MBW Reacts is a series of short comment pieces from the MBW team. They are our ‘quick take’ reactions – through a music biz lens – to major entertainment news stories.
Millions of young people are listening to Kate Bush’s Running Up That Hill for the first time.
They may have pored over the lyrics. They may have checked Wiki, and learned that it was 100% written, and produced, by Kate Bush. They may have done a TikTok.
But I’d wager they probably haven’t marvelled as much as I have over what, from my tower of music biz geekery, is the most interesting bit of information about the track on Spotify.
“(P) The copyright in this sound recording is owned by Noble And Brite.”
Yes. Kate Bush owns the entire recording copyright to Running Up That Hill, as well as the Hounds Of Love album, and the rest of her biggest hits.
Those hits are distributed by Warner Music Group. But they are owned by Kate Bush.
They’re not even credited as being licensed to anyone.
An educated guess, then: Kate Bush will be making the majority – possibly even as much as 80%-plus, if she’s on a basic distribution deal – of the recorded music royalties generated by her masters right now.
Last week, Running Up That Hill did 57 million chart-eligible global streams on Spotify alone.
That would, at rough industry estimates, translate to over $200,000 in recorded music royalties from one platform, on one format (streaming), in one week.
A million music biz questions rush into view. For example, through the lens of the music biz catalog acquisition craze:
- Would Kate Bush have considered selling her recordings before Stranger Things propelled Running Up That Hill to the No.1 streaming track globally?
- Was she in the process of having those kind of conversations before a Netflix music supervisor and some must-see-TV threw all the numbers in such a prospective deal out the window?
- How much more is Kate Bush’s recorded catalog worth now she’s (okay, temporarily) Bigger Than Bad Bunny?
It’s also interesting to look at this via one of 2013’s biggest music industry stories, when Warner Music Group acquired Parlophone Label Group for GBP £487 million.
When Warner completed its PLG buyout, it announced: “PLG’s artist roster and catalog of recordings includes, among many others… David Guetta, Pablo Alborán, M. Pokora, Raphael, Mariza, David Bowie, Radiohead, Tina Turner, Iron Maiden, Pink Floyd, Duran Duran, Jethro Tull, Blur, Kate Bush, Daft Punk, Edith Piaf, Itzhak Perlman and Maria Callas.”
I’ve bolded up a few names there. Guess why?
- The master recording ownership rights to David Guetta’s catalog reverted to the artist over the past decade. We know this because Guetta sold his masters ‘back’ to Warner Music Group for over $100 million last year;
- The underlying master recording ownership rights to (most of) David Bowie’s catalog have long been owned by the artist and his estate. This is well known. Exemplifying the fact, the Bowie estate last year announced a career-spanning distribution deal with Warner Music Group for his masters. WMG also acquired Bowie’s song rights;
- Pink Floyd’s underlying recorded music rights are the topic of fevered music industry speculation right now. The latest that MBW hears: Floyd’s career-spanning recorded music rights, bundled with their neighbouring rights plus name & likeness rights, are being chased for acquisition by the three major music companies (Universal, Sony, Warner) plus BMG. One well-informed source told us this week that Floyd will now look to drop one of this group of four from an extremely competitive bidding process. Another well-informed figure told us it’s entirely possible that Floyd will command a USD $600 million deal by the time the auction is through;
- And then, there’s Kate Bush. Who, as we’ve established, owns her own recording rights, via Noble & Brite Ltd – a company in which she owns 100%, and which, according to UK Companies House, had GBP £2.37 million in cash on its balance sheet at the close of May 2021. We expect that figure to grow to a rather larger sum following the star’s chart-topping success this summer.
These Warner-associated artists by far aren’t the only catalog megastars sitting on an owned recordings portfolio worth mind-blowing sums of money in 2022.
May we once again point you to Queen, who, it’s understood, own their recordings catalog worldwide outside of North America (where it’s owned by Disney Music Group / Hollywood Records) via Queen Productions Ltd.
Queen license their recordings to Universal Music Group for most of the world, but the band (and Freddie Mercury’s estate) own the underlying copyrights.
If Queen was ever to sell those underlying copyrights, MBW estimated last year, especially if they included publishing rights too (currently owned by the band but admin’d by Sony Music Publishing) we could be looking at music’s first billion dollar-plus, single-artist catalog acquisition story.
It’s not just ‘catalog’ artists that this narrative – of artists independently owning their underlying recordings copyrights – affects, either.
Drake recently inked a deal with Universal Music Group that was reportedly in the region of $400 million. He was famously signed for many years to a complicated combination of Young Money, Cash Money and UMG/Republic Records.
But Drake’s more recent material, including last year’s Certified Lover Boy, carries this credit on streaming services: “OVO, under exclusive license to Republic Records.”
OVO is Drake’s own record company.
And it’s here where things start getting more complicated: We have no indication of how long Drake’s owned recordings are licensed to Republic, or what the revenue split is in that agreement.
