Music catalogues can be valuable assets for musicians and record labels alike. They can generate substantial revenue through royalties and licensing arrangements, as well as serve as collateral for loans and other financial transactions.
A music catalogue is a collection of music recordings that are owned by a musician/artiste, record label or a music publishing company. It includes all of an artiste's songs which have been released by the songwriter/artist, or label, along with any related intellectual property, such as lyrics and melodies.1
The sale of part or all of a music catalogue can be a significant source of income, particularly for an artiste who has built a substantial body of work over the years. The income generated from such a sale, can be used to invest in other business ventures or to fund their retirement and other personal expenses. Additionally, if the artiste's music catalogue has not generated much income, selling the catalogue can provide much needed cash infusion.
The most important step in building wealth through the sale of a music catalogue is to create a high-quality body of work. This means creating music that is commercially viable and appealing to a broad audience, by understanding market trends and music in demand; and therefore, making the music catalogue more attractive to a prospective buyer.
Whilst the sale of a valuable music catalogue should provide substantial financial benefit for the artiste, any sale must be considered a major decision since it leads to the forfeiture of one's copyright benefits (derivable from streaming numbers, downloads rate, and future projections), in exchange for cash.
In many ways, the sale of a music catalogue is similar to a barter transaction, which serves as a fruit of the owner's intellectual and creative labour in exchange for monetary benefits. After the exchange, proceeds from streams and downloads of the songs listed in the catalogues will become the buyer's earnings. The legal effect of selling a music catalogue is that the songwriter will relinquish one hundred percent of the copyright interest, which he or she enjoys under the Nigerian Copyright Act,2 future earnings and ownership rights in each song including publisher's share and any applicable performance rights or royalties.
Although the buyer enjoys the rights and benefits of such a sale, buying a music catalogue is not without risk. The value of a music catalogue depends on the longevity of the music and as such, there is no guarantee that the music will continue to generate income in the future. Additionally, the buyer will be liable for any potential copyright infringement claims, in the event that the music infringes on the rights of other artists or copyright holders.
In Nigeria, the sale of music catalogues and any rights vested in the same, is governed by the Copyright Act, 2022 (the "Act"), which grants the owner of a copyrighted work the exclusive right to reproduce, publish, perform, adapt, distribute to the public, for commercial purposes, through sale or other transfer of ownership, transfer, or license the copyright to another party3 means that an artiste who owns the rights to his or her songs can legally sell his or her music catalogue to a music publisher, record label, or investor, and transfer ownership of copyrights to the buyer either by assignment or a license agreement. As a result, the artiste will have the right to the proceeds of such sale under the Act. 4
Unfortunately, many Nigerian artistes are not in a position to benefit comprehensively from their creative talents and to exploit what could have been a valuable song catalogue. This is because most Nigerian artistes when signing a contract with a record label, will relinquish most if not all of the intellectual property rights associated with their songs. In some instances, the record label may also acquire exclusive rights over the merchandise or stage name(s) of the artiste. Consequently, the ownership of music catalogues of most artistes signed to these labels, are in fact, vested in the labels who have the right to sell the catalogues.
In the foreign entertainment sphere, the sale of music catalogues is common practice. Recently, world-renowned American entertainer Justin Timberlake sold his music catalogue for US$100 million to a fund backed by Blackstone, a private equity firm5 and Justin Bieber sold his entire music catalogue to a music rights investment company, Hipgnosis for US$200 million.6 Other renowned foreign artists that have sold part of their music catalogues include Taylor Swift, Shakira, Bob Dylan, Fleetwood Mac, Neil Young and John Lennon, among others.
A music catalogue can be a valuable asset by which artistes and songwriters can generate stable income and secure their financial futures. They are advised to seek legal, financial and tax counsel in all negotiations that concern the assignment, transfer, licence, or sale of their creative works to mitigate the risk of negative exploitation and to extract maximum benefit.
Footnotes
1. "What is a music catalogue? What has it to do with royalties?," ANote Music Press, August 31, 2021
2. The Copyright Act, 2022
3. Section 9 of the Copyright Act, 2022
4. Section 17 of the Copyrights Act, 2022
5. "Justin Timberlake Sells his entire music catalog," by Jennifer Korn, CNN Business, May 26
6. "Justin Bieber sells the rights to his entire catalog for over $200 million,"by Megan Lim, Justine Kenin, Ari Shapiro, National Public Radio, January 25, 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
