The Gifted Songwriter

Dec 18 2010

While it may be more blessed to give than to receive, it’s also a lot more work. Anyone stressing about where and when to find that last elusive holiday gift will understand what I mean. I came to the realization last week that it’s a very dangerous thing to be at the end of my Christmas gift list– it’s like being named Zucker at a college graduation ceremony that’s proceeding in alphabetical order. By the time your name finally comes up, everyone’s lost interest and moved on to the reception. At this point, if I haven’t figured out what gift to buy for you, I’m likely to just give up and vow to do better next year.

The bottom line is: it’s crunch time. So in the interest of public service (and of course, being a music business weasel, some self service as well), I’m offering up a bag full of gift ideas for your songwriter friends or relatives. Or, with the understanding that songwriters tend toward the reclusive, buy these for yourself and save your family from buying you the scarf with musical notes on it, or the new edition of the rhyming dictionary.

Here’s the Songwriters Gift List (or “What To Get the Guy Who Gets Only 9 cents Each Time Someone Buys a $20 dollar CD”):

1. A spot at the ASCAP “I Create Music” Expo

http://www.ascap.com/eventsawards/events/expo/

Granted it ain’t a cheap gift, but at this time of year, there’s some deep discounts on the cost of the registrations for an event that takes place April 28-30. And all things considered, there’s no conference as rich in educational, mentoring and networking opportunities for aspiring songwriters, whether they’re producers, performers, composers or lyricists. The Expo covers every corner of the songwriting business, virtually every genre, and brings superstars like Quincy Jones, Justin Timberlake, Dr. Luke and Bill Withers together with writers just beginning their journey in the music industry. There’s no other event quite like it.

2. A subscription to Billboard magazine.

http://www.billboard.com/

This one is pretty generous as well, but it represents a world of opportunity for whoever receives it. My first gig in the music industry came from reading an article in Billboard, so I’m a true believer. There is no way to survive in this business without knowing what’s happening– it’s how you discover the openings in the marketplace, jump on the trends, find your business model, or identify the people who you need to turn into contacts. Whether it’s online or in print, every songwriter needs to be looking at Billboard each week.

3. “What They’ll Never Tell You About The Music Business” by Peter Thall

Peter is one of New York’s top music business lawyers, a clear and insightful author, and one of my favorite people to run into on the weasel Habitrail– he’s always dapper, funny and leaves me with one piece of knowledge that I didn’t have before. If you need a guide to the contractual, legal and practical realities of building a music career, this new update of his classic book is a great place to start.

4. “The Hit Factory”: Making Your Music Make Money”, a one-day workshop at Songwriters Hall of Fame.

http://www.songhall.org/news/entry/939

I told you there was a little bit of self-interest at work here. This is my own one-day, six-hour, intensive class at the Songhall in NY, which I led last year as well. It’s a chance for me to help those songwriters attending the workshop to develop a strategic approach to their career– it’s part lecture, part song-critique session, and part open discussion, and I love doing it. Last year’s class was sold out, and we had people from all around the country. I’m looking forward to doing it again, and have a lot of new material to cover. The cost includes both of my books, “The Billboard Guide To Writing and Producing Songs That Sell” and “Making Music Make Money”, so it’s not a bad bargain. I think all of us from the last session, myself included, felt that it was a day full of discovery, good music and valuable new contacts.

5. A Tip Sheet of choice: Songlink International or myhitonline.com
http://www.myhitonline.com/
or

http://www.songlink.com/

There’s no greater challenge for most songwriters in getting their music out into the market than trying to figure out who’s looking for songs and where to send them. These are both very well put-together “tip sheets” that can clue you into both big and small projects around the world. It doesn’t mean your songs are going to get cut. But at least they might be heard. Every little lead helps…

6. The T.A.M.I. Show Collectors Edition DVD

It’s hard to imagine any pop songwriter or musician who couldn’t find something to love here. Filmed at a live performance in Santa Monica Auditorium in 1964, then lost for decades to legal disputes, this has just recently become available– it is a brilliant document of the energy and variety that made music the defining element of pop culture in that time. The mix of acts is simply a representation of what was, in the early 60′s, a Top 40 playlist. Now it reads like the roster of the Rock ‘n’ Roll Hall of Fame. This was a time when you could have a concert bill that included: Chuck Berry, The Beach Boys (with Brian Wilson), Marvin Gaye, Smokey Robinson, Lesley Gore,the Supremes, The Rolling Stones, and James Brown, who gives what most consider his greatest performance of all time. The most remarkable thing is the consistency of the live performances. No lip syncing, very little rehearsal, and yet, no train wrecks. It’s a long way from Katy Perry or Britney Spears.

