New Players in the Music Rights Business by Jacob Sosinsky

Slipknot is usually not mentioned in the same sentence as private equity. But recently the heavy metal band made headlines when their catalog of music was sold to HarbourView Equity Partners for $120 million. [1].  Stories like this have become practically routine in the music industry.

         It can be confusing to understand exactly what investors in music rights are purchasing. Music intellectual property can be broken down into two components: the composition (the melody, chord progression, and other musical elements to a song), and the master (which refers to the specific recording of a given song). [2]. The partial or full collection of an artist’s master recordings makes up a given catalog. This is why despite a separate company owning the rights to the master recordings, Taylor Swift was able to re-record her compositions, and in the process, creating new masters that she could retain ownership. [3]. Investment in these master’s has been driving the buzz recently.

Why are funds investing in music?

         Large corporations investing in music catalogs isn’t a new trend. By the beginning of the 21st century, the popular music landscape was all but controlled by four major labels, including Universal Music Group and Sony. [4].  Yet music rights hold unique qualities that make them attractive to investors not typically involved in the industry. Music is a stable revenue source compared to other investments, as people across the world listen to music regardless of macroeconomic cycles. [5].  Catalogs from the past decades tend to maintain their popularity, with streaming sites such as Spotify making songs easily accessible. Selling catalog rights is also attractive to artists both new and old, especially in a post-Covid streaming world, entrenching pre-existing inequality in the streaming market. [6].  For many artists, the ability to benefit from selling one’s catalog to a private equity fund is a no-brainer.

         Recognizing the value of these investments, large private equity funds have been swooping up music catalogs left and right. KKR-backed HarbourView recently acquired stakes in Kelly Clarkson’s catalog, [7] and the Carlyle-backed Litmus Music similarly purchased much of Benny Blanco’s work in 2023. [8]. These deals show little sign of slowing down, as many of the largest music industry transactions in 2024 involved private equity. [9].

Legal Implications

         While in past years, an artist involved in a royalites dispute would have interacted with a record label such as Sony, today artists are finding themselves battling these investment funds. Iconic singer Barry Manilow was recently involved in an international dispute with Hipgnosis, now Recognition Music Group, over unpaid royalties after the investor purchased Manilow’s catalog of music back in 2020. [10]. While the leadership of companies such as Recognition are typically full of experienced music industry experts, the relationship between an artist and the organization owning that artist’s music has brought artists into an everchanging legal sphere.