Photo Illustration by Kaushik Kalidindi, Okayplayer.
Why Are Rappers and Rap Producers Selling Their Catalogs?
Dr. Dre, Nelly, Future, Mannie Fresh, RZA, and countless others have sold their catalogs for high prices. But why?
Bruce Springsteen. Bob Dylan. Neil Young. Just about every week brings a new headline of a musician selling their catalog of songs for huge money. Famous artists are auctioning off some or all the rights to their words and music, forfeiting a lifetime (plus an additional 70 years) of smaller payments in return for one big payday. Although exact figures can be hard to come by, many of the deals have been reported to be for tens or even hundreds of millions of dollars.
Even members of comparatively lesser-known groups like America and Bad Company have also gotten in on the action in recent years. The trend shows no signs of stopping, with Queen’s catalog rumored to be for sale for upwards of a billion (yes, billion with a “b”) dollars.
But most of the headline-making big-money deals have happened with aging rockers. Does hip-hop fit into this equation? And should it?
There have been a number of hip-hop catalog sales already by both rappers and producers. Among the biggest names are Dr. Dre, Nelly, Future, Metro Boomin, RZA, Logic, Marley Marl, Murda Beatz, Timbaland, Mannie Fresh, and Pusha T.
However, hip-hop’s slice of the overall pie is, for the moment, pretty small. To take one example, Hipgnosis, the company that sparked the current craze for catalog sales with its founding in 2018, has only one percent of the value of its portfolio in hip-hop.
What is a music catalog and how is hip-hop fairing in all of this?
Catalog (songs that are 18 months or older) is already the vast majority of music consumed in the United States, and the percentage is rising. So, it’s understandable why many of the players involved in this phenomenon want and own songs that have proven their value over decades. The companies in the song catalog business often use terms like “legendary” and “iconic” to describe the tracks they own. More to the point, they want to promise their investors consistent returns, regardless of the state of the larger economy. This results in those companies mostly buying songs from artists who had their heyday in the ‘60s and ‘70s, primarily singer/songwriters and rock bands. These are songs with a long track record, whose earnings have risen (when they were new), fallen (when interest waned), and have long since evened out.
Some veteran hip-hop figures exist in this mold, hence the inclusion of the likes of Dre, RZA, and Mannie Fresh in the list of sellers.
In 2020, RZA sold a 50 percent stake in his catalog to Hipgnosis. The catalog is composed of 814 songs, including many from the Wu-Tang Clan.Photo by Matt Kent/Redferns via Getty Images.
But there’s room for younger artists to get in on the trend as well. A subset of the market is devoted to songs that are called “shallow catalog” or “new evergreens”: hits that are old but not that old, usually between 3-10 years. This side of things tends to skew more towards hip-hop and R&B.
The shallow catalog market exists almost entirely because of one factor — streaming. In the age of physical record sales, money only changed hands once, when a product was purchased. Now, with streaming services, every listen brings a payment. This has brought new money and new optimism to the music business.
“Streaming has helped the industry grow back to where it was at one point,” said Rell Lafargue, the president of Reservoir Media, a company that has acquired the catalogs of Mannie and Scott Storch (the latter via the acquisition of the catalog of Lafargue’s old employer, TVT Records).
“I mean, there are some territories that have 300 million people, like the Middle East and North Africa, that aren’t really paying for music yet. And there's a billion people in China, there's all of India. Not a lot of revenue is coming from these massive populations. Since everyone has a phone and a lot of those people also have credit cards, we believe that streaming is going to continue to grow,” he added.
Hip-hop plays into this ecosystem in one more way you might not expect: in tracks we hear every day. An increasing number of new rap songs feature interpolations — re-sung or re-played elements from older material. And behind many of those interpolations are these same catalog deals.
Natalia Nataskin, chief content officer for one of the big companies in the song catalog market, Primary Wave, said that she has a whole team devoted to speaking with A&R people, managers, and artists about interpolating songs her company owns into current tracks. Her team has pulled off a number of successes, having reworked old tunes owned by Primary Wave into tracks by Doja Cat, Yung Gravy, and even Latto’s smash hit “Big Energy.”
So, that’s hip-hop’s role in this whole thing. But how did we get here in the first place?
How the 2007-2008 financial crisis gave way to the catalog sales trend of today
Catalog sales are not new. Major deals for song copyrights have a long history. Just look at Michael Jackson buying nearly all of the Beatles’ catalog back in 1985, to take one very famous example. But sales used to be a sign that a songwriter had fallen on hard times.
