In recent years, you have probably seen articles recounting how Rock-n-Roll legends sold their back catalogues to major investment firms for astonishing figures. The surging trend of music catalogue sales was recently embraced by Canadian-born singer-songwriter Justin Bieber, who sold his rights to all the music he has released up until 2022 to music management company Hipgnosis for a whopping $200 million US. This transaction shocked the whole industry – it not only stands “among the biggest deals ever made for an artist under the age of 70,” but also marks the very first music catalogue sale of superstars in his generation. This blog will break down some legal aspects and effects of Bieber’s music catalogue sale – what exactly was sold, how Bieber’s music career may be affected, and what are some of the driving forces behind the boom in music catalogue sales that Bieber is now part of.
Legally, there are several rights attached to music works – publishing copyrights, performance rights, and rights to the recording of the song (i.e. master recordings), etc. When someone wants to reproduce the music in question for commercial purposes (e.g. syncing it into a film as the theme song or performing it at concerts), they will need to obtain permission from the right holders (or their agents). Depending on the forms of reproduction, the corresponding right holders are entitled to payments (i.e. royalties). In this case, Bieber co-owned his rights to his music with Universal Music Group and Universal Music Publishing Group (UMPG) and sold 100% of his share of his rights to Hipgnosis. Therefore, by purchasing Bieber’s entire music catalogue, Hipgnosis is now entitled to Bieber’s percentage of rights to all his music work and the corresponding royalties thereof.
Bieber’s loss of control and ownership over his old music probably has minimal impact on his career moving forward. It may motivate him to release new songs, for which he will still be entitled to royalties. It will only be a matter of time for an artist as young, renowned, and prolific as Bieber to build up another highly lucrative and sought-after music catalogue.
Additionally, Bieber might be disincentivized to go on tour – a high-cost and high-return business venture. He will no longer receive the royalties from performing most of his own songs, but royalty payments only take up a small component of the income earned in the context of stadium-level world tours for stars like Bieber. However, Bieber’s decision to sell his music catalogue might turn on the fact that he is unlikely to perform at such a high intensity anymore, due to his diagnosis of Ramsay Hunt syndrome, which led to the massive cancellation of the “Justice” world tour. On the flip side, Hipgnosis will surely leverage its resources and network to advertise Bieber’s music so that it can quickly profit from the catalogue. To benefit in the long run, Hipgnosis will unlikely allow Bieber’s music to be used in any manner that would materially damage his brand or artistic integrity. In effect, this would reinforce Bieber’s continuous and ubiquitous presence in the media and render him more opportunities to profit from means other than the music rights he has given up.
In the age of pandemic-induced nostalgic streaming, buying iconic music catalogues has become a low-risk and high-return investment. Most notable music legends who chose to sell their music catalogues (e.g. Bruce Springsteen) are veterans that are no longer active at the frontline of the industry – they would gladly take the upfront cash and let their work be managed by the resourceful investors of their choice and enjoy their retirement. For others, selling their music catalogue before 2021 serves tax-planning purposes by taking advantage of the lower capital gain tax rate before U.S. President Biden’s capital gains tax plan took effect. However, neither purpose serves Bieber’s situation. With his concerning health condition and income loss arising from the tour cancellation, Bieber might spend this $200 million US bridging his past and future as one of the biggest pop icons of our generation.