Musicians who sold their lifetime copyrights:
Musicians who sold their lifetime copyrights:
Bob Dylan, an American folk-rock legend, who became the first musician to win the Nobel Prize for Literature. The musicians who do not spend money are selling their own copyrights. In the recent music market, incomprehensible things are happening every day.
In December 2020, he transferred the copyright for the melody-lyrics of all his songs to Universal Music.
The transaction is said to be worth $300 million.
And last month, I sold all the music to Sony Music and the rights to the sound source for a new song to be released in the future.
The transaction value is estimated to be between 150 million and 200 million dollars.
The world was once surprised that they sold a copyright that is lifelike to a musician,
Another surprise at the size of the deal.
*Normally, terms such as copyright and copyright are used together, but in this article, we use the term music IP, which is a more comprehensive concept. In addition to Bob Dylan, masters such as Neil Young and Bruce Springsteen have recently sold their music IP for hundreds of millions of dollars. .
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Uptown funk[/caption]Young musicians such as Mark Ronson and John Legend, who are famous for 'Uptown funk', also sold IPs.
If so, who paid such a huge amount of money to take over the music IP?
The companies that have acquired the IPs of these musicians are the so-called music music fund or music IP aggregators.
Music IP aggregators:
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Universal Music Group[/caption]Hipgnosis is a major player, first of all, it was established in 2018, and as of the end of last year, it has more than 65,000 song IPs. These IPs are valued at $2.55 billion.
In addition, traditional large record companies such as Universal Music Group, Sony Music, Warner Music, and private equity funds such as KKR are also participating in the battle to secure music IP by betting large sums of money.
In fact, there was a market that traded music IP before.
However, it has only been in the past few years that this market has become as vibrant as it is today.
According to one survey, more than $5 billion was used to acquire these music IPs last year alone.
Sony Music[/caption]Today, I'm going to talk about the 'music IP investment-management' business, which has recently been attracting attention.
First, let's take a look at what kind of business it is and why it's getting attention now.
What is a music IP investment-management business The basic concept of this business is simple.
We collect high-quality sound source IPs, and we make long-term profits from copyright fees from them.
It is to reduce volatility by composing the IP of several songs into a portfolio.
Music IP investment management business:
The recent fire before securing sound source IP can be summarized as 'because the value that can be created with sound source IP has increased compared to before due to market changes'.
A more detailed background is as follows.
The advent of the streaming era and transparent collection of copyright fees It goes without saying, but the price (copyright fee) for using the sound source IP can only be collected if it is possible to 'track' which music was used, when and how much.
However, until now, it was difficult to track which music was consumed, when and how much.
This is because I often listened to music from illegally downloaded mp3 files. Because of this situation, in the past, there was a limit to generating revenue from music IP.
Businesses using music IP were also difficult to mature.
But in the 2010s, things started to change a bit. Streaming services such as Spotify and Apple Music have grown in earnest.
Streaming services have taken the place of illegal downloads.
As a result, it became easier to keep a record and count which songs were consumed and how many times. It is now possible to collect copyright fees that could not be collected before because it was not possible to understand them.
Continuously Growing Streaming Market:
The streaming service market has maintained steady growth since the 2010s.
In addition, according to market research firm Statista, the number of global streaming service subscribers increased from 76.8 million in 2015 to 487 million in the first quarter of 2021.
This growth is expected to continue for the foreseeable future.
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Global digital music revenue by Statista[/caption]Goldman Sachs also predicted that the number of music streaming subscribers worldwide will reach 1.28 billion by 2030.
As a result, the revenue generated by streaming services is also increasing.
Last year, the International Federation of the Phonographic Industry announced that global streaming subscription revenue in 2020 recorded $13.4 billion, an increase of 18.5% compared to the previous year.
Incomparable number of music IP sales compared to the past:
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Spotify[/caption]In the past, the only medium for listening to music was a handful of TV-radio channels. If an individual wanted to listen, they had to purchase the musician's LP, tape, or CD.
In other words, there were not many channels that could sell and sell music.
Compared to those days, there are a lot of channels where you can sell music now.
