Institutional investment is transforming music catalogues into a growing and dynamic asset class. But music deals are rarely straightforward, with a range of risks potentially disrupting deal flow or causing them to collapse all together.
With volumes of transactions growing rapidly, and purchase prices reaching into the billions of dollars, the stakes have never been higher. Subsequently, insurance becomes a vital tool for protecting transactions and keeping deals on track.
Biopics to TV soundtracks: the turbocharging of music catalogue transactions
Acquiring rights to an artist’s music catalogue isn’t a novel concept.
For instance, in 1985, Michael Jackson famously paid up to $50 million (opens a new window) for British music publishing company ATV Music. Jackson’s acquisition of ATV helped secure the rights to the majority of songs written by the Beatles.
In the past five years the market for buying and selling music assets has undergone tremendous evolution. While there are many reasons for this, the perception that catalogues are a stable investment, often with predictable royalty revenue streams, and potentially provide further opportunities for monetisation, are key examples.
Recently, numerous high-profile artists have sold their ownership rights at significant valuations. Among more prominent examples, Sting sold his back catalogue (opens a new window) to Universal Music in a deal rumoured to be worth up to $300m, in 2022.
This trend extends beyond pop music, with interest in acquiring the music rights of composers’ catalogues, TV soundtracks, and game music also growing.
In 2023, Materia Music acquired Australian gaming record label Boss Battle Records (opens a new window), who’s composers and artists had worked on the soundtrack for high-profile games, including Star Wars, Pac-Man, and Pokémon.
What is attracting institutional capital to music catalogues?
Every time a piece of music is streamed, broadcast, or used in TV, film, or video games, royalties may be generated for both composers and rights holders. As such, investors – from private equity to sovereign wealth funds – are increasingly recognising the ability of music royalties to create potentially valuable, lasting sources of income.
In 2021, asset management group Blackstone announced a partnership (opens a new window) with Hipgnosis to acquire music rights and manage catalogues. The venture, backed by funding from Blackstone worth approximately $1 billion, purchased the rights to Justin Bieber’s music (opens a new window) for a reported $200m, in 2023.
As of 2026, Bieber’s music contains 23 songs that have already achieved more than a billion streams on Spotify (opens a new window). And with his audience still relatively young, royalties are expected to generate steady income over a significant period of time, providing a reliable, long-term source of revenue.
Income isn’t solely limited to streaming. As demonstrated by the success of the ABBA Voyage experience, the use of artist avatars and immersive experiences can also be a profitable way of leveraging a music catalogue. Musical biopics are a further option for catalogue managers, with films centring on Michael Jackson and Freddie Mercury key examples, both of which grossed over $900m (opens a new window).
The modern era: growing scrutiny in catalogue deals
As involvement from institutional investors grows, music catalogue transactions are undergoing rapid sophistication.
Historically, deal processes were less complex, but as the market has matured, buyers are placing a greater emphasis on establishing formalised and repeatable processes with greater due diligence enhanced by technology.
This new breed of investors, at times characterised as more risk averse than the previous generation of buyers, will routinely conduct thorough analysis when investigating and preparing deals for music catalogues.
This is resulting in heightened scrutiny on all topics, ranging from title, infringement, and taxes. However, during negotiation, these issues can be become sticking points.
What risks can threaten catalogue transactions?
A range of issues could cause significant friction during music deals, these include:
Title defects and document gaps
A catalogue of musical works may be the result of many contributors, including composers, lyric writers, session musicians, and producers. It is not uncommon in creative sectors for there to be a failure to assign crucial rights – leaving a title/ownership exposure for a buyer. The sister issue, which is equally as common, is a lack of documentation available for disclosure by a seller to enable a buyer’s legal counsel to conduct a thorough chain of title exercise, thereby leaving unknown risks.Copyright infringement
Any composition or recording may infringe third-party copyright. This can arise in a variety of ways, particularly in genres where sampling is common and artists may have omitted to obtain appropriate licenses. There can also be issues where an artist has taken a significant amount of inspiration from other works which may give rise to the potential for claims; an issue which also extends to album artworks and other visual media. Infringement claims can not only be expensive to respond to, but also result in lost revenue, including through take down requests made to streaming platforms.AI usage and copyright subsistence
Musicians are increasingly likely to experiment with AI to help create sounds, compositional ideas, lyrics, as well as, automating or informing the mixing and mastering process. The law is currently unclear on where the dividing line sits between AI work and AI assisted, which might determine if a composition or recording is protected by copyright or not. In the near future, this may prove to be an evolving and growing risk in music deals.
A unified proposition: how Lockton can help
Artists and business managers alike may be unaware insurance is available to help structure and protect transactions.
Lockton’s Entertainment and Intellectual Property specialists help protect both buyers and sellers by devising insurance solutions for risks uncovered during the due diligence process that may impede deal completion.
Our expertise in catalogue valuation, copyright law, and tax and compliance issues helps remove liabilities from negotiations, reduce deal friction, and support smoother transactions.
For artists, songwriters, and composers, collaboration with a trusted insurance partner can make all the difference.
To learn more, reach out to a member of the Entertainment Practice here (opens a new window), or the Transactional Liability Team here (opens a new window).