All we can be sure of is that some day in the future, Drake – or Drake’s estate – will recapture ownership of the rights to these OVO records.
It’s a similar situation for Kate Bush’s current chart sparring partner, Harry Styles, whose hit solo recordings are owned by: “Erskine Records Limited, under exclusive license to Columbia Records.”
Again, we don’t know how long this license lasts, nor what percentage Harry gets versus Columbia. But we do know that, eventually, one day, Erskine Records Ltd will get those rights back.
(Erskine Records Ltd, according to UK Companies House, was sitting on GBP £12.08 million in cash at the close of March this year. Harry Styles; no fool.)
It’s the same story for Adele‘s record-breaking 30 album: “Melted Stone under exclusive license to Columbia Records.”
(The rights to Adele’s earlier recordings are owned by XL/Beggars worldwide. Adele’s Melted Stone Ltd, by the way, had GBP £15.6 million in cash on its balance sheet at the close of 2020, its last published accounts. Adele; no fool.)
Three more examples of huge modern superstars whose recordings copyright credits on streaming services don’t even mention ‘licensed by”:
- The Weeknd (owned by the artist’s XO Inc., but “marketed by Republic Records”);
- Bad Bunny (owned by the artist’s Rimas Entertainment, distributed by Sony’s The Orchard);
- Taylor Swift (whose most recent recordings – including those re-recordings – are famously owned by the artist, with a partnership in place with Republic Records).
Is there a point to all of this? Too many!
For one thing, experts who thought the catalog acquisition boom would die down following all those major publishing sale deals (Bob Dylan, David Bowie, Paul Simon), may want to brace themselves for a rights acquisitions market where classic master recordings (hello Kate Bush! Pink Floyd! Aerosmith!) start becoming more readily available for purchase at eye-watering prices.
Don’t forget that no lesser idols than Bruce Springsteen and Bob Dylan have both sold their recordings catalogs (having also sold their song catalogs) for nine-figure sums in the past 18 months.
Now Pink Floyd are getting in on the recording rights-sale game… at over half a billion dollars.
If the current macro-economic climate allows, you can expect to see more of these massive-money recordings deals hitting MBW’s headlines.
One other thought this puts in my head is the major record companies, and their business models.
The bearish view there is they’re being chomped at both ends: Classic recordings by the likes of Kate Bush and David Bowie are falling back into the hands of the artists / their estates; meanwhile, modern frontline superstars are using their leverage to cement long-term ownership of underlying rights for themselves.
The bullish view: The majors are hitting record profits via a combination of owned, licensed, and distributed content. There’s a vast array of deal types operating across those three buckets, with a vast array of margin percentages at play too. Yet if the majors are ending up owning less music in perpetuity, it doesn’t seem to be dissolving their bottom lines: May we remind you that UMG has pledged to its investors that it will hit a mid-20-percent EBITDA margin (and pay out a 50%-of-net-profit dividend to shareholders) over the next few years.
It’s undoubtedly getting harder for the majors to own successful artists’ underlying rights long-term.
But their focus is increasingly shifting to maximizing performance and profits during the period under which they’re getting a higher-margin on rights in these deals. (For example, during the period of a long-term licensing agreement with a pop star like Harry Styles.)
One final perspective on all of this.
Just as we can argue that the majors are getting nibbled at both ends by these trends, then it must also be true that anti-competitive accusations of the three major music companies “owning everything” are also becoming less true.
The UK’s Competition and Markets Authority (CMA) is currently running a market study on the entire recorded music ecosystem to see if there are any abuses of power, and, especially, if the major music companies are unjustly controlling popular music.
That’s a fair thesis for an investigation.
But how much unjust control can the majors really have, when the story of 2022’s pop industry is a FAANG tech giant (Netflix) air-rocketing a song owned by an independent, copyright-owning artist (Kate Bush) to the global streaming No.1?
Whether you’re a long-term investor or anti-competitive watchdog, a proper understanding of the major record companies – and the level of ownership they have over the biggest records of all time – can only be reached by digging around under the hood of these businesses.
When you do so, quite often, you will find that the historical tale of superstar artists (new and ‘old’) being owned by (and indentured to) major record companies is fast becoming a nonsensical story in 2022.
“These superstar artists, with leverage coming out of their ears, are running independent businesses that hold tens of millions of dollars in cash.”
These superstar artists, with leverage coming out of their ears, are running independent businesses that hold tens of millions of dollars in cash.
They’re owning their underlying rights. And eventually, they’re selling their underlying rights too.
Increasingly, it’s the major record companies who are having to prove their worth and global value-add to successful artists, not the other way around.
That’s how the balance of power should have looked back in 1985, when Kate Bush first had a Top 5 hit with Running Up That Hill.
How satisfying it must be for her in 2022, as she soars to No.1 all over the globe, to know that she not only wrote, performed, and produced this evergreen classic – but that, today, it’s all hers, and no-one can take it from her.Music Business Worldwide