Music publishing has long been the world’s sleepiest $4 billion industry A startup thinks that’s changing...
Music publishing has long been the world’s sleepiest $4 billion industry. A startup that just acquired a chunk of the Nirvana catalog thinks that’s changing.
The past few years have been unkind to record labels, which have seen CD sales plunge by about a third since 1999. But many believe that music publishers—which control the rights to original songs—will thrive in the digital future.
For example, even if fans illegally download Beatles tracks, Sony/ATV Music Publishing, the publisher of those songs, can still make money by licensing them for use across the increasingly fragmented media landscape.
That’s why Primary Wave Music Publishing—a startup backed by the Credit Suisse Group and the Greenwich, Connecticut, hedge fund Plainfield Asset Management—has recently spent roughly $150 million, according to a source close to the company, to buy publishing rights from songwriters, including a reported $50 million for some rights to Nirvana songs.
As a rights holder, Primary Wave collects money whenever one of its songs is played in public. But C.E.O. Larry Mestel, former chief operating officer of Virgin Records, is also aggressively marketing songs in Primary Wave’s portfolio for use in online media, videogames, movies, TV shows, and ads.This type of proactive approach is relatively new to music publishing, long a passive business in which rights holders mostly waited for potential licensees to come to them.
“Publishing had become a collection-agency business,” says Brian Doyle, who manages Hall and Oates. The duo sold Primary Wave some rights to its songs earlier this year. “We met with a lot of companies, but Primary Wave was the most aggressive,”
Doyle says.The already heated market for song catalogs got an additional boost in January, when a change in tax law permitted songwriters to treat proceeds from catalog sales not as income but as capital gains, which are taxed at only 15 percent.
Publishers also believe that there will be a growing demand for licensing music to other media, which can bring in between $10,000 and $300,000 for films and $5,000 and $40,000 for television. Primary Wave has licensed the Nirvana song “Breed” for use in an Austrian telecom ad, the videogame Major League Baseball 2K7, and the movie Shoot ’Em Up.
The new publisher has also placed a song by critics’ favorite Daniel Johnston in a MasterCard commercial and is trying to put together a Hall and Oates tribute album to generate exposure as well as revenue. Partly because of such deals, though, publishing executives say that the price of catalogs is rising. And the ability of investors to resell the rights they’ve acquired could be weakened by the credit crunch.
“As financing costs go up, as they have been, the economics of these deals are weakening,” says Roger Faxon, C.E.O. of EMI Music Publishing, a big player in the industry.“If people think we’re paying too much, they shouldn’t bid,” Mestel says. “What we’ll pay for a catalog depends on what we think we can do with it.”
written by: by Robert Levine
The past few years have been unkind to record labels, which have seen CD sales plunge by about a third since 1999. But many believe that music publishers—which control the rights to original songs—will thrive in the digital future.
For example, even if fans illegally download Beatles tracks, Sony/ATV Music Publishing, the publisher of those songs, can still make money by licensing them for use across the increasingly fragmented media landscape.
That’s why Primary Wave Music Publishing—a startup backed by the Credit Suisse Group and the Greenwich, Connecticut, hedge fund Plainfield Asset Management—has recently spent roughly $150 million, according to a source close to the company, to buy publishing rights from songwriters, including a reported $50 million for some rights to Nirvana songs.
As a rights holder, Primary Wave collects money whenever one of its songs is played in public. But C.E.O. Larry Mestel, former chief operating officer of Virgin Records, is also aggressively marketing songs in Primary Wave’s portfolio for use in online media, videogames, movies, TV shows, and ads.This type of proactive approach is relatively new to music publishing, long a passive business in which rights holders mostly waited for potential licensees to come to them.
“Publishing had become a collection-agency business,” says Brian Doyle, who manages Hall and Oates. The duo sold Primary Wave some rights to its songs earlier this year. “We met with a lot of companies, but Primary Wave was the most aggressive,”
Doyle says.The already heated market for song catalogs got an additional boost in January, when a change in tax law permitted songwriters to treat proceeds from catalog sales not as income but as capital gains, which are taxed at only 15 percent.
Publishers also believe that there will be a growing demand for licensing music to other media, which can bring in between $10,000 and $300,000 for films and $5,000 and $40,000 for television. Primary Wave has licensed the Nirvana song “Breed” for use in an Austrian telecom ad, the videogame Major League Baseball 2K7, and the movie Shoot ’Em Up.
The new publisher has also placed a song by critics’ favorite Daniel Johnston in a MasterCard commercial and is trying to put together a Hall and Oates tribute album to generate exposure as well as revenue. Partly because of such deals, though, publishing executives say that the price of catalogs is rising. And the ability of investors to resell the rights they’ve acquired could be weakened by the credit crunch.
“As financing costs go up, as they have been, the economics of these deals are weakening,” says Roger Faxon, C.E.O. of EMI Music Publishing, a big player in the industry.“If people think we’re paying too much, they shouldn’t bid,” Mestel says. “What we’ll pay for a catalog depends on what we think we can do with it.”
written by: by Robert Levine