“It [was] like a death-divorce-tax scenario,” said Alaister Moughan, an expert in music valuation who has been brought on to help determine the dollar amount in many of these deals (including Murda Beatz and television composer James Levine).
Now, things are drastically different and the reasons, unsurprisingly, are mostly financial.
The trend of catalog sales takes place against a backdrop of historically low interest rates beginning around the financial crisis of 2007-2008. This made the cost of borrowing money for many businesses and funds effectively zero, encouraging riskier bets by investors.
“It's impossible to overstate just how much our society as a whole, and music in specific, was reshaped by the fact that capital was basically free for like 15 years,” Sam Backer, a postdoctoral fellow at the Center for Digital Humanities at Johns Hopkins University and one of the hosts of the music business podcast Money 4 Nothing, said. “You could get a lot of money into assets without ever having to explain exactly how they were going to make that money back, and all kinds of weird stuff happened.”
“Money had already gone through a lot of truly ridiculous tech companies before they were like, ‘I guess we'll try music rights,’” Backer added.
In 2018, a decade or so into this free-money environment, song rights began being part of that mass of weird stuff.
Merck Mercuriadis has acquired catalogs from RZA, Timbaland, and countless other artists through Hipgnosis, a music IP investment and song management company.Photo by Matt Winkelmeyer/ Getty Images for SXSW.
In rapid succession, a number of companies, both old and new, began throwing around big money to buy song catalogs. The trend was really set into motion by Hipgnosis, founded by Merck Mercuriadis, a music business veteran who’s managed giants like Beyoncé and Guns N’ Roses. Hipgnosis made a number of splashy, high-profile acquisitions — The-Dream, frequent Justin Bieber writer Pooh Bear — spending tens of millions of dollars and garnering press attention. Soon after, a number of other companies followed, and things have continued apace.
Most of the companies making these deals own significantly fewer songs than traditional music publishers (which own and/or administer millions of them). These smaller companies, explained Primary Wave’s Nataskin, plan to increase the value of the songs they own with what she called, “a little bit of marketing muscle.”
“[Having] some brand partnerships around the music; a documentary film that has 20, 30 songs in it — all of those things add value to the catalog,” she said. “The value of the catalog gets enhanced because more people are seeing the content [and] more people are streaming the music because it's visible.”
For the songwriters, having added resources behind their songs can be enticing, even if there’s no immediate financial upside.
For Mannie Fresh, that was a big plus when making his deal. The Big Tymer said that Reservoir promised “to keep growing my music and expose [it] to younger audiences so it can live a longer life,” which led to him selling his catalog to the independent music company in April of this year.
All of these factors — the overall financial picture, the rise of streaming, the idea of promoting old songs with new marketing strategies — have combined into one single idea that’s not exactly new, but is newly popular. Songs are a financial asset; one that can be bought and sold like any other.
“I think for the first time, investors and music creators are seeing music and copyright as a tangible asset and a growth asset, like oil or minerals or natural resources,” Rodney Murphy, president of A&R and acquisitions at Kilometre Music Group, said. “They are a commodity that have value.”
So, we know why buyers (which include both the small companies mentioned above as well as publishers tied to the major record labels, who hopped into this market in order to not get left behind) are interested in owning songs. But why are people selling?
The four reasons artists are selling their catalogs
There are four main reasons. First, is COVID.
“I think that the pandemic had a lot to do with a stream of catalog sales,” Primary Wave’s Nataskin said. She pointed out that the world shutting down in 2020 killed touring for what was initially an unforeseeable amount of time, which led musicians to explore other options for revenue.
Second, there are now more buyers than ever before, which drove prices up. This is something the songwriters themselves noticed, with Mannie Fresh saying: “The environment seems on the high end for these types of deals.”
n 2023, Mannie Fresh sold his entire catalog to Reservoir Media. Reservoir has spent over $695 million on catalog acquisitions since its launch in 2007.Photo by Erica Goldring/Getty Images.
Third, for older artists who are thinking about their estate, it’s often easier to leave your family a chunk of money rather than dozens or hundreds of copyrights that they may have no interest in figuring out how to administer.
And fourth, after death inevitably comes taxes.
