Paul Simon’s recent decision to sell his entire song catalog to Sony Music Publishing is the latest in what’s become a retirement trend among music superstars.
Fellow rockers Bob Dylan, Stevie Nicks and Neil Young have also sold all or parts of their catalogs in the past few months.
The deals are driven by a once in a lifetime confluence of events.
First and foremost, the rock gods are aging. And like all successful and sensible people of a certain age should, they are preparing their finances for the last stages of their lives. It’s time to think about how to ensure their wealth is preserved and passed on to their heirs.
Second, historically low interest rates make it possible for potential acquirers of music rights to borrow enough to fund deals. Such deals seem wise if you believe -- as many in the music industry do -- that there are lucrative deals to be had selling songs across entertainment platforms in the future.
“You’re talking about a low interest rate environment and you can achieve a 7% to 9% ... and then increase that through marketing and generate mid-teen returns,” Larry Mestel, CEO of Primary Wave Music, told CNBC.
Primary Wave was the majority investor in Stevie Nicks’ catalog. Other acquirers in the boomer-music boom include Universal Music Group and Hipgnosis, according to Reuters.
Also, no discussion of music-catalog investing is complete without a hat tip to the man whose innovations in finance rivaled his innovations in music: David Bowie, the visionary behind the Bowie Bond.
