With Apple and Spotify offering per-stream payouts averaging in the sub-$0.01 range, the economics of music can seem a bit gloomy. But when it comes to royalties, your cousin’s garage band ain’t Beyoncé.
Investment giant KKR is taking a majority stake in Grammy-winning pop producer Ryan Tedder’s catalog, which features hit songs from Bey, Adele and Stevie Wonder. The deal values Tedder’s catalog around $200 million.
The Suits Get Creative
NYC-based KKR has dabbled in the music industry for over a decade. The firm helped relaunch BMG as a global music rights management company in 2009 and now owns legendary guitar-maker Gibson.
This time KKR is tapping Ryan Tedder, lead singer and lead heartthrob of pop band OneRepublic. But unlike his doting fans, KKR is more interested in Tedder’s side-hustle – writing and producing some of the most popular songs of the modern era:
- KKR is acquiring a mix of copyrights and royalty streams for some 500 songs written, recorded or produced by Tedder, including those co-written with top artists like Lady Gaga and Paul McCartney.
- According to KKR, the catalog’s songs have sold more than 420 million copies. At the RIAA’s conversion rate of 1:150, Tedder’s catalog sales equate to 63 billion streams.
KKR plans to bring Tedder’s tunes to more ears through its chain of digital investments, including stakes in TikTok owner ByteDance and Fortnite creator Epic Games.
Streaming revenue has amplified in recent years, making copyrights a hot commodity. Deal insiders report that songwriter catalogs have hit a crescendo, drawing 10 to 20 times their annual royalties versus 8 to 13 times in prior years.
- In December Bob Dylan netted a nice little payday of $3-400 million from 600 songs he relinquished to Universal Music Group.
- And Hipgnosis hasn’t missed a beat after spending well over a billion dollars on song acquisitions. The music-investment company just announced fresh deals last week to purchase copyrights from Jimmy Iovine, Lindsey Buckingham and Neil Young.
The Takeaway: With live shows on a prolonged hiatus, the copyright craze is giving artists a chance to cash in. And investors see a money train ahead as music use expands in areas like digital fitness, online gaming and social media.