Music catalogs used to be affordable. I used to buy them for 5x-6x net publisher’s share (or NPS, the amount defined as gross publisher royalties minus any writer royalties). Recently buyers have been paying up to 30 times NPS for the publishing catalogs of artists like Bob Dylan, Neil Young, Bruce Springsteen and Justin Timberlake — and now, David Gilmour and Roger Waters are shopping their interest in Pink Floyd‘s recorded music catalog for $500 million.
Is it worth that much?
What You Get
Pink Floyd is one of the most successful bands in history, having sold over 75 million culturally transformative albums worldwide. Hits include “Another Brick in the Wall” and “Comfortably Numb,” which, if licensed aggressively, could generate millions of dollars in synchronization income annually.
A buyer of the Pink Floyd catalog would acquire ownership of recorded music rights, meaning all recordings performed by the band. Sources tell Billboard that the musical publishing rights, meaning the rights to the songs’ compositions and lyrics, aren’t for sale, but the merchandising rights, including trademarks, album logos and set props like the Flying Pig, likely are.
This means collecting revenues from Spotify and Apple; licensing individual songs for movies, TV shows, and commercials; royalties on any live or unreleased studio albums; royalties from any artist covers; income from the use of any music on Broadway or Vegas and planetarium laser shows, and if, say, Gucci decided to do a Pink Floyd-inspired collection.
Why It’s Overvalued
Pink Floyd’s catalog doesn’t have very impressive streaming numbers. “Wish you Were Here” (490 million), “Money” (360 million) and “Hey You”(190 million) pale in comparison to Drake “God’s Plan” (2 billion), Ed Sheeran’s “Shape of You (3 billion), The Weeknd’s “Starboy” (1.8 billion), and Ariana Grande’s “7 Rings” (1.7 billion). As streaming continues to lean in favor of contemporary artists, it’s hard to believe revenue for this catalog wouldn’t decline as well.
Currently, the band owns recorded assets and licenses its catalog to Sony. These assets generate about $25 million a year, net of any 15% distribution fees. Waters and Gilmour individually or collectively wrote the majority of the songs in the Pink Floyd catalog. The royalties they collect for performance (radio/streaming), mechanical (downloads) and synchronization (movie/TV uses) generate about $10.5 million a year. Merchandising rights generate about $4 million year.
Can these assets continue generating those numbers? What’s more, many of these copyrights were written in the 1960s and 1970s, meaning titles in the catalog would be subject to reversion in the near future. These are UK copyrights, where rights revert to the authors 25 years after their death. Waters is 78. Gilmour is 76. Any new buyer would lose control 25 years from the date either author dies.
$500 million is a lot for any catalog and might be better spent on catalogs with better sampling and cover potentials. Still: “Wish You Were Here,” “Money,” “Another Brick in the Wall,” “Hey You,” “Learning To Fly,” “Comfortably Numb.” Assuming there are no contractual restrictions in licensing the Pink Floyd catalog –Waters might want to control some of those uses — any creative buyer could re-introduce these titles to fans around the world.
Look at what’s happened to Kate Bush.
Negotiate down to $250 to $300 million – and ask them to throw in the publishing rights, too.
I’m David Schulhof. I’ve been doing music deals with Wall Street for the last 20 years. By training, I’m a music lawyer. I raised private equity money from Trilantic Capital Partners (formerly Lehman Brothers) for my first company Evergreen Copyrights. As CEO I acquired the publishing rights to songs performed by Tupac Shakur, Michael Jackson, Joe Cocker, MC Hammer, 2 Live Crew, Third Eye Blind, JJ Cale, Bill Monroe, Nick Drake, Todd Rundgren, and many others. I sold that company to BMG in 2010. I’ve been buying and selling music catalogs ever since.