I just read that Sony bought the rights to Pink Floyd’s catalog for something like $400 million. They also bought Bruce Springsteen’s catalog for around $500 million. That’s close to $1 billion for just two artists. There’s a whole bunch of other artists who are also getting bought out which brings the grand total to billions of dollars.
How are these companies getting the money to pay these crazy sums?
What is their plan to make that money back? Commercials and film placement?
Seems like you’d have to wait a veeeery long time to recoup these investments.
In: Economics
Springsteen’s catalog has been estimated to generate $15m per year for Sony. That is a lot less than $500m. However, it’s a perpetuity, so you have to think about the value of a $15-20m annual revenue stream that continues out kind of forever. A giant company with a long history and long-term perspective can easily realize a profit on this – just not right away. They will also work to market his music and ensure the revenue stream grows as much as possible. Bruce gets the 500m upfront but they make money off him basically forever. Time value of money.
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