7. “Murphy’s Laws of Songwriting: The Book” by Ralph Murphy

http://www.murphyslawsofsongwriting.com/index.php/buy-the-book

A legendary country songwriter and publisher, Ralph is both one of the most astute students of songwriting and one of the most engaging teachers. He has analyzed hundreds of popular country and pop hits to understand the nuances of what makes them work, figured out what audiences want to hear, and what radio needs to play. Then he’s able to actually explain it– and be funny as hell at the same time. I’ve recommended his classes and workshops before, but now he’s got a book coming out, just in time for Christmas. Definitely worth studying and sharing with every other songwriter…

Ralph Murphy


8. A consulting session with “Ask The Music Business Weasel”

www.ericbeall.com/consulting

So guess who the weasel is? This is my own hourly consulting service that I launched this year– it’s available to songwriters, publishers, or artists looking for specific advice for a career situation, some overall strategy, or detailed feedback about their work. Happily, it’s been a big success, not just on my end, but for the writers involved– there have been management deals, record contracts, and business partnerships that have grown, in least in part, from some of the discussions. I love the opportunity to really dive into someone’s business, rather than just offering up cursory observations or song critiques. If you don’t have a weasel on call, now you do…

As the phones in the office have gone eerily silent of late, I think we can safely say that the music biz is shutting down for the remainder of 2010, and I’m about ready to join everyone else in cueing up in the airport security line. So here’s wishing you a great holiday and all the best for 2011. It’s not always been easy out here this year for anyone, but the weasel’s greatest qualities are perseverance and resilience. You can’t kill this beast. I’ll see you all next year…

HAPPY HOLIDAYS!!

Back To Basics

Dec 13 2009

I’ve had some interesting inquiries come to me recently on the blog site and it got me thinking… after all is said and done, the problems of most songwriters and music publishers are not really the complex issues of negotiated royalty rates, streaming on demand versus downloads, or flat rate licensing schemes. Those big, multi-faceted bones of contention certainly affect us as songwriters and music publishers. They may weigh on our minds, get us in a fighting mood, or, best case, bring in some unexpected money. But they are not what is front and center in our mind as we go through our daily career struggle.

What we think about almost all the time is a challenge that seems considerably more straightforward and simple, but is in fact, far harder to conquer:

What specifically can I do to get my music out into the world to start earning me money?

So I thought that in the time leading up to the holiday break, perhaps I would try to address that subject, from a variety of different angles. In the end, it’s what music publishing is all about. It’s how my first book, “Making Music Make Money” got its title. It’s the primary focus of my class, Music Publishing 101 at Berkleemusic.com. And yet the questions keep on coming. And the challenges to actually getting our music into income-generating opportunities keep increasing. Let’s go back to basics one more time.

http://www.amazon.com/Making-Music-Make-Money-Publisher/dp/0876390076

But in order to do it, we’re going to start with three more questions, all of which usually follow the big question of “what do I do to make my music earn money?” If we can tackle these fundamental issues, then we’ll have a start on conquering the bigger question in the following weeks. Here are three selections from the “greatest hits” compilation of questions to ask the music business weasel:

Question #1: How do I get my songs considered by major, superstar artists?
Answer: You don’t. You also don’t get to pitch in the World Series with no professional baseball experience or become the president of a Fortune 500 company on the first day on the job. In songwriting, as in every other business, there is a concept of “working your way up the ladder”.

Songwriters who have yet to have even one successful single do not need to be spending their time trying to figure out how to get songs to Rihanna, or Taylor Swift, or Daughtry. The truth is, most major artists want to be directly involved with writing most of the songs they record, and the ones that they don’t write will largely come from the proven, successful hitmakers so sought after by the record companies. Trust me, if it were your multi-million dollar investment on the line, you’d probably take the same approach.

