In 2017, Primary Wave Music Publishing acquired the rights to Canadian pianist Glenn Gould.
“His innovative approach to music interpretation and his use of technology made acquiring his catalogue an easy choice for us and we look forward to furthering the legacy of this legendary artist,” said Primary Wave Founder & CEO Larry Mestel.
At the time, few outside of the financial world had even heard of Primary Wave. No terms of the deal were disclosed, but the sale went well beyond publishing and master royalties and included full control of Glenn Gould’s name and likeness rights.
“In addition, their focus on all musical genres across all media platforms is a perfect fit for Glenn Gould and we are already excited about the many new perspectives and projects that they are bringing to the table,” said Stephen Posen, Sole Executor of the Glenn Gould Estate.
Posen went on to suggest that Gould’s love of technology would have meant he would have embraced the sale, as a “direct-to-listener experience.”
While it’s hard to argue if Gould would have supported the deal, no one would dispute that Primary Wave seems to understand more than anyone how valuable music rights are.
How the money flows
A royalty is a sum of money given to the owner of an asset in exchange for the right to use it. These are derived from copyrights, which are a type of intellectual property.
This property dictates how money flows through the various stakeholders associated with an artist’s catalogue.
At the top of this ownership structure is the royalty owner(s). This can be the artist, the record company, a combination of the two, or even a holdings company that acquires copyrights after the fact.
The majority of revenue from music is consolidated with the royalty owner, as they get paid first. Any remaining money trickles down to other stakeholders such as stockholders, record company executives, and so on.
According to Rolling Stone, 2 copyrights are created when a song is recorded:
- One on the composition of the song (intellectual property)
- Another on the actual physical recording (the physical property)
Each of those rights is then split into 4 buckets:
- Mechanical rights (sold in a physical format or streamed)
- Performance rights (played on the radio or live at a concert)
- Synchronization rights (appears in film, TV, online, or games)
- Print rights (sheet music)
Music catalogues = big bucks
The rise of streaming services has resulted in artist catalogues skyrocketing in value. According to Primary Wave, older artists are commanding higher prices because they are seen as safe bets. The artists are proven, and in the case of artists like Glenn Gould, have become the standard from which to measure artistic merit.
- Bob Dylan (100% of his publishing catalogue to Universal Music Publishing) est. US$300-400M. Sony acquired his master recordings for another ~US$20M.
- David Bowie (his entire catalogue to Warner-Chappell), US$250M.
- Bruce Springsteen (300 songs, 20 studio albums, 23 live albums and more to Sony), estimated at US$500M.
- Neil Diamond (complete song catalogue and all master recordings to Universal), possibly north of US$300M.
The pandemic amplified the situation with an even bigger surge in streaming during the lockdowns as fans leaned into comfort listening from familiar artists.
According to MRC Data, formerly Nielsen Music, online streaming now makes up some 70% of listeners’ consumption. The result? Multiples for artists catalogues have gone from from 8-13x annual royalties to 10-20x annual royalties.
Looking ahead
Music Ally has reported this week that Primary Wave secured a $2B partnership with investment firm Brookfield. Brookfield will buy a minority stake in Primary Wave and commit $1.7B to bolster its acquisition efforts.
Primary Wave has already completed more than $300M of acquisitions this year, and has another $600M of “pending transactions expected to be completed by year-end”.
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