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The New Economics of Music

Andrew Basile • December 8, 2020

publishing streaming music-industry finance catalog

I once had a professor who told our class that one of the best business decisions a musician can make in their career is to write a hit Christmas song. Plenty of big songs have their time on the charts, some can last for more than a year, but few reach that “evergreen” status and consistently perform well year-in and year-out. Except for Christmas music. The Christmas season comes around every year, and it’s so heavily associated with music that it drives significant streams and sales for an entire month.

This in part explains why Hipgnosis Songs bought the catalog containing Mariah Carey’s “All I Want for Christmas is You” and over 33,000 other songs for $322.9M this November. It’s the 11th best-selling physical single of all time and as it continues to assert itself as the Christmas song of all Christmas songs, it’ll climb that list indefinitely.

It’s not just the “Christmas Catalog Effect” that’s proving how well songs can continually generate revenue, however. Whether it’s because of a video of Nathan Apodaca aka DoggFace208 drinking cranberry juice on a skateboard that brings back Fleetwood Mac or a hip new cover of “Three Little Birds'' that reminds us how much we love Corinne Bailey Rae, it’s growing clear that any catalog can now surge or resurge at any time. Streaming has made songs more accessible and since listeners generate royalties every single time they play a song, its prime window of revenue generation can last much longer now, and potentially recur forever.

As a result of this trend, companies like Hipgnosis have been buying up hundreds of millions of dollars worth of catalogs and are completely changing the publishing paradigm along the way. Songs are now looked at as investments and they’re being considered as more stable and valuable than other typical asset classes including oil and gold.

Those that have already recognized this value are getting in at a great time. They’re years ahead of the game, catalogs are cheap, and the infrastructure for their continued success is in place with very strong proof of concept. The recorded music industry is still in its infancy and we’ve barely scratched the surface of understanding what catalogs will be worth in the future. Songs have only been recorded for about 150 years and Spotify has existed for 12 years. If “All I Want for Christmas is You” continues to be the premier christmas song for the next 100 years as streaming royalty rates continue to rise, it could very well generate hundreds of millions of dollars on its own in that time. Music will continue to be a prominent part of the world forever and it makes sense to try and get a piece of the revenue it generates in perpetuity.

So, moving forward, what does all of this mean for the future of the music business? Although I am a bit biased, I have a few predictions.

Firstly, though this is an admittedly lukewarm “take”, I think that it brings a lot more money into the industry. In 2019, the recorded music industry generated $11bn. In the same year, ten individual hedge fund owners combined to make $13.385bn. Convincing more finance companies like The Blackstone Group that songs are good investments will help the music business to break into the “finance money” game which stands to help the industry.

Currently, the amount of money in the industry is not proportional to the value it provides the world. A quick look at Spotify Wrapped numbers this year shows that an exorbitant amount of music was consumed and yet, bands are still going broke because they can’t play live shows. There’s a disconnect, so hopefully as more investors inject more money into music via catalogs, the entire industry profits and everyone in it can earn more.

My next thought is that we’re going to see a new “musical economy” emerge. This will manifest in a lot of different ways, but there’s a few I’m most interested in. My primary consideration is how publishers and investors will try to bet on the success of songs at certain times and acquire their rights accordingly. Similar to the “Christmas Catalog Effect”, predicting the future popularity value of songs stands to generate a lot of money if timed properly. If I had the money or ability to, I’d strongly consider investing in Future’s “Mask Off” before the pandemic subsides… Not so subtle plug, but handicapping the future value of songs and catalogs is what we’re working on at

As a result of these new music economics, I think that song exploitation could also become much more song focused. Two years ago, if anyone asked you “hey, what’s that song, you know the one with the horses?” you would have immediately known they were talking about Lil Nas X’s “Old Town Road”. There’s A LOT of value to being known as “the horse song”. Kids and adults alike loved its playfulness, and it was prime for any western themed or horse related sync placement. With that in mind, companies may shift some of their focus from how they need to market artists to how they can best market individual songs.

Lastly, my biggest wish is that everything mentioned above calls more attention to the value of songwriters and producers. The more catalogs are bought for high sums of money, the more effectively it will allow these creatives to leverage their talents and successes. Trends fade, some artists will be remembered forever, but most won’t, so in the end, it’s good music that wins and I think we’re on the brink of that finally starting to get reflected economically.