SYLVIE DOUGLIS, BYLINE: NPR.
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STACEY VANEK SMITH, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith. And today, I'm very excited because my friend and NPR culture correspondent extraordinaire Anastasia Tsioulcas is here with us. Hey, Anastasia.
ANASTASIA TSIOULCAS, BYLINE: Hi, Stacey. I'm so happy to be here, and I have a question for you. What is the very first song you remember loving?
VANEK SMITH: (Laughter) I really loved John Denver as a little kid. My parents took me to one of his concerts, and so "Rocky Mountain High" was, like, the first song that I really remember just loving.
(SOUNDBITE OF SONG, "ROCKY MOUNTAIN HIGH")
JOHN DENVER: (Singing) Colorado rocky mountain high.
TSIOULCAS: Amazing.
VANEK SMITH: What about you, Anastasia? It's going to be something very sophisticated, isn't it? It's going to be, like, Vivaldi.
TSIOULCAS: Stravinsky.
VANEK SMITH: (Laughter) And what was the song that done it?
TSIOULCAS: "Rite of Spring" - and to be honest, I bought it on the same trip that I also got New Order's singles collection, "Substance."
VANEK SMITH: OK. I still stand by "Rocky Mountain High." It's an excellent song.
TSIOULCAS: You should.
VANEK SMITH: We all have these, like, very emotional attachments to songs. And these days, musicians and investors are betting big on these emotional attachments. In fact, recently, a lot of big-name artists have been in headlines for selling their songs for a lot of money. The exact numbers aren't always public, but we do have a sense in a lot of cases - like Bruce Springsteen, $500 million, Bob Dylan, $350 million, Stevie Nicks, $100 million - think she undercharged.
TSIOULCAS: And it's not just older boomer artists who are now in their 70s who are contemplating what's next and selling off their songs. John Legend, for example, is only 43. But last month, he sold the rights to his hits, too.
VANEK SMITH: That is one expensive conversation in the dark.
TSIOULCAS: (Laughter).
VANEK SMITH: Sorry (laughter). So today on the show, we take a look at who is buying up these musicians' work and why, and how songs are now being pitched to investors as, you know, stable assets that are a little bit like gold.
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VANEK SMITH: Historically, the economics of the recording industry are messy and pretty complicated, and a lot of artists will tell you that that, in fact, is very much on purpose. I mean, this was an industry that had ties to gangsters going back to at least the '30s and '40s.
TSIOULCAS: And the thing to know right now is that in many of these gargantuan deals, we're talking about the rights to the composed music and the lyrics, not the recordings that artists make of that music.
VANEK SMITH: Musicians who have written their own material are selling off their songwriting copyrights to investors. They are all intensely aware that, these days, they're earning way less on Spotify and other streaming services than they did when fans bought CDs or vinyl.
TSIOULCAS: And some of the rights can be a really pretty sweet deal for them. Maybe they're older now. Maybe they're not so interested in being out on the road touring anymore.
VANEK SMITH: Yeah, exactly. And for most artists, touring was how they made their serious money. And the pandemic, of course, has put a stop to a lot of that. And so it has become a pretty natural time for musicians to kind of take a beat, so to speak, and figure out what they want to do now. So, Anastasia, you went to a couple of the biggest players in the music business to find out, why did music become so attractive to investment firms and venture capitalists all of a sudden?
TSIOULCAS: That's right. One of them is Merck Mercuriadis. As a longtime figure in the music business, he's worked with what seems like everybody - Culture Club, Iron Maiden, Elton John, Guns N' Roses, Beyonce.
VANEK SMITH: And Merck's company Hipgnosis Songs now owns about $2.2 billion worth of assets. And Merck is, you know, making a very nice pile of money. But he says he is also trying to make sure that the songwriters get a fair shake of these deals because this is a business, the music industry, that often will tend to put songwriters last.
MERCK MERCURIADIS: As a manager, I started to take songwriters under my wing as well. So people like the incredible Diane Warren who wrote "I Don't Want To Miss A Thing" for Aerosmith or The-Dream who wrote "Single Ladies (Put A Ring On It)" for Beyonce and "Umbrella" for Rihanna.
(SOUNDBITE OF SONG, "UMBRELLA")
RIHANNA: (Singing) You can stand under my umbrella.
VANEK SMITH: Merck has also promised his investors that he can make these songs pay out some real money, so he has purchased song rights from everyone from Justin Bieber to Kenny Chesney.
