If you're an artist, songwriter, producer, label, publisher, lawyer, broker, or manager looking to sell a music catalog, here's how to ensure your catalog stands out and commands the best price:
Provide an Income Summary: Detail the earnings for the last 3 years by distributor. Bonus points for breaking out income by revenue type so that any large sync placements or one-time payments can be easily spotted.
Include All Relevant Agreements: Essential for buyers to assess the value of publishing assets and masters. Sellers should be looking for information on reversion rights, administration rights, term of the agreement, and distribution fees. Bonus points if you prepare a memo in the data room outlining the terms.
Incorporate PDF and CSV Files: CSV files are important for sellers to be able to analyze the data. PDF files can include other information such as third-party payments which can impact price.
Label Files Clearly: Organizing files, especially from multiple distributors, facilitates efficient analysis by potential buyers. Every distributor has a different format when it comes to reporting. Buyers will bulk upload files to analyze them but revenue from each distributor is analyzed on a stand alone basis so keep files from each distributor in a different folder.
Provide Price Guidance for Recent Releases: Setting realistic expectations for newer songs in the catalog helps align buyer and seller perspectives. When newer songs are involved in the deal, a buyer might quickly pass on a transaction because the assumption is that price cannot be agreed upon. For example, a song released 2 years ago will not sell for a 15x multiple.
Optional, Share Portal Logins: For trusted buyers, direct access can streamline the review process and reduce additional questions. If files are missing the buyer can then quickly download those in the format needed.
Established buyers have many deals to evaluate so if it’s too hard to understand what is being sold, it might just end up being a pass or worse, you might end up getting less than the catalog is worth because the offer accounts for additional risk.
99% of catalogs for sale do not include all of the above. If this is too much work, do not worry about it. Just hire the Music Finance Advisors. They will take care of all of the above.
This post was written by the Music Finance Advisors. For more information email ag@musicfinanceadvisor.com
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