On Friday, news broke that music giant David Guetta had sold the rights to some of his music – for a whopping nine-figure sum. But what would inspire an artist to sell the rights to their intellectual property? Yes, the money is certainly a boon, but as some artists in the past like Taylor Swift and Paul McCartney have discovered, having someone else own the rights to your work can present challenges and heartache. So what inspires these superstars to make the sale? CELEB took a look at some old feuds over music rights, along with some new deals, to understand why stars are making these choices and what can go wrong.
David Guetta Makes Bank in Sale
Guetta is one of the biggest and most influential names in pop and dance, but you might not know his name even if you know his songs. Guetta has been the producer behind mega-hits like, “Titanium,” “I got a feeling,” “Hey Mama,” “Turn me on,” and a multitude of others that you’ve been tapping your toes to without realizing he was behind them. Guetta was almost single-handedly responsible for bringing dance music into the mainstream listening sphere, wresting it from the clubs and sharing it with the world. The enterprising 52-year-old got his start in music as a DJ in Paris and Ibiza, before hitting up the US music scene and collaborating with song big names including Rihanna, Bruno Mars, Justin Bieber, The Black Eyed Peas, Nicki Minaj, Sia plus many more. Guetta has sold over 50 million records, and has won two Grammy awards. It’s no surprise really that his music rights have sold for so much.
The deal with Warner Music is reportedly worth $100 million, and includes the rights to future music as well. The BBC shares, “‘It’s rare for an artist to not only define a genre, but transform it,’ said Warner Music boss Max Lousada in a statement. ‘David has been doing that for over two decades.
‘He continues to have an extraordinary impact on the evolution of dance music, while innovating and collaborating with new voices in dynamic ways.'”
Old Feuds Over Music Rights
While it seems like an easy deal – an exorbitant amount of money for songs that have probably slowed to a trickle on royalties after so many years of being out. But selling song rights comes with a risk for artists. Two major feuds in the music industry highlight this risk.
First, the feud between pop superstar Taylor Swift and music industry boss Scooter Braun. In order to understand the later parts of this story, you first have to understand that Braun – who at the time managed Justin Bieber, Ariana Grande, and Demi Lovato – bullied Swift, according to the star. Swift claims that Braun and some of those he work with treated her poorly over the years. So to say Swift isn’t a Braun fan is an understatement. But the feud between them dates back to when Swift was 15 and first signed with Big Machine Records. At the time, Swift was new to the music scene and didn’t fully appreciate what it meant for the producing company to own the master versions of all of her songs. With a master copy, you can make copies of the original recordings and control where and when they are played and how money is made from the songs. As Swift got older and began racking up Grammy awards and multi-platinum hits, she obviously earned the right to her own songs and the money earned from them – except, she didn’t. Not legally. Big Machine Records still owned those originals. In 2018, Swift cut ties with them and signed with Republic Records, but it seemed to be an amicable split.
Enter Braun. Braun purchased Big Machine Records in 2019, which means he held all of Swift’s original songs, a blow which was doubly personal after the way Swift says she was treated. Swift was horrified. What followed was a contentious back and forth where Swift inched closer to a magical 2020 deadline wherein her contracted state she could re-record songs from her 1st through 5th albums again, but Swift claims Braun and former manager Scott Borchetta unreasonably restricted her access to them. They denied her accusations. But it was a clear situation where understanding the contract from the very beginning and realizing the implication of signing away music rights can lead to heartbreak and frustration for artists.
Another famous music rights feud was between former pals, the late Michael Jackson and Beatles star Paul McCartney. The two began a friendship in the mid 1970’s, and it was McCartney who taught Jackson about the value of owning rights and how to navigate the business side of the music industry. Part of the lesson he imparted was due to the fact that he had lost the rights to Northern Songs, which included many of the Beatles’ greatest hits. McCartney was reportedly upset that he no longer received compensation on some of this mega-hits. But McCartney couldn’t say too much; he was busy buying up the rights to other songs, including those of Buddy Holly.
Things were fine between the pals until 1985 when Jackson paid $47.5 million to own the catalog of Beatles’ songs McCartney lamented losing the rights to. Reportedly, both McCartney and John Lennon’s widow Yoko Ono had been approached with the opportunity to bid on the songs, but they passed. McCartney and Jackson grew apart over this business deal, but it was the fact that Jackson used his shrewd business sense to commercialize the Beatles songs that drove the final wedge between them.
McCartney saw Jackson earning obscene amounts of money off his former intellectual property, and the friendship fractured beyond repair. Although McCartney lamented their feud after Jackson’s untimely death, the pair never fully reconciled.
So Why Are Stars Selling Rights?
If two of music’s biggest stars over the past 75 years can find themselves swindled out of the rights to their own music and bereft of the money they should theoretically be owed for their own intellectual property – why do stars still make this deal?!
There are a few reasons why this could be a good deal for stars:
- Personal circumstances. During the pandemic especially, tour income dried up and stars who were used to living on the money they earned from live performances found themselves flailing. The stars may find themselves in need of a sudden bolus of cash or to replace lost touring income due to illness or injury, and selling the rights is like selling any liquid asset – you get that shot in the arm of cash.
- Taxes, taxes, taxes. Rolling Stone writes, “A beneficial tax window in the United States is currently closing fast. Joe Biden’s tax plans include altering U.S. capital gains tax so that it falls in line with income tax for any asset sale over $1 million. In layman’s terms, that will increase the tax rate on the sale of a lucrative asset from around 20% to around 37% for high-earners. Consider Bob Dylan, who sold his publishing catalog for $400 million: At 20% tax, he’s due to pay $80 million to the government; at 37%, he’d need to turn over $65 million extra.” Plus artists who rely on royalties may find themselves in the higher earnings category, subjecting them to the 37% tax rate every single year. It can save them money to sell it for a lump sum that only loses 20% to taxes.
- Being aware of the market and their legacy. Some artists are really good at understanding when their value has peaked and, just like stock trading, they lock in that value by selling at a high point.
Hundreds of some of the biggest name in music have sold music, song, or publishing rights over the years, and for many they’ve been lucrative deals. Although there are certainly cautionary tales that warn artists to pay attention to the fine print, music giants like Guetta are unlikely to get swindled by the legal mumbo jumbo. Selling the rights to your intellectual property is always a gamble – but it can pay off, and for Geutta, it’s paying off to the tune of 9 figures.