“The industry has changed in the last 24 months because of one company, Hipgnosis,” said Mathew Knowles, a music executive and father of the music stars Beyoncé and Solange Knowles. “That’s the company that changed the whole industry on selling your royalty rights.”
Hipgnosis had money available to invest before the pandemic, giving it flexibility to buy rights to songs from musicians who suddenly weren’t making any money from performances.
“For artists, touring is their No. 1 income,” Mr. Knowles said. “No one knew an end to performing was coming, and they certainly didn’t know it was going to be 18 months to two years before it returned. Even A-list artists and some of the big acts that have enormous overhead are struggling.”
The amount paid for royalties depends, of course, on the artist. But it’s also related to the type of royalties. Selling the master recordings could fetch 10 to 14 times the annual royalty stream, but publishing rights can be closer to 18 to 22 times, Mr. Knowles said. An advance that will be paid back is usually two times the royalties.
Yet, he said, the genre of music also matters, with rock artists fetching more than hip-hop and RB artists, because of the size of the audience for their music.
Figuring out what to do if you’re an artist — or someone who is trying to value the royalties of an artist — can be complicated. Streaming has fundamentally altered the economics of music royalties.
Eli Ball, chief executive of Lyric Financial and a music producer in the 1990s, said that when artists used to sell records they would receive $1 to $1.50 per record. Streams pay a tiny fraction of that. Or to put it another way, an album that sold one million copies paid an artist $1 million to $1.5 million in royalties, but one million streams of songs from that album pay the artist about $3,500.
Article source: https://www.nytimes.com/2021/06/25/your-money/musicians-investors-royalties.html
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