There was a line of thinking in the early 2000’s that the value of recorded music would be zero. That the album would be used purely as a promotional tool to get the artist on the road. That no one would make music anymore because why would they, if they can’t make any money from album sales.
Time Warner got so scared of these kind of conversations and Napster and illegal downloads and peer to peer sharing, that in 2004, they sold their music division of Warner Music/Atlantic/Elektra and their many associated labels for approx. $2.6 billion. In 2018, that same division, is valued at $15 billion.
Today, we have so much new music that it’s hard to keep up. The money received from recorded music is going up, because of streaming. And apart from the ones who made it or had public acceptance of their music or the oldsters, no one really creates to be paid.
They create because they need to create. It’s an outlet for them. It’s a way to express who they are, to put their thoughts and ideas into characters and into stories in the songs. If they do get paid afterwards, well that’s a by-product of their need to create.
And music gets bigger. If the artist has a song that connects or becomes a hit, it costs the label or the artist nothing to continue to sell that hit. Word of mouth would do that.
Think about the first two Black Sabbath album’s. Both albums were recorded and mixed in a short amount of time. The costs would have been minimal. And fast forward 50 years later, “Paranoid” has 362 million streams on Spotify. “Iron Man” has almost 220 million streams. “War Pigs” has 122 million streams. “N.I.B” has almost 50 million streams.
In other words, the costs of making the album evaporate quickly and the rest is almost pure profit, especially in the era of digital, where music lives forever and pays forever. So the labels have assets that will never go down to zero.
A few weeks ago I was thinking how Frontiers from Italy is constantly putting money out to get artists to record new music. From looking at the metal and rock genre, Frontiers have the most releases from any label that I am aware off. They even get artists from different bands to work together, like Michael Sweet and George Lynch. Well, the Frontiers execs are aware that by having assets like the copyright of the music in their building, those assets will never go down to zero.
And Frontiers is thinking, we need to have a catalogue of songs like Universal and Warner’s.
Warner Music has the history of recorded music as an asset. Led Zeppelin. They have it. Prince. They have it. Twisted Sister. They have it.
You get the drift.
And people will always want to listen to songs from artists, so Warner will get paid for decades, until the copyright runs out, which in my lifetime will never happen. In other words, music is a better investment than anything else. If you buy physical property, you would need to maintain it, renovate it and keep paying bills for utilities, however music just scales.
And people will keep on creating and the labels will get bigger if they are the ones funding the creating. But creators are smarter these days and they know that if they give up their copyrights for a fee right now, they might miss out on millions later.