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
The companies have a pretty good idea of what kind of income stream to expect off the music. Pink Floyd has been earning royalties off their music since ~1967 so they have a pretty good idea what it’s going to earn per year. If you know that it’s easy to calculate how much that income stream is worth as a lump sum payment. In essence they’re doing the same thing as J.G. Wentworth, but instead of an annuity or lawsuit payout, Messrs. Gilmour, Mason and Waters have just sold the rights to their royalties instead of their rights to a lottery payout.
Also, I bet those royalties are way more than you think per year.
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