A 2006 law called the Songwriters Capital Gains Tax Equity Act made it so that money gotten from catalog sales is not taxed as income, but instead at a lower capital gains rate. Royalties, by contrast, are not subject to this rate. By pretty much all accounts, this lower tax rate was a driving factor in sales. Murphy, whose Kilometre has ownership in big streaming-era hits by The Weeknd, Drake and many more, as well as Murda Beatz’s catalog, broke it down.
“You can get your money quarterly or bi-annually over 15 years and get taxed as income,” he said. “Or you can say, ‘Hey, here’s 15 years worth of earnings [at once]. Get a lump sum now, receive a lower tax hit, and invest that money and have experiences that you otherwise wouldn’t have.’”
For some rappers, the reason for selling is even simpler. Iggy Azalea explained on social media that her decision to auction off her catalog to Domain Capital came down to two factors: she liked the buyers, and she wanted the money.
“I sold a portion of my catalog to who I wanted, for an amount that means I don’t have to work another day in my life,” she said.
Cash is important for more reasons than just the ability to live a life of leisure, though. According to Kilometre’s Murphy, for people in hip-hop having a large amount of up-front money can be essential because just being a star is expensive.
“A lot of these young artists, especially in the hip-hop, R&B, pop space, it's an expensive lifestyle,” Murphy said. “It’s upkeep. In the world of Instagram and socials, it’s not cheap.”
“Having cash on hand can allow young artists to diversify,” he added. “They can start other businesses or make investments.”
There is another factor in this situation as well. Rappers and producers are sometimes selling only part of their catalog. Chuck D, for example, is holding on to about a quarter of his publishing, after selling the rest to his longtime publisher Reach Music. This allows him to retain some ownership, while Reach now has added incentive to work his songs even harder. The Public Enemy frontman said in a statement that “doing this deal was the right timing for a forward and logical evolution of our business together in an ever-changing industry.”
RZA’s deal is similar. He sold 50% of his copyrights to Hipgnosis, with his statement about the deal using language that mirrored Chuck D’s. “I’m honored to partner up with Merck and the Hipgnosis team to usher my songs into an exciting future,” RZA said in the statement.
This may all seem like a win-win. The companies and their investors get assets that they think will earn them major returns over time, and the writers get cash upfront. However, there is always a risk that the writer will live to regret selling.
“It’s in the interest of catalog buyers to try and find ways to bring new value to catalogs,” Moughan said. “If there’s a big success (say a TikTok strategy or a big television or movie sync placement), the artist or producer may feel like they have missed out.”
He offers a hypothetical example — if Miguel or his co-writer/producer Happy Perez had sold their rights to “Sure Thing” before the 2011 song’s recent viral moment. To avoid these exact kinds of regrets, though, Moughan explained that “upside sharing provisions” are sometimes included in deals specifically to cut writers in, should one of these scenarios occur.
How might catalog selling affect the future of music?
There’s one more important angle to examine in the whole catalog sales situation: what’s the effect on listeners?
As mentioned, consumption of catalog music now considerably outpaces new. With investment firms like BlackRock, Barometer Capital Management, KKR, and more providing the financing for these catalog sales, it’s easy to envision that situation continuing.
Moughan admitted as much — that the cultural footprint for new music may lessen as more and more dollars are spent on increasing the value of older songs.
“The most obvious parallel is the film industry. There has been this real focus on if you own IP, you have numbers to base a value of something on,” he said. “So, rather than take a risk to create an entirely new piece of IP, it's so much quote-unquote ‘safer’ financially just to create new IP based off old IP. And there is that idea that, does that take away from creating new IP?”
Sam Backer, while acknowledging the danger, had a slightly more optimistic take. Noting how popular music is often full of sudden, massive, and seemingly inexplicable changes, he said there’s no reason to believe that will stop now.
“There have been structures of the music industry that were able to centralize power in certain ways previously,” he said. “They last for a while, and then they eventually change again.”
Shawn Setaro is a writer, reporter, and podcaster. He is the author of the book Dummy Boy: Tekashi 6ix9ine and the Nine Trey Gangsta Bloods (Kingston Imperial), and he reported and wrote the podcasts Infamous and Complex Subject: Pop Smoke. He is the former Editor-in-Chief of Genius and his byline has appeared in Complex, Forbes, The Atlantic, Rolling Stone, GQ, and The Sondheim Review, among others. He can be found on Twitter @SameOldShawn.
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