A Canadian-based investment fund has acquired the rights to classic recordings by Janis Joplin and Gordon Lightfoot. The deal underscores the major changes that have taken place within the music industry since the advent of streaming.
The shift from physical media to streaming has created a sea change in the music industry. New tracks no longer dominate the landscape, and have become less and less important to what the industry really runs on: revenues.
Singles take precedence over albums, and back catalogues of music are becoming more and more prominent. A Netflix show put Kate Bush’s Running Up That Hill in the spotlight, taking a single from 1985 and putting it back on the charts 37 years later. It’s a music marketer’s dream.
A Music Royalty Fund
The ICM Crescendo Music Royalty Fund, via ICM Asset Management of Calgary, AB, now owns what it is calling the “commission rights” to recordings by Joplin and Lightfoot previously owned by Albert Grossman. Grossman was a legendary music manager, who guided people like Bob Dylan, The Band, Todd Rundgren, Peter, Paul and Mary, and many others, including Lightfoot and Joplin. Grossman died in 1986, leaving his estate to his widow, who recently passed away.
Funds like the ICM Crescendo Music Royalty Fund earn revenues from royalty rates from streaming services like Spotify, along with other streams. In turn, they pay those revenues out to shareholders.
According to the firm’s Q2 statement for 2022, their assets include country music, including “a very significant body of work from Tim McGraw, Faith Hill, Sugarland and Jo Dee Messina”. That acquisition came from producer Byron Gallimore, who retained producer royalty rights to the tracks.
The ICM Crescendo Music Royalty Fund is the result of a partnership between ICM Asset Management and Crescendo Royalty Corporation, which began buying up royalties in 2017.
The fund holds primarily music intellectual property rights, with a focus on streaming rights. As the company’s literature points out, there are virtually no operating expenses, and rights can last for a long period of time, up to 70 years beyond the lifetime of the creator.
As quoted in Music Business Worldwide, when the deal was made in 2020, David Vankka, a Partner and Portfolio Manager of ICM Asset Management, said that ICM has “been interested in the music business for a long time and are excited about the portfolio diversification benefits and high margin income that music royalties exhibit”.
They’ve been on a buying spree ever since, with the Lightfoot tracks just their latest acquisition. The Fund’s net asset value was approximately CAD $39.9 million as of June 30, 2022, according to their most recent financial report.
What does it mean?
Influential investment company Goldman Sachs predicts a bonanza in music industry revenues in general, based on the assumption that streaming will continue to rule, and that prices for streaming services will remain relatively stable.
Music rights have become another commodity to be traded and used for income and wealth building. It’s understood that the music in question needs to have the kind of replay value that will generate income for years to come.
The emphasis on music catalogues and history has not yet noticeably touched the world of classical music. Certainly, there seems like potential for the same kind of treatment, when there are vintage recordings available, as well as the work of many giants of the classical music world.
In other news, according to a 2016 report, the average Canadian musician earns less than $18K. Musicians and singers make up 22% of all artists, and earn a median income of $17,900, or 59% lower than the median of all workers.
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