Bruce Springsteen is on Fire​

By Jake Rickman​

What do you need to know this week?

Bruce Springsteen is on fire, having sold his musical catalogue to Sony Music for $500m.

In exchange, Sony has acquired 300 songs, 20 studio albums, and dozens of live performances spanning the heartland rocker’s decades-long career.

For musicians, the past two years has been a seller’s market: Bob Dylan sold his rights to Universal Music for $300m. Last December, Stevie Nicks of Fleetwood Mac sold her rights to Primary Wave for $100m. In a more controversial deal, Taylor Swift’s former manager sold her rights (against her wishes) for $300m.

Why is this important for your interviews?

Whether you are interested in media law or private equity, this is a fun-spirited commercial topic that can demonstrate a deep level of commercial awareness.

20 years ago, the music industry looked like a dead-end to business leaders and investors. Today, the opposite is true: investors like the sound of songs as an asset class.

Private equity giants like Blackrock, KKR, and Apollo, known for going after some of the world’s biggest companies, have also been front and centre in the buying frenzy. There are also newer names leading the way, including Hipgnosis, a UK-listed investment and “song management” company.

For investors, the rights to popular songs have three elements that make them attractive.

First, pop songs generate a steady stream of income in the digital age because each time someone listens to a song, those that own the rights get paid. Additionally, if ad agents, politicians, and companies wish to use pop songs to promote their brand, they have to pay for the license to do so.

Second, it is an asset class that is easily diversified because investors can purchase the rights to artists’ music across different genres while still generating impressive double-digit returns.

Similarly, it is known as an “uncorrelated asset class” because consumption and production tend to be divorced from wider market trends. Put another way, whether there is a recession or a booming stock market, people are still going to be paying to listen to music.

How is this topic relevant to law firms?

Record-breaking catalogue sales like Springsteen’s brings together practice areas that you may not think of as having much in common.

Firms with strong media and intellectual property teams, such as Clintons, Russells, and CMS, will have advised both Springsteen and Sony Music on the particulars of the transaction, including what, if any, legacy rights Springsteen will be entitled to, as well any future royalty payments.

Likewise, Sony will want to ensure that there is no other party with any outstanding claims on the rights, which will require substantial intellectual property due diligence.

Additionally, private equity and other investment firms looking to raise funds specifically to purchase catalogues will need to instruct law firms with strong fund-raising teams.


Image Credit: Brian Patterson Photos / Shutterstock.com