together.”
South Korean investment and management firm Beyond Music has acquired the music catalog of Puerto Rican reggaetón star Yandel, including his publishing interests and royalties, his share of performance royalties and neighboring rights royalties. The acquisition is a “first of its kind” for an Asian music company that’s acquiring a Latin artist’s catalog directly, according to […]
Opus Music Group, which owns a stake in late rapper Juice WRLD’s rights and income streams, is putting its portfolio up for sale as the market conditions that fueled a gold rush for music intellectual property rights cools.
Opus is seeking around $200 million for its package of mostly passive income and royalty streaming rights, according to three sources with knowledge of the deal. Working with bankers from Raine Group, the group has fielded bids for several months, two of those sources said.
After a dramatic runup in the song-catalog investment and management market, persistently high interest rates and a bounce back in the broader market are prompting some, like Opus, to cash out, one of the sources said.
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New York-based Opus launched in 2021 with the backing of activist investor Elliott Investment Management. In 2022, Opus purchased a majority stake in late rapper Juice WRLD’s rights and income streams in a nine-figure deal, Billboard reported at the time. Opus’s portfolio also includes works and recordings from Rauw Alejandro and Maluma, according to its website. Billboard was unable to determine a full accounting of what rights Opus owns or is selling.
Representatives from Opus and Raine Group did not respond to requests for comment. A spokesperson for Elliott declined to comment.
Billboard was not able to independently value Opus’ catalog. However, according to a source familiar with the deal, Opus’ catalog had $16 million in net publisher’s share, and at the time the deal was done, the Juice WRLD rights had at least $9 million in annual royalties — publishing and artist royalties combined — according to another source.
Beginning in 2015, a wave of investors sparked a dramatic runup in the market for artist catalogs, song royalties, copyrights and income streams, with rights to works by Smokey Robinson, Bruce Springsteen, Shakira and Justin Bieber selling to both established companies like Primary Wave and the majors, as well as new players like Hipgnosis. In the years since, however, market dynamics have shifted. Interest rates have remained unexpectedly high, making financing further catalog acquisitions expensive, and the yield on U.S. Treasury bills and other stable asset classes has rebounded, making the steady returns of music IP less of a standout to yield-hungry investors.
“When the frenzy started there really were not a lot of great places to reach for yield,” says Michael Bizenov, president of Sound Royalties, which specializes in royalty financing to music clients like Dominican rapper and dembow star El Alfa. “This was a place where you could find yield. As you have yield opportunities in other places, people who were in there as a commodity will stop and reallocate.”
Investors, industry lawyers and bankers said music royalties remain an attractive and stable asset class for those with a long-term appetite. However, those sources said, they expect a wave of consolidation to hit catalog investment firms as companies backed by financial industry investors seek to securitize or exit the investment by 2027.
“There is still a robust marketplace for the sale of music IP, but the ones who were in it because everyone else was in it are getting out,” says Bizenov.
Additional reporting by Ed Christman.
Let me start this column the way I ended the last one: Private equity isn’t destroying the music business. But it’s worth wondering: How will so much outside investment change the way the music industry works?
Obviously, we’re going to see more documentaries, Broadway shows and box sets, both to make money and to promote catalogs. But will this lead to significant changes to royalty distribution or the industry’s balance of power? And is there even a small chance of what might be called a subprime publishing meltdown?
As Cyndi Lauper sang, though, money changes everything — and that was before her recent rights sale. So I spoke with a half dozen serious players — music publishers and private-equity-backed catalog buyers of rights, plus lawyers and consultants who have been working on these deals since investment started flooding into the music business at the end of the 2010s, about how these new players are changing the business. Any new investment sector will have successes and failures — a new report from Shot Tower Capital says Hipgnosis Songs Fund overstated its revenue and overpaid for catalogs, although Hipgnosis has said it disputes this — but what does all of this mean for music in the long term?
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One of the few points of agreement is that this has been great for creators so far, especially songwriters. These deals involve creators who are already making money, but the ability to sell their catalogs lets them replace a steady stream of revenue with a one-time cash infusion — it’s “allowed artists the ability to have more liquidity opportunities,” according to one buyer. This is helpful if they need cash, want to diversify their assets, or have to think about estate planning. The emergence of outside buyers has also spurred traditional music companies to buy more publishing assets, especially in cases where they already own related rights, for reasons that can be either strategic (“we can bundle rights”) or defensive (“we can monetize this without interference”). That competition implies that prices will rise, which is good for creators.
It also means that potential investors will bid for a wider range of catalogs, including more recent songs in more genres — which is already happening. So what happens when some of the world’s biggest investment entities own so many catalogs? They will push — using the various tools at their disposal — to raise the value of their assets. They will not do this out of goodwill, of course; they will do it out of self-interest. But any move that raises the value of the song catalogs that they own will also raise the value of the song catalogs that they do not, and this could be very good for songwriters.
