Bieber, at the age of 28, sold his rights to all music he released before 2022 for $200 million. Why?
Justin Bieber is the latest in a growing list of musicians who have sold the rights to their music.
That decision is usually made by more seasoned artists such as Bruce Springsteen, who reportedly received $500m (£406m) for the sale of his life’s work in 2021, or Stevie Nicks, who sold a part of its edition for 100 million dollars in 2020. .
Bieber, at the age of 28, sold his rights to all music he released before 2022 for $200 million. Merck Mercuriadis, founder and CEO of Hipgnosis Song Management, which purchased the rights, said, “This acquisition ranks among the largest deals ever for an artist under 70.”
What does it mean when an artist sells the rights to their songs?
The songs are protected by what is called copyright. This is a legal right that creators can sell or license in order to profit from their music.
Artists with deals cede some or most of those rights to publishers and record labels. In fact, songs have more than one right attached to them.
There is a right in the composition which may belong to a publisher, a right in the recording which may belong to the record company and there are also rights in the performance of a song. All of this means that when a song is purchased or performed (for example played on the radio, in a film or on television), the money is shared among all those who have an interest in the music rights.
Justin Bieber has a recording contract with Universal Music Group and a publishing contract with Universal Music Publishing Group (UMPG). He therefore owned a percentage of his rights.
He shares these rights with his publisher, who owns a percentage of the copyright in his composition, and his record company, which owns a share of his rights attached to the recording of the songs, sometimes called master recordings.
Bieber has sold 100% of his share of his copyright and publishing performance rights, master recordings and neighboring rights (the performance in the recording) for his entire back catalog – which includes more than 290 securities – to the investment company Hipgnosis Songs Capital. Hipgnosis buys music catalogs and then manages the rights to earn income from royalty payments.
This means that when his songs are purchased or performed, the share of revenue that previously would have been a royalty payment to Bieber now goes to Hipgnosis. The company hopes that over time, these royalties will exceed the initial payment it made to Bieber and that it will therefore benefit from this investment.
The copyright in the musical composition lasts for 70 years after the death of the creator, so the copyright holder can continue to collect royalties for a long time. However, the songs must be used to earn income, so it’s a risk.
When artists tour, they may earn money from ticket and merchandise sales, but they also receive a royalty when their music is played. Sounds good, but the cost of touring is huge and continues to rise, so it doesn’t always turn a profit.
Bieber no longer owns his back catalog, so he will not receive this royalty when performing these songs. This is unlikely to affect his motivations for touring as it represents a smaller portion of income.
Why Artists Sell Their Music Rights
So why would Bieber and other artists want to sell their rights, when they could keep that income for themselves?
For artists thinking about retirement, it’s a way to enjoy the fruits of their labor and build a retirement. It could be that due to the pandemic, artists have sold their catalog to make up for lost revenue while venues and other sources of revenue have been lost.
Copyright is an asset that can be bequeathed in a will. Thus, during the 70 years during which the copyright survives the creator, its royalties can accrue to its heirs. However, copyright has to be managed and so it may be more attractive for some to cash in and leave the administration to the buyer.
Bieber can still earn royalties on the music he creates as of January 2022, so maybe he has plans to release new music and wanted to supplement his current income in the meantime. The singer had to take time off and postpone tour dates due to difficulties with Ramsay Hunt syndrome, a rare virus which in his case caused facial paralysis, which may have contributed to his decision.
Is there a risk when artists sell their music rights?
The risk for Bieber is that in the long run, he could have made more money retaining his rights and receiving royalties than he did with the lump sum payment. To make more money from music, Bieber will now have to release new songs.
In general, it is essential that artists maintain their rights so that they can continue to benefit from their music over time. The music industry has pushed back against similar deals where catalogs are put together by investment firms buying up copyrights from creators.
While it may seem like a great deal to receive cash, playing the long game can often be more advantageous for performers. – The Conversation|Rappler.com
Hayleigh Bosher is Senior Lecturer in Intellectual Property Law, Brunel University London.
This article originally appeared in The Conversation.