If you are a developing songwriter with no real track record, you need to concentrate on writing for the next Rihanna, or Taylor Swift, or Daughtry. That means working with artists who don’t yet have a record contract, and helping to write the song that clinches the deal. Or finding a lesser-known act still trying to break-through with that one big hit. Or meeting local developing artists or managers in your local community, and trying to write the song that will expose them to a larger audience. If you can do that successfully, then you’ll get approached to work on slightly bigger, more high-profile projects. Then slowly, but steadily, you’ll be building the contacts and the track record that can move you up the ladder.

Check out tipsheets like Songlink International or Myhitsonline.com. They are full of projects in various stages of development, all looking for songs. Or get active in your local community and find the potential talent you can work with there.

http://www.songlink.com

http://www.myhitonline.com

Certainly, most of these projects will amount to little. But if you can provide a key song, you will at the very least make a new set of contacts, who will go on to other projects after this one. This is how “networks” are built. If you can show up with a genuine hit, you might create a new star, and immediately put yourself in a different level of the industry.

Question #2: How do I cold-call A&R people, managers, and others who I want to listen to my music?
Answer: You don’t. In my Music Publishing 101 class at Berkleemusic.com, we don’t get to the subject of pitching music until halfway through the semester. Instead, the early weeks of Music Publishing 101 are devoted to laying the groundwork that will make the pitch effective. This means building a team of support around you– a music lawyer, a Writer Relations rep at ASCAP, BMI, or SESAC, a network of friends and colleagues in your local community that could include everyone from a music journalist to a studio owner to a radio programmer.

Just as importantly, it means researching and studying your music genre and identifying the major and minor artists in that world, the key labels (both major and independent), the A&R decision-makers, the managers, the radio stations, and the clubs. It means identifying what business strategies are the most effective in your market. In the pop-rock or indie band world, advertising placements can be crucial stepping-stones. In the heavy metal biz, video games are key. You have to be an expert in whatever field of music you’re pitching songs. That’s what gives you the right to bother someone else, who is also an expert of sorts, in the middle of his or her workday.

Only when you’ve established your team and network of business contacts will you be in a position to change a cold-call into a referral. Once you’ve decided who you want to approach with your music, you can then try to figure out if there’s someone on your team, or in your network, who might be able to make an introduction, or at least allow you to use their name as a reference. Obviously, the bigger your circle of supporters, the fewer real “cold-calls” you’ll make.

In the same way, proper research and understanding of your musical genre will ensure that you’re approaching the right people, and saying the things that they want to hear. If you understand the nuances of the business environment in which you’re working, know the background of the person with whom you’re speaking, and can show how your music fills a need in that person’s world, you can speak with the A&R person, manager or producer as a colleague. That’s not cold-calling. That’s connecting.

Question #3: How do I find time to get my music out to people– music supervisors, A&R, artist managers– when I’m so busy actually making and recording the music?
Answer: You don’t. The one thing I can tell you without any doubt, having been a songwriter, producer and music publisher for more than twenty years, is that every single thing that happens to you everyday will conspire to prevent you from actually getting songs sent out to the people that need to hear them. You will always be needed in the studio, or have to pick up the kids, or be exhausted from last night’s gig, or be stressed from tonight’s gig, or in need of a new computer, or SOMETHING. And each night, you will vow that tomorrow you really will get those songs sent out…

You will never find the time. There are no spare hours lying under the bed somewhere. Trust me- I’ve looked. The only hope that you have is to make the time. You will have to change your schedule, cut back on certain things, try to find an intern to help out, or figure out a way to run your business on the road. But one way or another, you must make the time to get songs sent out to the people that need to hear them. Because…

Your business depends on it. Without that, nothing happens. There is no music publisher anywhere that has built a business solely by doing administration and collecting money. At least in the beginning, someone has to get the music out to people who will use it.