“Investors now stand in the shoes of the songwriter,” as one buyer of catalogs told me, “and will use their political clout to help make how a songwriter is paid fairer.” An executive who works for another company that buys catalogs is skeptical of some private-equity-backed ventures, because “their incentives are misaligned with those of creators.” But that doesn’t seem to be the case here. To the extent that some aspects of copyright regulation involve political power, the influence of private equity could counter that of the big technology companies that generally lobby to undermine copyright. Two executives even suggested that private equity could serve as an engine of reform to make collective management organizations more transparent. “We put up with all of this,” the argument goes, “but Wall Street won’t stand for it!”
Right now, some of the catalog acquisition business rests on the idea that new buyers can do more to promote songs than the current owners, especially with film or theater projects. Eventually, though, at least some of that advantage could disappear. Executives can see what works, and some of them will inevitably bring that knowledge to other companies. Plus, as we reach Peak Rock Doc, catalog owners — traditional publishers and private equity players alike — could start to see diminishing returns.
What about the downsides? The reason private equity has such a bad reputation is that it usually buys assets with considerable leverage and holds them for a limited amount of time, which can often result in layoffs at companies in which they invest. Although deal structures vary, a source familiar with many deals told me that buyers generally don’t borrow more than half the purchase price of copyright assets, which seems reasonable.
Eventually, of course, some buyers will become sellers, presumably because their funds have run their course, or perhaps because they do come under pressure. In some cases, operators will be able to attract other investment. In others, “secondary sales will just expand the field for what is in play,” a publishing executive pointed out. A market for publishing assets inevitably means that not everyone will succeed — but it should also provide other buyers. A certain amount of consolidation may be inevitable, but it might not be so bad. Some writers will worry about how the new owner of their songs will treat them, but realistically — and this might sound cold, but it’s also true — that’s something creators need to think about before they sell.
Is there any chance of a broader market failure — a subprime copyright crisis, of sorts? Music copyrights generate steady cash the way mortgages once did, but while individual investments can rise or fall, it’s harder to imagine that a financial squeeze would lead to a selling frenzy that would send prices downward across the board. This isn’t a massive liquid market the way housing is, plus there’s less leverage and far more due diligence about the assets being purchased. (One lawyer said that this market is encouraging creators and publishers to improve their contracts and document-retention practices.)
Although it might seem counter-intuitive, the market for music copyrights might actually be more solid than that for housing. So far, on-demand streaming has proved pandemic-proof, and it seems recession-proof, so the only danger would be a collapse of the copyright system — and it’s hard to imagine how that would happen, especially now that the music business survived illegal file-sharing. Outside investment in music rights will change, like everything else in the business, but it looks like we’re going to see steady, long-term change — most of which creators have good reason to be optimistic about.
The Swedish company Pophouse has been a player in the rights market since 2022. Led by former Universal Music Sweden chief Per Sundin, they backed ABBA’s Voyage show in London, and acquired rights from Swedish House Mafia and Avicii.
Now the company has announced its first deal with a U.S. artist, the rainbow-haired pop icon Cyndi Lauper. The deal includes the majority share of Lauper’s publishing as well as her royalties from her recorded music. Lauper has sold more than 50 million records worldwide, with hits including “Girls Just Want to Have Fun” and “True Colors,” and she has writing credits on some of her biggest hits, including “Time After Time” and “She Bop.” (The deal does not include her Broadway music, which includes the hit show Kinky Boots.) The share acquired by Pophouse was not disclosed.
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Pophouse, which was founded in 2014 by investor Conni Jonsson and ABBA frontman Björn Ulvaeus, is known for trying to add value to its rights acquisitions with creative productions and installations, including ABBA Voyage in London, which uses virtual “ABBAtars” in a live musical show. It also operates the “Avicii Experience” museum in Stockholm, and it is working with KISS on its next avatar show.
The deal announcement says that Pophouse will “create new content and experiences to enrich Cyndi Lauper’s catalogue for fans old and new,” although it does not provide specific details. As an ‘80s icon, though, Lauper would be ideal for a show or a museum that could appeal to a broad audience worldwide. Fans just want to have fun, after all.
“Pophouse has impressed me with their commitment to maintaining and developing my professional life’s work and ensuring its legacy,” Lauper said in the press release about the deal. “Their creativity and vision, combined with my continued involvement via our unique joint venture is what is most exciting to me.”
Pophouse did not say whether the deal includes name, image and likeness rights, although it will work with Lauper on a joint venture, which presumably has the permissions it needs to create installations or experiences around the pop star’s career. “We set ourselves apart through our emphasis on artist and brand development so that we can nurture the value of our investment,” Sundin said in the press release, “and we are pleased Cyndi endorses our vision for her remarkable catalogue of work.”