Springsteen Sale-Big Picture
30 times? ! ! ! !
This is the dusk of the gods. Pete Townshend said that rock music will never die, but one thing is certain, its performers will die. No one will live forever. After the deaths of David Bowie and Glenfrey, we know that it may come from bad behavior, not drugs and alcohol, but the unpredictability of life, drawing the wrong gene number, suffering from cancer or Rheumatoid arthritis.
What about music? Although modern rock is a footnote to the entire new music field, classic rock is still everywhere, from radios to jukeboxes, from streaming services to advertising, to speakers in cars… Will this continue?
What you have to know is that those superstars who sold copyrights at once regret it. The two biggest examples are Elvis Presley and Led Zeppelin. Colonel Parker wants his cash, and he thinks the value of the Elvis catalog has reached its peak. Peter Grant doesn’t think Led Zeppelin is long-term. He sold the copyright. Thankfully, the Internet appeared and gave the band a chance to renegotiate. As for those who have already sold it and are very happy…On the surface, things are much more complicated than this. They have it, and they can use it to do what they want. On the one hand, this is good, it can keep the music alive, on the other hand, the use may be inconsistent with your identity/personality/career strategy. But what if you die?
The fact is that most behaviors did not survive. For each door, there is a Jefferson airplane. Not everything in the past is worth making a fortune.
As for the sale of your royalties, Josh Gruss of Round Hill Music told me that he hopes to make the money back in seven years. Some behaviors are bankruptcy, they need cash, but unless you are 85 years old, why do you want to do this? Don’t forget that musicians are terrible businessmen in history. But you know the adage, everything is for sale, if the price is high enough…
So they say it is between US$50 and US$600 million. This is a lot of cash, but the problem lies in the details. Selling, you pay 20% tax, and your annual royalties are taxed at the normal tax rate, up to 37%. so…
This is a calculation.
Let us do the math. Bruce Springsteen is 72 years old. Can he live another thirty years? Highly skeptical. Some people live to 102 years old, but very few. So this is the transaction of a lifetime, and he must take the cash. Let us not forget that when he and his wife die, his heirs will have to pay a huge estate tax, which means that if Bruce does not sell now, his children will almost certainly be sold after his death.
So anyone who says that Bruce shouldn’t accept this deal is out of emotion, not fact.
However, the biggest question is… what value will Bruce Springsteen’s music have in the future?
Yes, Bruce’s songs are iconic, but you can’t cover “Born to Run” or “Born in the USA” Those are records, those are blues. This is not Bob Dylan, or even Paul Simon, with countless covers. However, the cover is not the only way you can make money on the old catalog. Hell, Cadillac offered Doors $10 million to use “Breakthrough” a few decades ago, but the band refused! Prices will only rise. Hedge funds will not invest unless they foresee huge returns. They don’t want 5-10%, they are looking for a huge multiple, just like Bruce.
Now we know one thing, as long as there is a copyright law, at least in the United States, you will get paid (Disney has been lobbying not to expire, especially Mickey Mouse). This is the silver lining of streaming media. It seems that there is a new monetization opportunity every few years. No one foresaw TikTok, all these social media companies are now licensing music. So there are runways, in the short to medium term, but in the long term? Sales of Elvis’ merchandise have fallen. His fans are dying. No one is forever. Well, maybe Frank Sinatra and the Beatles. Who could have expected the door to linger for so long. But will your band last, and will your song last?
You don’t want to sell. These are your creations, these are your children, you want to manage them, hold them tightly. But now you are facing death. No one lives forever. As I said above, it may not make sense emotionally, but it must be intellectually and financially.
Now I bet that some previous sellers are now blaming themselves, thinking they should stick to it. When to sell is always a question. We saw this in SFX, which is now Live Nation. At first, the price was very good, then the stratosphere, but if you wait too long, the value will drop. (Don’t forget, Sillerman sold SFX to Clear Channel. He got his money, and the music business has a history of integration. Who will own your rights in the future? Of course, people who have nothing to do with you, whether you own it or not. Interests are the same.) We have no frame of reference, no history, no classic rock singer has been dead for so long, and their audiences are gone, so we can correctly calculate the value of their work. Classic rock may be timeless, or it may decline rapidly when Generation X disappears. Again, classic rock is not just music, it represents an experimental era, when music is everything, when musicians move their pointers in their daily lives, culture and music go hand in hand. That’s not today, which is why today’s music has a shorter lifespan. Think of the paintings and sculptures of the Renaissance, they are eternal! Will that be classic rock?Just maybe, especially if there is enough melody
So it’s weird. Although Springsteen quoted this sentence today, the label has always been the enemy, it has not paid accurate royalties, the face is constantly changing, and you can never trust your label. Therefore, on the one hand you can get funds in advance, on the other hand you will lose control. Isn’t classic rock all about control?
how much money do you need?
Again, you don’t want to leave everything to the government. The government basically pays you to invest and give away some. This is one of the driving forces of the economy. Having said that, when you are really rich, how much can a person or a family buy?
So Springsteen’s children will inherit a lot of cash, but they won’t own any music. Still have cash? You can spend it all in one day. Music copyright has almost guaranteed returns, so more than 30 times. But what about stocks, other investments? They can fall or rise. Never forget that Steve Bing died with no money, less than 100,000. And he is not a fool.
Therefore, this is a once-in-a-lifetime opportunity. When prices go crazy, it’s hard to say no.
But again, valuations are made by people who specialize in money, not music.no Feel, Is mathematics. The number of available catalogs is limited. The key is to have critical mass, or is Mercuriadis pushing the entire copyright business off the cliff? Remember when the Internet appeared, Napster? Record companies have a lot of transactions with legacy behaviors, and they have to pay millions of dollars in advance for albums, and the returns for these albums are unlikely to reach the expected returns. Things happen in the future you can’t foresee. Just like Black Friday or 2008. You may lose money on all the stocks, but if you still own music assets, you will pay royalties.
On the surface, 30x seems to be out of control. Springsteen just couldn’t refuse. On the other hand, this is the death of a dream. The money is always there, but it is never prepaid. Damn it, Bruce wants to keep the fare low. Now that money is in front of you, it will affect credibility, and it is difficult to create art with the dollar sign. This is a business proposal. Music is a business, but it depends on the efforts of artists to survive. The value of music has grown to such a high level because of classic rock. This is why it is classic! But when Bruce Springsteen and Neil Young sold to this man, it broke your heart. You can understand, but still… Men are always the enemy. Companies are the scourge of America. Now Sony owns the work of street poet laureate Bruce Springsteen? That’s just sad.