Michael Jackson’s music catalog may be worth as much as $1.5 billion, according to report in Billboard last week that described Sony Music Group’s purchase of a 50% stake. The deal reportedly covers rights to Jackson’s recorded masters, the publishing rights to his songs, and perhaps rights to songs by other artists. Jackson’s deal may be the largest ever for the catalog of an iconic artist. In recent years, Bruce Springsteen, Bob Dylan, Katy Perry, Shakira, and many other artists have sold partial or full stakes in their music rights, with some of the deals valued in the hundreds of millions of dollars. The rights for Queen’s music may exceed $1 billion, according to recent rumors. Deals like these create a fascinating and complex pricing challenge, as the new rightsholders seek to earn back their investment. The stakes are high. Billboard estimated last year that Jackson’s catalog generates $75 million in annual revenue. Should the rightsholders of these large catalogues play the Value Game, the Choice Game, or the Custom Game? Their decision depends on how they want to use the recordings and songs in these vast portfolios to create value for performers, advertisers, movies and television producers, social media channels, and ultimately for consumers themselves who enjoy the music in a number of ways. The breadth and depth of the portfolios, the degree of competition, and the negligible variable costs make the Choice Game seem optimal. In any event, it will be interesting to see what other artists will sell their catalogs, how high the valuations will go, and how creative the new rightsholders are in generating revenue.
Sony Music Buys Stake in Michael Jackson Catalog, Valuing Rights at Over $1.2B