What would you think of a widget-making company that invested solely in production–building a factory, hiring workers, making widgets– but had no sales team or strategy in place to sell the product? Yet, that’s what so many songwriters and music publishers do– retreating to their comfort zone of writing music, recording music, acquiring music and listening to music, until there’s no time left in the day to sell any of it. Check the number of songs sitting on your hard-drive and compare them to the amount of songs that were sent out this week. It may be happening to you.

The point of these negative answers to oft-asked questions is not to be discouraging. I’m a publisher too. I know that none of us need more discouragement. The point is to give a reality-check, and to adapt realistic strategies to our businesses.

It is the nature of show business to sell dreams, and this is one of the most prevalent– the sudden opportunity that leads to instant glory. I’m not saying it never happens. Almost every career is built on a few such unexpected moments. But it’s not a day to day strategy for approaching your business.

I heard a great story recently of a hard-working musician laboring in relative obscurity, who was playing in a band that recorded several records for small labels, none of which found any great success. However, one of the records was picked up by a dance music DJ and producer in another country, and began to garner some underground buzz. When that buzz led to more calls for material from the DJ-producer, he turned back to our friend the musician, who after more than a decade of playing and touring, had virtually given up on his band and was looking for a new line of work. But the musician answered the call for more material and sent it off to the DJ-producer, who then added his own magic touch. One of those tracks was recently released as the first single off a recent Madonna album, and it became a world-wide hit.

That’s the reality of the music business. Doing your work, getting the music out, meeting the right people and building on those contacts, as you slowly climb the ladder. Only then can you hope to finally get that lucky break that catapults you to the top.

Last question: When do you give up?
Answer: You dont. You just keep moving, one rung at a time.

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The Buyers' Market

Oct 16 2008

If you’ve been watching the stock market plummet in the past week (and who hasn’t?), or better yet, if you’ve noted the recent moves by financial guru Warren Buffett, then you’ll recognize a buyers’ market when you see it. And you’ll probably be seeing one shortly– if not right now. The principle is simple: when everyone is desperate to sell, when prices are dropping, when the sky is falling, that’s the time to go on a buying spree, so long as you’re buying quality assets with long-term value. It’s true in real estate, in stocks, and it’s even true with music publishing catalogs.

I had a recent comment on the blog that asked about how one goes about purchasing a publishing catalog of songs– so I thought now was as good a time as any to take up the subject. Why? Because all indications are that we’re soon entering a period where some very valuable song catalogs are going to be auctioned off by desperate sellers for far less than their purchase price only three or four years ago.

In the past five years, there has been a sudden influx of new publishing companies into the marketplace, many of them backed with money from banks, hedge funds and pension funds. Unlike most traditional music publishing companies, these firms were not interested in discovering the hot new writer, or the next big star. Instead, they were focused on acquiring songs as investments, like a fine painting or precious jewelry. These companies were looking for proven, tested hit songs, that had maintained relatively steady earnings over a 10 or 20 year period.

Needless to say, those types of catalogs are unusual, highly valued, and very expensive. But these companies had money to burn, and were quite aggressive in going after what they wanted– often paying 50% more, or even double what a traditional music publisher might have offered. The theory was that these “classic” copyrights would only become more valuable with the explosion of media outlets for music, the growth of markets like India, China, and Eastern Europe, and a more aggressive approach to film and TV licensing. Can you guess the end of this story?

It’s not too hard to predict how this worked out. Unfortunately, the stock market collapse, the credit freeze and the complete disappearance of many of the most prominent investment banks has put these new publishing ventures on the ropes. Most of them have learned that it’s not so easy to increase earnings on song catalogs, nor does the money come in all that quickly or consistently. Over a ten-year period, most classic song catalogs have a pretty consistent average performance. But within a shorter period of time, say 3-5 years, the earnings can vary wildly, based on collection issues, currency exchanges, copyright disputes, or pure dumb luck. The bottom line is that there are plenty of people looking to sell their publishing catalogs at the moment. This means it’s a buyers’ market for everyone that’s left in the game.