TSIOULCAS: Merck likes to compare songs as an asset comparable to gold and oil, and that's music to investors' ears.
MERCURIADIS: Because when the songs become hits, they become a part of the fabric of our lives and then part of the fabric of society. So, you know, if you're a 14-year-old boy or girl in 1982 and you're listening to Eurythmics' "Sweet Dreams (Are Made Of This)" and you're having your first crush, that song stays with you. And it stays with you, you know, 40 years later.
(SOUNDBITE OF SONG, "SWEET DREAMS (ARE MADE OF THIS)")
EURYTHMICS: (Singing) Sweet dreams are made of this.
MERCURIADIS: Through the good times, through the bad times, it makes the revenues from these songs very predictable and reliable, which is the reason why we look to assets like gold and oil and why they're so investable. But in fact, you know, if there's political upheaval, then the price of gold and oil is affected. Equally, while, you know, we've lived through a pandemic that none of us could see coming over the last couple of years, the price of gold and oil is affected, but songs are something that you're taking comfort and you're escaping with these great songs, so they're always being consumed.
TSIOULCAS: That's kind of a mix of old-fashioned entertainment business razzle-dazzle with investment talk. But investors are clearly liking the returns they're seeing, according to Larry Miller. He's a professor and the director of the music business program at New York University.
LARRY MILLER: As we sit here in the beginning of 2022, the value of music rights is at a historic high. If you were a songwriter who wrote a very important catalog and you perhaps were looking at selling that a decade or so ago in 2011 or '12, you might be able to obtain something between 12 to 15 times annual net revenue for that catalog. Today, that same writer, they are able to get upwards of 25 to 30 or more times annual revenue.
VANEK SMITH: That is good money.
TSIOULCAS: And these companies are making their investments pay off by putting these classic songs right back into the public's ears. They license them out for use in advertisements, movies, video games, TV shows, on Peloton and earning some revenue via streaming services, too. Of course, we live in the age of all-you-can-eat streaming. But the payout of royalty rates for services like Spotify and YouTube are much lower than they are for CDs and vinyl.
VANEK SMITH: Yes. So for instance, the songwriting royalty payout for a CD would be somewhere around a dollar. By contrast, Spotify pays out, like, a fraction of a penny per song stream.
TSIOULCAS: And Merck argues that many people now see streaming subscriptions, not as a luxury or even discretionary spending but as a utility.
VANEK SMITH: And that means that even though royalty payments are being made super incrementally, it all adds up to some revenue. And if you're a company that now owns thousands of the most popular songs in history, that can be a pretty big chunk of money.
TSIOULCAS: And some of these companies are taking it even further to make money for their investors. Take Primary Wave. It's another of these publishing companies, and it was founded by another longtime music executive, Larry Mestel. Yep. That's another Larry for you.
VANEK SMITH: (Laughter).
TSIOULCAS: He buys up songwriting rights. But for his company, it's about packaging a musician as a brand. Primary Wave also makes deals for artists' names, images and their life stories. He wants the musicians he works with to be everywhere.
LARRY MESTEL: Take the band Styx. Our brand team went out and did a brand alliance with Styx. We created a beer called Oh Mama beer, you know, based on the song "Renegade."
(SOUNDBITE OF SONG, "RENEGADE")
STYX: (Singing) Oh mama, I'm in fear for my life.
VANEK SMITH: I mean, if you were in fear for your life from the long arm of the law, it is definitely time for a beer.
TSIOULCAS: (Laughter) And that's also the unofficial theme song of the Pittsburgh Steelers, and they have very serious feelings about this song.
(SOUNDBITE OF SONG, "RENEGADE")
STYX: (Singing) The jig is up.
MESTEL: Right. And so now Styx, Tommy Shaw, have their own beer line. It's being sold in box stores - I think 200 locations now selling Oh Mama beer.
VANEK SMITH: Oh mama (laughter).
TSIOULCAS: That is definitely branding.
VANEK SMITH: It's catchy.
TSIOULCAS: So look forward to all these classic songs becoming even more omnipresent thanks to Wall Street.
VANEK SMITH: This episode of THE INDICATOR was produced by Brittany Cronin and engineered by Isaac Rodrigues. Corey Bridges fact-checked the show. Viet Le is our senior producer, and Kate Concannon edits the show. THE INDICATOR is a production of NPR.
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