Music can also be consumed on OTT platforms such as Netflix, Disney Plus, and YouTube.
Music is also used on social media such as TikTok, Facebook, and Instagram.
When a sound source is played on these platforms, the right holder can receive the revenue (copyright fee) for it.
When a video covering a certain song is played on YouTube, when a secondary creation is produced and consumed in the name of '~challenge' on TikTok, the right holder with IP also gets a profit.
As you know, the users of these platforms range from a few hundred million to billions of people worldwide.
In the end, the possibility of generating more revenue than in the past with digital music IP has been opened.
'Copyright' guaranteed for 70 years after the author's death
Once you have a sound source IP, you can make money for quite a while.
In general, the copyright of a sound source IP expires 70 years after the (co)composer's death.
Even if the creator of the music IP purchased today dies right away, the copyright fee and other income can be settled every day for the next 70 years.
Find a verified IP:
Therefore, 'Hipgnosis', a representative player in this field, claims that it can generate copyright revenue for over 100 years on average.
Assuming that musicians pass the copyright and survive for a few more decades, it's not a bad calculation.
However, a question arises here.
There is no guarantee that the music that is popular now will be popular in 10 years. Popular music, in particular, usually gains popularity quickly and then gets forgotten over time.
Being able to receive royalties for 70 years is definitely a strength, but if no one listens to the sound source in 10 years, wouldn't it be useless?
If so, the companies that have acquired the IP may also stumble.
Find a verified IP!..
The power of IP that is still alive even after decades
So, I looked at the 'report card' of old songs.
I looked around the 'Billboard Global 200' chart this month. I was a little surprised that many older songs were on the rankings than I expected.
Hunt for 'masterpieces':
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Eminem-Lose Yourself[/caption]First of all, Eminem's 'Lose Yourself' was ranked 157 in the first week of February.
It was released in 2005, so almost 17 years have passed.
The next song that caught my eye was Nirvana's 'Smells like teen spirit'.
The song was released in 1991, so it's been about 32 years since it was released, but it's still on the charts.
In addition, Queen's 'Bohemian Rhapsody' (1975) and Eagles' 'Hotel California' (1976) were also found on the chart.
Although both songs were released more than 40 years ago, they are still popular worldwide.
As such, the lifespan of the master song IP is very long. In other words, it can generate meaningful profits even after a long period of time.
This is the reason why companies that collect music IPs are passionate about 'hunting masterpieces'.
Then, is it possible to generate profits in the future only if it is a 'masterpiece that will go down in history'? Industry insiders say that's not necessarily the case.
It is said that the popularity of music that dominated at one time remains fairly stable even after that.
It is true that music sources generate the most revenue in the first year of release, but it is possible to generate profits for a long period of time even if the popularity wanes.
Verified music rather than latest hit:
Therefore, these music IP collection companies are trying to purchase the IP of verified music rather than the latest hit.
In other words, we prefer sound source IPs that generate a certain level of revenue over a long period of time and can predict future revenue to some extent.
Summing up so far
(1) Music IP Fund - Aggregators have invested large amounts of money in recent years to secure excellent music IP.
(2) One of the backgrounds is that the streaming service market opened and transparent copyright fee collection became possible.
(3) Another background is the increase in the value of sound source IP due to the expansion of the digital market.
(4) Music IP is an asset that has the strength to hold for more than 70 years.
(5) In the case of a sound source IP that has been verified for a long time, there is a high possibility that it will continue to generate profits over time.
From this point of view, it seems like a promising business with nothing to take.
There are no voices of concern. No matter how good the IP is, isn't it too expensive?
In recent years, the IP of famous musicians has been trading at a fairly high price.
Some expensive investments of Music IP companies:
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OneRepublic[/caption]Private equity firm KKR purchased a music IP catalog (song bundle) for $200 million from Ryan Tedder, a member of a band called OneRepublic.
Sony Music is said to have bought Bruce Springsteen's music for $500 million.
Hypnosis also bought Neil Young's song for $150 million, and Primary Wave bought Stevenick's music for $100 million.
Warner Music bought David Bowie's songs for $250 million.
