There Are Fewer Catalog Hit Deals in 2024. Why?

Insights There Are Fewer Catalog Hit Deals in 2024. Why? Celeste Moy · June 25, 2024

Rimon Partner Celeste Moy discusses the reasons behind the decline in catalog hit deals in 2024. Her piece delves into the factors influencing this trend and provides insights into the current music industry landscape.

What do songwriter/artists Bob Dylan, Loretta Lynn, Bruce Springsteen, Kool and the Gang, and original “Village People” member Victor Willis all have in common? During their lifetimes, these songwriters all successfully served notice of termination to transferees of their copyright interests in their musical compositions and reclaimed ownership of their copyrights.

The list of successful award-winning songwriters also includes Berry Gordy, Smokey Robinson, Sylvia Moy, Holland-Dozier-Holland, and William “Mickey” Stevenson, and the late Prince Rogers Nelson (aka Prince), who, after an infamous and legendary 18-year rights battle, reclaimed his music catalog from Warner Brothers beginning with his debut album released in 1978.

The U.S. Copyright Act permits authors and/or their heirs, under certain circumstances, to terminate the exclusive or nonexclusive grant of a transfer or license of an author’s copyright in a work or of any right under a copyright. For songwriters and recording artists, this means that they can terminate a grant of copyright in a work, such as a musical composition or a sound recording, that was previously granted to a third party, such as a publisher or a record label, provided specific requirements are met. If there is no dispute claimed by the record label or publisher, the copyright will revert to or be “recaptured” by the songwriter or recording artist.

The statutory provisions for how and when to terminate a grant of a transfer or a license of a copyright for a musical composition or sound recording are set forth in 17 U.S.C. § 203 (“Section 203”) and 17 U.S.C. § 304(c) (“Section 304(c)”) of the 1976 U.S. Copyright Act (the “Act”).

More importantly, recaptured rights provide an opportunity for an author or author’s heirs to negotiate better deals with higher royalty splits in their favor, sell catalogs for large sums of money, or finally regain control of how a catalog is exploited and increase profits with the right team in place.

Before the Covid-19 pandemic, catalog sale deals made up a big portion of my law practice. But despite offers based on higher multiples, the offers my clients received were lower than they had been in recent years, partly because of lower royalty earnings as a result of Covid. In fact, according to a recent Billboard article, so far this year, there are no catalog tracks defined as more than 18 months old that made it to Billboard’s Hot 100.

To be sure, there are other reasons for the decline as well. For example, so many music superstars and new artists with new releases led to fewer listeners searching for and listening to the oldies. Mike Weiss, VP of Music and A&R head at the distribution company UnitedMasters, said that “The quality of new music that’s come out this year is so high that there hasn’t been the need to bring back old records to use on TikTok.”

Another reason for the slowdown in catalog sales of older hits is no doubt the result of the dual strikes in Hollywood in 2023 that slowed the flow of new TV shows and movies. Even Netflix announced that it plans to reduce the number of original movies it makes by nearly half this year. The Hollywood slowdown caused fewer synch opportunities and royalties for older catalogs.

I recently read a bit of good news that came from Mike Biggane, a former UMG and Spotify executive, who predicts that “older music will continue to be rediscovered outside of the release moment.”

For now, my clients with great catalogs full of great hits are turning down catalog sale offers and opting for administration offers instead. I can’t blame them, but nonetheless, I look forward to a visit back to the future for when catalog sale deals made up of older hit records make sense again!

This summary is provided for informational purposes only and is not intended to constitute legal advice nor does it create an attorney-client relationship with Rimon, P.C. or its affiliates.

Celeste Moy is a Partner in Rimon’s Entertainment Sports & Media practice group.  Ms. Moy has extensive music and entertainment law experience primarily representing songwriters, and their successors-in-interest, in disputes over royalty payments and royalty monetization transactions, copyright assignment terminations and recaptures, as well as negotiating and drafting various types of entertainment contracts for recording and performing artists and music producers.  She also helps her clients to obtain trademark registrations and trademark license agreements for use of their logos, and creative works in connection with advertising, marketing materials and merchandise. Read more here.