I don’t really understand why this guy’s articles are so popular here. He comes up with some utterly ridiculous statements. And he - deliberately, I think - elides key things to make his point. If that’s not deliberate then he doesn’t have a basic understanding of the industries he claims know about - and write about.
His point about the Sony/Jackson song catalogue deal is a perfect example. He deliberately conflates several different things.
1. Buying an existing catalogue which generates predictable revenue is very different to taking a risky bet on an unknown artist. Music rights are traded like an asset class these days, and there are simple revenue multiples plus some other factors used to determine value. $1.2 billion for one of the most successful collections of songs in history is a good deal.
2. Investing in songs is not the same as investing in an artist - or even investing in recordings. A song pays whenever it is used. If someone records a version of a song written by Michael Jackson then whoever owns the song gets paid quite separate to whoever gets paid for the recording. If Thriller is played on the radio pretty much anywhere in the world the owner of the song gets paid. The owner of the recording only sometimes gets paid.
3. He says “no label would spend a fraction” of $1.2 billion “launching new artists”. And yet in 2022 Warner Music Group spent almost exactly that amount on A&R costs developing and launching new artists. In the same year UMG spent nearly $4 billion.
“Music may be in the worse state of them all. Just consider Sony’s huge move a few days ago—investing in Michael Jackson’s song catalog at a valuation of $1.2 billion. No label would invest even a fraction of that amount in launching new artists.”
His point about the Sony/Jackson song catalogue deal is a perfect example. He deliberately conflates several different things.
1. Buying an existing catalogue which generates predictable revenue is very different to taking a risky bet on an unknown artist. Music rights are traded like an asset class these days, and there are simple revenue multiples plus some other factors used to determine value. $1.2 billion for one of the most successful collections of songs in history is a good deal.
2. Investing in songs is not the same as investing in an artist - or even investing in recordings. A song pays whenever it is used. If someone records a version of a song written by Michael Jackson then whoever owns the song gets paid quite separate to whoever gets paid for the recording. If Thriller is played on the radio pretty much anywhere in the world the owner of the song gets paid. The owner of the recording only sometimes gets paid.
3. He says “no label would spend a fraction” of $1.2 billion “launching new artists”. And yet in 2022 Warner Music Group spent almost exactly that amount on A&R costs developing and launching new artists. In the same year UMG spent nearly $4 billion.
“Music may be in the worse state of them all. Just consider Sony’s huge move a few days ago—investing in Michael Jackson’s song catalog at a valuation of $1.2 billion. No label would invest even a fraction of that amount in launching new artists.”