So what goes into a catalog acquisition? First of all, MONEY. You need a lot of money. As in any buyers’ market, the first requirement is cash on hand. On this point, I can’t offer much help. Get some money before you start– preferably cash, rather than credit. Once your wallet is full, here are the four primary steps in purchasing a catalog:

1. Find Something To Buy. This is harder than it sounds. Many of the best catalogs are taken. Often, sellers are hesitant about openly announcing that their catalog or their company is on the market. Ideally, you need a network of industry insiders to keep you on the alert as to what might be available, or who might consider an offer. Most buyers build a team around one or two prominent music business attorneys, some consultants with a long history in the music publishing business, and a large network of contacts, including people at the PRO’s (ASCAP, BMI, SESAC) and the NMPA (National Music Publishers Association).

Beyond that industry insider approach, you can also watch the key trade publications– Billboard often contains public notices of catalogs being auctioned off by writers or publishers in bankruptcy. You can also check tipsheets like New On the Charts and Songlink International, which sometimes list catalogs currently up for sale.

2. Know What You’re Buying. Remember, there are two sides to every song. There is the writer’s share of the copyright (which represents 50% of the total income generated by the song) and the publisher’s share (which represents the other 50% of the income, and the control of the copyright). Theoretically, it’s possible to purchase either share, or both of them together. In practice, most publishing acquisitions involve the purchase of only the publisher’s share. In other words, if you purchase the song, you will control the copyright, collect all the income, pay the writer 50% of that income, and keep the other 50% as your publisher share.

Historically, it has been frowned upon for publishers to purchase the writer’s share of the income– as it brings to mind countless episodes in the Fifties, when songwriters down on their luck unknowingly sold off their copyrights (and the right to all future income) only to see their songs emerge as classics a few years later. ASCAP and BMI have always discouraged publishers from purchasing writer share– and most major publishers refused to consider it, even as recently as a decade ago. However, in the past few years, several companies, most notably Primary Wave, have begun doing very high-profile deals with superstar artists or writers (or their heirs) to purchase the writer share of income. Consequently, more and more companies are now open to the prospect. But keep in mind that purchasing the writer share does not give you control of the copyright. That only comes with the publisher share. Whoever controls the copyright has the sole power to decide where and how to license the song, as well as the responsibility to collect the money and pay it out. If you buy writer’s share, you have to know who your business partner, the publisher of the song, will be.

3. Determine the Price. First, get a calculator. Then, get the income records for what you’re looking to buy. Anyone selling a catalog of songs must be prepared to provide income statements, demonstrating what the catalog has earned over the past 3-5 years. This will mean accountings from the current publisher, as well as BMI or ASCAP statements, showing performance income. Once you’ve got all the records, and you’ve checked them VERY carefully, it’s time to be fruitful and multiply.

Song catalogs are purchased for a multiple of their annual earnings. This means that if a song generates $100,000 a year for the publisher’s share (that’s 50% of the total income), then it will likely be valued at somewhere between 8-15 times that annual income. A catalog showing an NPS (net publisher’s share) of $100,000 annually, valued at a 10 multiple, would sell for $1 million dollars. All things remaining equal, the buyer would need 10 years to recoup their investment– after that, they would begin to turn a profit.

Most of the negotiation on catalog acquisitions involves determining the proper multiple. In the past, publishers usually valued catalogs at 8-10 times earnings. But just as in the real estate market, once the investment bankers came to town, the prices soared. Many “classic” catalogs, ones that contain a healthy portion of truly timeless hit songs, have recently sold for multiples from 15-20. And like the real estate market, most of these prices today look highly inflated. If a catalog has one or two “hit” songs, and a few prominent album tracks, it’s probably around an 8 multiple. If it’s a deeper, more valuable catalog, it might be worth 10-12. If it’s Leiber-Stoller or the Motown catalog, you can expect to wait at least two decades before you pay off your investment– and it will be worth every penny.

4. Do Your Due Diligence. This is where the business becomes an art. There are a myriad of things to consider when purchasing a catalog, and there’s not nearly enough space to discuss them here. But you better think about:

Has the catalog’s earnings peaked? Did the last two years of income fall dramatically?

Did the catalog’s earnings recently spike? A key film or ad placement can cause a catalog to suddenly jump in earnings, driving up the 5-year average to a somewhat artificial high. Be aware that you can’t count on those kinds of placements in the future.

