Dividends and Springsteen’s dancing in the dough after catalogue sale

Most of us enjoy music of one sort or another and when the music is enjoyed across many age groups it becomes valuable. The music is valuable in itself on how it makes an individual feel, sometimes a song marks a year or a generation, and the more popular a song is, the more opportunities to do more with it. The song can be used for advertising and when it is used along those lines it generates sizable royalties which means controlling the ownership of music can be very profitable.

In an article by Ben Sisario of New York Times News Service, Bruce Springsteen sold his recordings and songwriting catalogue to Sony Music for $550 million. The amount is likely the highest ever paid for the work of one musician.

According to Barry M Massarsky, an economist who specializes in calculating the value of music catalogues on behalf of investors, last year more than 300 valuations for $6.5 billion was done.

Prior to streaming services such as Spotify, Apple Music and You Tube the music industry was considered a dying business, now it is doing very well. Investors have poured in billions as they see music as a safe commodity – an investment with predictable rates of return and relatively low risk.

According to MRC Data, a tracking service that powers the Billboard charts, 66% of all music consumption is for material greater than 18 months old.

in the 1950’s and 60’s, musicians had great voices but did not own the recordings and many did not do well financially. In the 1970’s and beyond there was a push to obtain more power and leverage and to own their own work. Stars such as Taylor Swift are passionate about owning their music.

Linking to dividend paying stocks, when you hear music, the music brings you to a particular mood – hopefully a happy one. If you are happy then the music company can use the music in other areas of your life. When you hear the music, you may not buy right away, but you will listen to the advertising message and the royalties from the music flow in. A number of years ago, Disney used to advertise coming out of the vault for a short time – buy your copy now. Music and movies often work hand in hand and investors see those recurring revenues.

There are more questions than answers, till the next time – to raising questions.

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