Some point out that the above price is too expensive.
The LA Times reported that in recent years, music IPs have been trading at least several times more expensive than the previous 25 years. No matter how good a famous musician's IP is, if it is priced excessively, it cannot be considered a reasonable investment.
In fact, the increase in the price of music IP. It was somewhat predictable. These fund-aggregators want to secure
The number of good IPs is limited:
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Merck Mercuriadis[/caption]“I think we have about two years left to purchase the artist catalog before we hit the content price hike.”
Hipgnosis CEO Merck Mercuriadis once said this in 2020.
It shows the industry's mood to quickly preoccupy high-quality IP. This atmosphere seems to have influenced the formation of high prices for digital music IPs.
Should these companies' investments be considered right?
I still think it's hard to predict.
This is because the investment was made after looking at about 100 years until the time of copyright extinction.
Time will tell whether the price paid by these companies was reasonable.
The real game starts now.. Securing sound source IP is not the end
Management of your music sources:
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Copyrights[/caption]Of course, valuation of music IP is not the only business.
Just as important as securing a sound source IP is to 'manage' your music sources well.
Simply put, we need to make the music our company owns make more money.
Management can be done in several ways.
First of all, copyright fees should be collected, but the missing cases should be identified so that they can be properly collected. Another way is to induce secondary creation with the sound source owned by the company, or to sell so that it can be used for heterogeneous content such as dramas and movies.
In addition, it is possible to create a profit model using NFT or to open a market with new platforms such as metaverse or games.
In fact, in the case of Hypnosis, over 110 games last year made sure that their music was used. It also started the NFT business.
In this way, if the company creates a 'second heyday' by steadily pioneering the sales channels of its own music sources, there is a high possibility that the profits of the companies that own the sound source IP will also increase.
Each company's music management skills are a variable in their business.
Music IP funds:
The emergence of music IP funds.. Is it good for musicians? Up to this point, I have mainly talked about companies that have invested in music IP.
You need to look at it from the musician's point of view as well.
First of all, I think there is room for a positive view in that it gave musicians 'another option'.
It is said that music IP was not recognized as an asset until now.
Hipgnosis songs fund[/caption]The reality was that there was no proper way to make a lot of money using the music IP as collateral.
This was a disappointment when musicians had their own business or project.
Like it or not, there weren't many options in that they had to split their earnings over the course of their lives. In short, I think it is a good sign that the conditions are being prepared to satisfy the need for a large sum of money or the need to be settled by converting the income to be earned over a lifetime into the present value.
Others argue that leaving large financial assets behind is a better option instead of leaving the bereaved families with 'complex rights to manage'.
Why Bob Dylan sold the copyright?
This is said to be one of the reasons why old musicians, including Bob Dylan, change their music IP to a lot of money.
And the company that took the music IP will try to consume more of the IP it owns to generate profits.
As a result, it seems that the effect of increasing the vitality of my songs can be expected.
Of course, it is difficult to rule out the possibility of side effects occurring during this process.
For example, unexpected conflicts may arise, such as using the sound source IP in a way that the original author does not want.
Essay on the birth of the music IP market
Above, we learned about the beginnings of the music IP collection business.
In addition to the business point of view, I think there are several points implied by the beginning of the music IP collection market.
First of all, I think that the fact that this market is hot is a proof that an environment has been prepared in which the rights of creators can be recognized better.
Basically, it must be a business that was difficult to try in the past when the concept of copyright was rare.
The fact that this business is getting attention means that the era has come when music IP is recognized as an asset.
The 'value of creation':
Also, the emergence of this market provides an opportunity to think about the value of creations.
After Bob Dylan, the 'big deals' that appear in the news every day are intuitively showing that a well-made music IP is worth hundreds of millions of dollars in itself.
This seems to play a role in instilling a perception that the value of a creation is never low.
Of course, it is still in its infancy, so it remains to be seen how the future will unfold.
Since it is a business that deals with sensitive 'rights to creations', I am worried that there may be side effects.
I hope it can be a win-win for artists and aggregators who are market parties, and even general listeners.
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