Dire Straits called it quits as a band in 1995. But in 2019, the back-catalog of the British rock band is reeling in more money than ever — thanks to an investment scheme that may help take the oft-in-turmoil music industry into a smooth financial future.
The band’s longtime manager, Ed Bicknell, took a gamble last year by selling his share of Dire Straits’ royalties through Royalty Exchange, an online marketplace that lets investors buy chunks of music royalties. Royalty Exchange’s premise is similar to the Bowie bonds of the Nineties, which netted David Bowie $55 million, but it operates on a much larger scale: Its eBay-like setup lets investors and rights-sellers size one another up, and facilitates auction-style bids.
In the last 12 months, Bicknell’s share of Dire Straits’ back catalog royalties — which covers a slice of the profits from all six studio albums, including the runaway hit Brothers in Arms, as well as solo releases from band members John Illsley and Mark Knopfler — has earned about $338,000. “I hadn’t ever thought this would be possible,” Bicknell muses, adding that it’s “very unusual” for artist managers to have a post-term commission in perpetuity, like the one he does, in the first place, so he didn’t have any prior cases to look at when going into the deal.
Royalty Exchange has brokered close to $70 million worth of transactions so far, making deals for songs recorded by artists from Barry White to Coolio.The company determines the starting value of catalogs by tagging price values to metrics like a band’s income track record and the number of awards it has won; it also works with young artists as well as established acts, seeing itself as a platform through which music creators can “liquidate” their product into crucial funds and cash-flush investors can put their money toward a cause they genuinely support. “People love music. Our [mission] is to move that into something that’s much more structured in a way that the assets can be sold or transferred easily,” says CEO Matthew Smith.
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Smith says the demand from investors to get in on the Dire Straits catalog was “substantial” and there were more investors than they could accommodate. Though he wasn’t a part of the deal himself, Dire Straits’ John Illsley says he believes “there is a marketplace for future royalty earnings” and that he sees “quite a few deals” similar to Bicknell’s on the horizon — especially as artists realize how many opportunities they have to make money outside of simply putting out more music.