I keep hearing the same two questions: Will this affect the way fans digest his music? (No, but expect to hear his hits in more perfume commercials.) And what might have been Dylan’s motivation for selling his crown jewels now? (Music catalogs are fetching all-time-high prices, he’s nearly 80 years old, and Joe Biden may significantly hike taxes on big U.S. asset sales when he becomes president.)
What hasn’t drawn as much attention is the motivation of the buyer, Universal Music Publishing Group (UMPG), which my sources indicate paid closer to $400 million than $300 million to get Dylan’s 600 songs. Obviously, Dylan’s catalog is one of the most evergreen collections of music to ever be committed to notation. As Universal boss Sir Lucian Grainge said in an internal email yesterday: “In an instant, we have forever transformed the legacy of this company.” He hinted that UMPG won the deal against stiff industry competition because of its historical pedigree: “That this opportunity came to us was no accident,” he wrote. “When you put songwriters first, when you achieve unparalleled value for the art they create, when your track record is clear and consistent then the best of the best come to you.”
Grainge’s choice of words here is very deliberate. The “clear and consistent track record” comment is an obvious slight against newer companies — like Hipgnosis Songs Fund and Primary Wave — which have recently been nibbling into Universal’s market share. These firms have quickly acquired triple-A publishing catalogs from the likes of Bob Marley, Whitney Houston, Stevie Nicks, and Mark Ronson, using institutional investor money to pay more than traditional music companies like Universal are willing to.
Universal’s Dylan acquisition, then, is a landmark statement from the world’s biggest music rights company: We’re not going to sit back and just let the greatest music in history be auctioned off to Wall Street under our nose.
Which raises the question: Who’s this statement for? To a degree, it’s for the current investors of Universal’s publicly-traded French parent Vivendi. But here’s the thing: Vivendi has confirmed Universal Music Group will be spun out for an IPO in 2022. In doing so, it’s deliberately seeded excitement amongst new would-be investors, who have seen music rights become one of the most reliable growth assets of the pandemic era.
The bear-case counterargument on Universal is that it has allowed cash-rich industry upstarts to reduce its commercial leverage; maybe, critics have said, Universal doesn’t have the fight or the funds to buy triple-A catalogs in the modern era. So — as its two-fingers to the financial naysayers — Universal went out and snatched up 600 Bob Dylan songs.
The Dylan buy is Universal putting a flag in the ground that reads, “We’re still Number One, and we’re staying that way.” The company wants to demonstrate its ability to survive, long-term, as king of the jungle — and, of course, to drive that future IPO price through the roof.
This is a trend amongst the major music companies, by the way — a public fightback against existential threats to their dominant position — that has really come to the fore during the pandemic. In October, Warner Music Group took the unusual step of raising $250 million in debt with the express intention of spending it on two acquisitions, at a combined cost of $338 million. My sources suggest that one of these deal, which took up the majority of the $338 million, saw Warner quietly acquire the publishing catalog of an all-time giant of music.
Warner’s game in 2020 is a distinct shift in strategy from what we saw from the company in December 2019, when it struck a deal to be the distribution and/or administration partner for music assets acquired by the third-party Tempo Music Investments, using $650 million of money raised from private equity giant Providence. The industry took this deal as a tacit admission from Warner that it was bowing out of the catalog acquisition game — leaving that realm to the new crop of well-funded big spenders.
Guess what changed between December 2019 and October 2020? Yes: Warner Music Group floated on the NASDAQ and, like Universal, will be keen to crumple any bearish suggestion that it’s willing to let market share slip through its fingers and into the jaws of Hipgnosis, Primary Wave et al.
One could argue that this trend began in earnest back in November 2018, when the parent of the third music major, Sony Corp, paid $2.3 billion (and then a further $288 million) to acquire the majority stake in EMI Music Publishing it didn’t already own.
Had Sony not dug deep to acquire EMP, the company and its 2 million copyrights — including hits by Carole King, Queen, Kanye West — would have inevitably been sold on the open market and, it’s entirely possible, ended up in the hands of a Wall Street-funded vehicle that, to paraphrase Sir Lucian Grainge, had no “track record” of “putting songwriters first.”
Interestingly, the trend of major music companies kicking back against existential threats can also be seen in other sectors. Last week, Sony Music and The Orchard bought Human Re-Sources from Q&A; Sony Music also acqui-hired Human Re-Sources’ founder, J.Erving, as executive vice president of creative development. The deal brings stars like Ant Clemons, a nominee for Best R&B Album at the 2021 Grammys, into the Sony family.
Like Warner and Universal, Sony can see the clear danger posed by firms that can successfully find and develop independent stars without a record company.
There are many players — and many trends — poised to weaken the three historic majors’ stranglehold on the blockbuster music business as the streaming era rolls on. But, as the $400 million Bob Dylan deal shows us, when those same majors choose to punch back against these threats, they punch back big.
Tim Ingham is the founder and publisher of Music Business Worldwide, which has serviced the global industry with news, analysis, and jobs since 2015. He writes a weekly column for Rolling Stone.