What is the long-term creative outlook for these songs? Is the style of music fading in popularity, or experiencing resurgence? Are there new outlets that would be a perfect fit for these particular songs?

How long will the songs last? Generally, publishers purchase songs for the life of copyright– which is 75 years after the death of the last composer. If you’re buying old songs, that date may not be so far off. Once songs go public domain, your earning days are largely over.

As you’ve probably discerned by now, the buying game isn’t for everyone. It’s definitely not for the average individual, the conservative investor, or the weak of heart. But I do think the investment community got this one right. Over time, classic songs have shown that they hold their value as well or better than most other works of art. Certainly, the long-term prospects for increased earnings from music are solid, especially as we start to get the digital realm to produce real income. And if you’re looking for the time to strike, the pendulum is swinging your way. As New York real estate brokers like to say:

Bring your checkbook.

The Buyers’ Market

Oct 16 2008

If you’ve been watching the stock market plummet in the past week (and who hasn’t?), or better yet, if you’ve noted the recent moves by financial guru Warren Buffett, then you’ll recognize a buyers’ market when you see it. And you’ll probably be seeing one shortly– if not right now. The principle is simple: when everyone is desperate to sell, when prices are dropping, when the sky is falling, that’s the time to go on a buying spree, so long as you’re buying quality assets with long-term value. It’s true in real estate, in stocks, and it’s even true with music publishing catalogs.

I had a recent comment on the blog that asked about how one goes about purchasing a publishing catalog of songs– so I thought now was as good a time as any to take up the subject. Why? Because all indications are that we’re soon entering a period where some very valuable song catalogs are going to be auctioned off by desperate sellers for far less than their purchase price only three or four years ago.

In the past five years, there has been a sudden influx of new publishing companies into the marketplace, many of them backed with money from banks, hedge funds and pension funds. Unlike most traditional music publishing companies, these firms were not interested in discovering the hot new writer, or the next big star. Instead, they were focused on acquiring songs as investments, like a fine painting or precious jewelry. These companies were looking for proven, tested hit songs, that had maintained relatively steady earnings over a 10 or 20 year period.

Needless to say, those types of catalogs are unusual, highly valued, and very expensive. But these companies had money to burn, and were quite aggressive in going after what they wanted– often paying 50% more, or even double what a traditional music publisher might have offered. The theory was that these “classic” copyrights would only become more valuable with the explosion of media outlets for music, the growth of markets like India, China, and Eastern Europe, and a more aggressive approach to film and TV licensing. Can you guess the end of this story?

It’s not too hard to predict how this worked out. Unfortunately, the stock market collapse, the credit freeze and the complete disappearance of many of the most prominent investment banks has put these new publishing ventures on the ropes. Most of them have learned that it’s not so easy to increase earnings on song catalogs, nor does the money come in all that quickly or consistently. Over a ten-year period, most classic song catalogs have a pretty consistent average performance. But within a shorter period of time, say 3-5 years, the earnings can vary wildly, based on collection issues, currency exchanges, copyright disputes, or pure dumb luck. The bottom line is that there are plenty of people looking to sell their publishing catalogs at the moment. This means it’s a buyers’ market for everyone that’s left in the game.

So what goes into a catalog acquisition? First of all, MONEY. You need a lot of money. As in any buyers’ market, the first requirement is cash on hand. On this point, I can’t offer much help. Get some money before you start– preferably cash, rather than credit. Once your wallet is full, here are the four primary steps in purchasing a catalog:

1. Find Something To Buy. This is harder than it sounds. Many of the best catalogs are taken. Often, sellers are hesitant about openly announcing that their catalog or their company is on the market. Ideally, you need a network of industry insiders to keep you on the alert as to what might be available, or who might consider an offer. Most buyers build a team around one or two prominent music business attorneys, some consultants with a long history in the music publishing business, and a large network of contacts, including people at the PRO’s (ASCAP, BMI, SESAC) and the NMPA (National Music Publishers Association).

Beyond that industry insider approach, you can also watch the key trade publications– Billboard often contains public notices of catalogs being auctioned off by writers or publishers in bankruptcy. You can also check tipsheets like New On the Charts and Songlink International, which sometimes list catalogs currently up for sale.

