All About Music Catalog Sales

Behind the curtain of the music industry, you’ll find a world bustling with lucrative deals, strategic decisions, and a vibrant market driven by sound and investment opportunities. The market for music catalog and music asset acquisitions is more dynamic than ever.

The past five years have seen a large uptick in music catalog sales and acquisitions. Major legacy artists such as Queen, Bob Dylan, and Pink Floyd have made blockbuster headlines by selling assets including song catalogs, master recordings catalogs, and name and likeness rights.

But it’s not just the domain of classic rockers and pop icons - buying and selling music assets is becoming more accessible to rising artists and savvy investors alike. Platforms like Royalty Exchange and SongVest let mid-tier and new hitmakers auction their music assets online. This democratizes the market, opening the door for anyone with the means to own a piece of tomorrow’s hits—or the streaming powerhouses of today.

What is the benefit of buying music assets?

Buying music assets is attractive beyond the ownership of a piece of art. Music assets can be incredible investment opportunities for two main reasons:

Steady Income

From an investment perspective, one of the major attractions of music assets is stability. Well-known songs, especially those enjoying evergreen popularity, generate reliable revenue streams on platforms like Spotify, Apple Music, and YouTube. It’s not unusual for a catalog to deliver consistent passive income, regardless of economic cycles or shifting pop culture winds.

Tax Benefits

Thanks to IRS Section 197, intangible assets such as music copyrights can be amortized over 15 years. This means a buyer can reduce their taxable income each year, making music catalogs desirable assets for investors looking to minimize tax liability while maximizing returns.

What kind of musical assets can you buy?

Musical Composition

Musical compositions are different from master sound recordings. In music publishing, “musical compositions” are synonymous with the copyright law concept of a “musical work”, which is one of the categories of works protected under §102 of the Copyright Act.

The musical composition consists of all elements that can be notated on paper. Such elements of a musical composition are generally the lyrics, the melodies, the chords, and the rhythm.

Among the different types of music assets an investor can purchase, musical compositions are easily the most confusing to potential buyers. Musical compositions can generate several distinct types of royalties and income, many of which are specifically dictated by statute.

To the uninitiated, buying a songwriting catalog sounds exciting but also intimidating. A potential buyer might wonder – what exactly am I buying when I purchase a song catalog? How am I going to earn money on music assets?

Master Sound Recording

A master sound recording is an audible work, generally created in a recording studio. It refers to the actual recorded version of the song you can hear on an album or online.

“Master sound recordings” are also a class of works protected under §102 of the Copyright Act, distinct from musical compositions. The rights to a master sound recording are generally owned and administered by a record label.

Producer Royalties

Beyond compositions and masters, investors might purchase producer royalties, performance income, or even name and likeness rights. These additional assets might come bundled with a major catalog sale or be traded independently, adding further layers of complexity and opportunity.

Music Publishing Revenue streams

Musical compositions have a particularly complicated set of revenue streams. Music catalog owners derive their revenue by licensing their musical compositions to outside parties (a/k/a “licensees”). Revenue streams fall primarily in these categories:

• Mechanical royalties

• Performance royalties

• Synchronization licenses

• Printed music and lyrics, and other ancillary rights

Mechanical Royalties

Mechanical royalties are generated whenever a musical composition is “reproduced” and “distributed to the public…. by sale” in a phonorecord (a material object that embodies sounds). “Reproduction” and “distribution” are both exclusive rights reserved for the copyright owner under §106 of the Copyright Act.

Mechanical Royalties in the Pre-Digital Era

In the days of vinyl, cassettes, and CDs, record labels manufacturing phonorecords paid mechanical royalties to the publishers. “Reproduction” simply meant making a new copy to sell in a store.

Mechanical Royalties in the Digital Era

With the rise of digital downloads in the 2000s, and the current dominance of streaming, mechanical royalties are now paid out by digital service providers (DSPs) like Spotify and Apple Music. The Music Modernization Act of 2018 introduced the Mechanical Licensing Collective to simplify payments to the copyright holders in the U.S.

2000’s: Permanent digital downloads became the preeminent method of selling music. Record labels still assumed the responsibility of paying mechanical royalties, though no physical “phonorecords” were manufactured or distributed.

2010’s: Interactive music streaming is the dominant method of consuming music. Music streaming services, also known as “DSPs” (digital service providers), are responsible for paying the mechanical royalties to the rights holders.

2020’s: Due to the Music Modernization Act, the major streaming services now pay out mechanical royalties to a non-profit called the Mechanical Licensing Collective, which in turn pays those royalties out to rightsholders.

Performance Royalties

Performance royalties are generated by the “public performance” of musical compositions, which is one of the exclusive rights of a copyright holder under §106 of the Copyright Act.

These royalties are managed by performance rights organizations (PROs). Up until the 2010’s, there were just three PROs in the United States: ASCAP, BMI, and SESAC. In recent years GMR, AllTrack, and Pro Music Rights have also entered the marketplace. Songwriters and publishers sign up with a PRO to administer their copyrights, and the PRO then grants blanket licenses and collects the resulting license fees on behalf of their members.

In practice, the sources of public performance royalties are:

• Live band performances and DJ sets at concert venues and nightclubs

• Restaurants, bars, fitness studios, and other businesses that regularly play music for their customers

• Television broadcast

• AM/FM radio broadcast

• Satellite radio broadcast (SiriusXM)

• Internet radio broadcast (e.g. Pandora)

• Interactive and non-interactive streaming services (e.g. Spotify, Apple Music, YouTube, etc.)

The blanket license is paid on a flat fee basis by the licensee. The PRO then determines each songwriter and publisher’s share of the PRO’s royalty pool with a pro-rata formula.

Synchronization licenses

Synchronization licenses (“sync licenses”) are direct licenses between rights holders and licensees. that produce audiovisual media. A sync license allows the licensee to synchronize a musical composition in timed relation to visual media, such as TV shows, movies, advertisements and video games.

Sync licenses are negotiated directly between the rights holders and the media producer on a flat fee basis.

In addition to the sync license for the musical composition, a licensee also needs to secure a license for the master sound recording, referred to as a “master use license”. The musical composition and the master sound recording are protected under copyright law as separate works, requiring separate licenses.

Print Licenses and Ancillary Rights

Even in a digital age, print rights matter. Publishers and rights holders earn fees when lyrics and music are reproduced in print—sheet music, songbooks, or even as lyrics printed on merch, such as T-shirts or greeting cards. While these revenues are generally smaller, they contribute to the wider income potential of a music catalog. Some common commercial examples of printed music include songbooks and guitar tablature books, which are printed by print music publishers such as Alfred Music and Hal Leonard.

Major Deals and Industry Players

2025 is seeing even bigger deals than years past, with huge catalog sales exceeding the billion-dollar mark. Powerhouse companies like Concord, Warner Music Group, Sony Music Publishing, and newer financial entities (like investment funds and private equity) are reshaping the acquisition landscape. And recently, even artists themselves - most notably Taylor Swift - have acquired exclusive rights to their work.

The music catalog acquisition craze is more than just a financial trend—it’s a seismic shift in how we value, trade, and interact with songs. While the world buzzes about high-profile deals with superstar names, the real story is the changing face of music rights, the democratization of investment, and the increasing sophistication of revenue streams. Whether you’re considering buying in or simply enjoying the soundtrack of your life, understanding music asset acquisitions is the key to decoding today’s industry and its future.