White Sky’s Matt Bird demystifies the music catalogue sales boom
The industry-wide chatter about music catalogue buy-outs tends to be tilted towards the biggest bucks for the biggest superstars, however, a smaller but equally lucrative market exists.
Among the biggest of the music catalogue sales boom are Bruce Springsteen ($590 million), Jay-Z ($470 million), Bob Dylan ($300 to $400 million) and Paul Simon ($260 million).
But in reality, the opportunities are far wider and the purchase prices can be low six figures.
“There’s a lot in the news about the huge sales by massive artists, but there are many smaller artists, producers and songwriters capitalising on the groundswell that’s happening in this space.”
So says Matt Bird, partner and head of royalties at Australian music accounting firm White Sky.
Is there scope for local catalogues from international investors as well?
“Definitely!” Bird emphasises. “The quality of Australian music is world-class, and as we know, with the internet, a broad reach is easier than ever so geo-location doesn’t have to be a factor.
“Buyers are looking all over for catalogue to acquire,” he says. “Some buyers are looking for untapped opportunities as well, which may be a certain catalogue to exploit in other markets.
“So it’s definitely being looked at on a global scale.”
White Sky has already been involved in the catalogue sales of two major international songwriters, and is looking at other opportunities both in its native and abroad.
It’s been a major growth for the company since it was set up in 2002 by Tom Harris in his Melbourne bedroom, offering bookkeeping for bands and small Australian music businesses.
Twenty years later, White Sky has 50 staff at its offices in Melbourne and Sydney, providing tax services, bookkeeping, tour accounting and specialist royalty accounting.
Bird joined in 2012. Eight years as a royalty manager at record labels allowed him to see the monumental shift in royalty accounting from the inside the bubble.
White Sky was involved in two recent international catalogue sales
The first was Calvin Harris (which Variety sources estimated at “around” US$100 million), and the second was Bruno Mars co-writer, collaborator, and record producer Philip Lawrence.
“We were part of the larger team that put those deals together out of the US,” Bird says. “Our role was on the data analysis and number crunching across the various sources of royalty income.
“Interpreting the data in a meaningful way to ensure we negotiated the highest sale price.
“We’ve been providing royalty services for artists and business managers from the US and UK for about five or six years now.
“Having this unique skillset has enabled us to build a solid network around the world.
“Those trusted relationships, combined with the understanding of music royalties, is how we’re able to facilitate catalogue sales for Australian artists and ensure they’re getting the best possible price for their work.”
A number of reasons are given as to why so many catalogues have come on the market.
The long tail of streaming is driving demand.
“Traditionally, you might only see those massive artists with on-going ‘classic’ back catalogues in a space like this,” according to Bird.
“But revenue from streaming is far from the ‘peak then drop’ pattern that we would see with album cycles in previous decades.
“Revenue can be ongoing and generated by different means than just releasing new music.”
The data generated from DSPs has made it easier to value a song’s worth and project earnings.
Other factors include rising royalty rates, low-interest rates, diversification in catalogues, and a trend towards looking for return streams that are less correlated to the stock market and have yields higher than those offered by bonds.
There are many minefields to avoid, so getting expert advice and backing is recommended.
The shopping around process can be consuming, especially in finding the right buyer without the right contacts or understanding the value of one’s copyrights.
Good catalogue and royalties data are all important to increase the sales price.
“Artists only have one chance to capitalise on an opportunity like this,” Bird warns.
“So ensuring they receive the maximum sale price is vital.
“There’s a lot of information hiding amongst the thousands of lines in a royalty statement and being able to properly understand and analyse that data is key to boosting the chances of a great outcome.
“Identifying key territories, understanding particular revenue sources and demonstrating an ongoing interest in the catalogue are all key factors.”