Sony Music spent as much as $911m (£696m) on music catalogue acquisitions in the last 10 months, with more and more artists looking to cash in on their hits.
Since December, the music giant has snapped up both Bob Dylan and Bruce Springsteen tunes, forking out a whopping $500m (£376m) for the Born In The USA singer’s 20 albums.
However, it’s not just Sony Music making big music deals. Dancing On The Ceiling icon Lionel Richie cut a deal with Universal Music last November, whilst Warner Music bought the late David Bowie’s music for an estimated $250m (£191m) earlier this year.
However, what Sony’s immense investment does is put them ahead of the likes of rival Universal, which spent an estimated $459m (£351m) last year on music catalogue investments, according to Music Business Worldwide.
Advisers at Coutts, private wealth management bank which caters to some of the UK’s best known recording artists, told City A.M. that increasing competition amongst music funds and record labels has helped to drive up prices.
“There’s been a huge change in the multiples being paid for these types of assets,” said Matthew Lazenby, Executive Director, Sport, Media & Entertainment, Coutts.
According to Director, Commercial Media, Coutts, “the buoyancy of the market has always been there.”
Funds now regularly offer to acquire music rights from artists for 15 to 16 times the annual revenue they receive from the assets, up from multiples of six to eight times in 2010.
“What brought this to prominence in the last couple of years is the emergence of Hipgnosis,” Lazenby explained, crediting high-profile music funds prepared to strike high-value deals with legendary artists for making mega deals mainstream.
Music fund Hipgnosis has acquired $2.5bn worth of songs since its 2018 IPO and has already picked up 47 of the 190 songs which have over 1bn streams on Spotify.
“Whether we’re at a peak now or not, remains to be seen,” Lazenby continued, suggesting that the frenzy could die down post-pandemic as artists, able to make revenue from touring, face less sell pressure assets.
“I would expect to see more deals this year,” he continued. “While the multiples being offered by the key funds and the major labels are as high as they are now, we will continue to see interest from songwriters and artists.”