Unexpected payday when EDM artist lands a song on a TV show
I’ve written before about my strong interest in purchasing streams of income produced by royalties. In the past couple years that I’ve been doing so, the value of song catalogs has skyrocketed.
Some of that increase is tied to a simple search for yield. When interest rates are near zero and have been for years, a somewhat predictable source of cash flow can look very attractive. Last year unleashed a high-profile wave of sales by songwriters. Bob Dylan sold his entire catalog for $300 million to Universal; Stevie Nicks sold hits like “Landslide” and “Edge of Seventeen” to Primary Wave for $100 million and somehow the Imagine Dragons got the same for its catalog from Concord Music Publishing.
Press play to hear a narrated version of this story, presented by AudioHopper.
The publicly traded Hipgnosis Song Fund (OTC: HPGSF) might be leading the single biggest acquisition spree. Over the last year and change, it’s spent almost a billion dollars scooping up catalogs from artists including Blondie, Rick James, Richie Sambora, Barry Manilow and Chrissie Hynde.
So obviously, some big money is at stake and it’s attracting savvy investors. But for me, at least a piece of what makes it more interesting than a typical investment is the sense of pride I get at the idea of others listening to songs I’ve tried to support. Often, I’m purchasing the catalog directly from the songwriter or performers. They get the instant cash, and I get the royalties over the specified term, which is often 10 years, but sometimes has no expiration.
Because I only will purchase works that I genuinely enjoy, when a catalog I’ve bought suddenly gets more Spotify plays than usual, it feels oddly validating. The same is kind of true, I guess, in ordinary stock investing. Tesla fanboys believe in the financial future of the car company, but it’s obvious some of their interest has to do with the sense that they’ve identified a trend as it’s waxing.
Another element that makes this form of investing fulfilling is the sense that there are real human beings behind it. Elon Musk is not going to come to your house to thank you for your expression of confidence in his creation. But I’ve managed to become at least acquainted with and maybe even friendly with some of the artists whose royalty streams I’ve purchased. Domingo Padilla, for example. He’s the hip-hop Producer behind a staggering number of near hits by great artists such as KRS-One, Masta Ace, Big Pun and others.
That allows me to get the inside scoop on some of my investments in a way I find just totally delightful. For example, the biggest hit in the hundreds of songs I got from Domingo’s catalog is Drake’s amazing “All Me.” I assumed Domingo had played some kind of role in engineering or producing, but I know from experience in evaluating these that this catalog would have sold for a lot more if he had legit points on a Drake record. Domingo explained to me that there’s a tiny sample on “All Me” from the KRS One song “The MC,” which Domingo did produce. So small that Drake probably could’ve gotten away with just using it, in the way that hip-hop artists have been borrowing from each other since the dawn of the art form. Instead, Domingo told me Drake right away credited KRS One, and was happy to do so because Drake wanted him and his co-writers to share in his success. So Domingo gets a taste of that, and now so do I. It’s a great origin story that makes me enjoy that song even more than I always have.
So this week something happened that I had never experienced. I have my first hit.
Last summer, I bought the entire Mux Mool catalog. My brothers-in-law are DJs in London, and my nephews are heavily into electronic music, so I’ve been trying to experiment more in that direction. I heard one of this guy’s best known songs, “Get Better John,” and loved it. The catalog was very affordable because of its low recent quarterly payouts, which had been in the $100-200 range.
Yesterday, I got a check for $3200. The Mux Mool song “SFW Porn” got picked up for a TV show. I don’t know Mux Mool personally (real name: Brian Lindgren), but I sure hope he has retained enough of his royalty streams that he too will benefit from this wonderful turn of events. (And if not, he should reach out to me, and I’ll send him a few bucks.)
But the point is, it’s so nice to think that some film producer or whoever is in charge of the music heard this dance song from 2010, liked it, and boom, value has been created by the highly talented Colorado music fellow 12 years after he wrote his song.
I don’t imagine this is going to be a huge money maker for me. If I had some magical ability to pick hits, my own songs probably would have performed better. (My best-played song has yet to hit 100,000 plays on Spotify.)
But the chance to support artists who need a lump sum of cash, as well as a company that’s enabling these artists to find willing buyers make this a tantalizing proposition for me. At the end of the day, I guess I’d rather net 5% from a company that sends most of my investment to the songwriters and producers who are enhancing my existence rather than T-bills or shares in Disney.