2. Know What You’re Buying. Remember, there are two sides to every song. There is the writer’s share of the copyright (which represents 50% of the total income generated by the song) and the publisher’s share (which represents the other 50% of the income, and the control of the copyright). Theoretically, it’s possible to purchase either share, or both of them together. In practice, most publishing acquisitions involve the purchase of only the publisher’s share. In other words, if you purchase the song, you will control the copyright, collect all the income, pay the writer 50% of that income, and keep the other 50% as your publisher share.

Historically, it has been frowned upon for publishers to purchase the writer’s share of the income– as it brings to mind countless episodes in the Fifties, when songwriters down on their luck unknowingly sold off their copyrights (and the right to all future income) only to see their songs emerge as classics a few years later. ASCAP and BMI have always discouraged publishers from purchasing writer share– and most major publishers refused to consider it, even as recently as a decade ago. However, in the past few years, several companies, most notably Primary Wave, have begun doing very high-profile deals with superstar artists or writers (or their heirs) to purchase the writer share of income. Consequently, more and more companies are now open to the prospect. But keep in mind that purchasing the writer share does not give you control of the copyright. That only comes with the publisher share. Whoever controls the copyright has the sole power to decide where and how to license the song, as well as the responsibility to collect the money and pay it out. If you buy writer’s share, you have to know who your business partner, the publisher of the song, will be.

3. Determine the Price. First, get a calculator. Then, get the income records for what you’re looking to buy. Anyone selling a catalog of songs must be prepared to provide income statements, demonstrating what the catalog has earned over the past 3-5 years. This will mean accountings from the current publisher, as well as BMI or ASCAP statements, showing performance income. Once you’ve got all the records, and you’ve checked them VERY carefully, it’s time to be fruitful and multiply.

Song catalogs are purchased for a multiple of their annual earnings. This means that if a song generates $100,000 a year for the publisher’s share (that’s 50% of the total income), then it will likely be valued at somewhere between 8-15 times that annual income. A catalog showing an NPS (net publisher’s share) of $100,000 annually, valued at a 10 multiple, would sell for $1 million dollars. All things remaining equal, the buyer would need 10 years to recoup their investment– after that, they would begin to turn a profit.

Most of the negotiation on catalog acquisitions involves determining the proper multiple. In the past, publishers usually valued catalogs at 8-10 times earnings. But just as in the real estate market, once the investment bankers came to town, the prices soared. Many “classic” catalogs, ones that contain a healthy portion of truly timeless hit songs, have recently sold for multiples from 15-20. And like the real estate market, most of these prices today look highly inflated. If a catalog has one or two “hit” songs, and a few prominent album tracks, it’s probably around an 8 multiple. If it’s a deeper, more valuable catalog, it might be worth 10-12. If it’s Leiber-Stoller or the Motown catalog, you can expect to wait at least two decades before you pay off your investment– and it will be worth every penny.

4. Do Your Due Diligence. This is where the business becomes an art. There are a myriad of things to consider when purchasing a catalog, and there’s not nearly enough space to discuss them here. But you better think about:

Has the catalog’s earnings peaked? Did the last two years of income fall dramatically?

Did the catalog’s earnings recently spike? A key film or ad placement can cause a catalog to suddenly jump in earnings, driving up the 5-year average to a somewhat artificial high. Be aware that you can’t count on those kinds of placements in the future.

What is the long-term creative outlook for these songs? Is the style of music fading in popularity, or experiencing resurgence? Are there new outlets that would be a perfect fit for these particular songs?

How long will the songs last? Generally, publishers purchase songs for the life of copyright– which is 75 years after the death of the last composer. If you’re buying old songs, that date may not be so far off. Once songs go public domain, your earning days are largely over.

As you’ve probably discerned by now, the buying game isn’t for everyone. It’s definitely not for the average individual, the conservative investor, or the weak of heart. But I do think the investment community got this one right. Over time, classic songs have shown that they hold their value as well or better than most other works of art. Certainly, the long-term prospects for increased earnings from music are solid, especially as we start to get the digital realm to produce real income. And if you’re looking for the time to strike, the pendulum is swinging your way. As New York real estate brokers like to say:

Bring your checkbook.