From Dylan to Bieber, catalogue sales are the megadeals taking over music

“They’re banks,” she says of the major publishers. “They just hold the material. They don’t actually do anything, as far as I can tell. So I’m excited at that opportunity, that they might be able to reengage with some audiences and reimagine some of my music in a way that I may not be yet aware of.”

This first brainstorm session took place this spring, just weeks after Primary Wave, founded by former Arista Records executive Larry Mestel and fresh off a $2 billion infusion from Brookfield Asset Management, struck a deal to buy a share of McLachlan’s songs. McLachlan tuned in from her home in Vancouver, B.C., as talk turned to obvious hooks for creating new buzz — a Lilith doc in the works, the upcoming 30th anniversary of her career-making “Fumbling Into Ecstasy” — and the not so obvious. Had she considered appearing on “CMT Crossroads” in Nashville? Did she have song “stems” that could be shared with other artists for samples? And then there was Eau de Sarah. That came from chief branding officer Jeff Straughn.

“Have you ever thought about doing a fragrance?” he asked. “Is the beauty space something that you’re open to?”

“In theory,” McLachlan said and then paused. “I haven’t thought about it.”

Some call it song management, others royalty acquisition. The managers of this asset class include Mestel, Merck Mercuriadis (CEO and founder of Hipgnosis Songs) and Round Hill Music’s Josh Gruss, in addition to traditional publishers such as Universal Music Publishing Group, Sony Music Publishing and BMG. The latter have longer histories and much larger holdings than the more insurgent independents, but they’ve only recently been making the blockbuster deals on publishing acquisitions.

There was a time when even the biggest stars — the Beatles, the Rolling Stones and the Beach Boys — watched helplessly as their publishing was sold to corporations. That changed in the 1970s when songwriters learned the value of publishing and hired attorneys to protect it. This new market is something well beyond that. It’s about a wave of investors, many more accustomed to speculating on pharmaceuticals or real estate, cracking into territory once reserved for Casey Kasem. And artists, confronted with this new math, are cashing in. Where it was once considered almost sacrilegious to sell a song, it is now an element of estate planning for aging artists as singular as Bob Dylan, Neil Young, Steve Nicks and Sting.

They get a payout and a promise of a cleaner future, giving their heirs a chance to avoid the battles that took place after the deaths of Tom Petty, Prince or Aretha Franklin.

“I’m not Bob Dylan, so I didn’t get $400 million, but I got a very, very large chunk of change,” said Lindsey Buckingham, whose $100 million deal with Hipgnosis included Fleetwood Mac songs such as “Go Your Own Way” and “The Chain.” “It just makes things in the present a bit easier. And you’re not setting up your kids to be fighting over any sort of things that haven’t been well defined enough as to know how they’re going to get passed on.”

In a home office by a swimming pool in Los Angeles, Mercuriadis is working the phone. He is in his standard uniform — black Prada — and pacing as he works through a complication with a megadeal for Justin Bieber’s catalogue. It’s not with the artist, who has agreed to sell for $200 million. It’s with the Wall Street Journal, which is trying to scoop the news when Hipgnosis has already agreed to release it widely first.

The Bieber deal will make headlines. It’s notable because most of the deals have been for older, established artists. They are surer bets. A song by Paul Simon or Dylan has been earning a steady royalty for decades from commercials, radio (and now streaming) plays and other licensing agreements. Signing up Bieber shakes up the system. He’s just 29, and his future value must be calculated without the benefit of history.

That’s why Mercuriadis’s competitors question the deal.

“I don’t think when Justin Bieber is 40 years old, people are going to go back and listen to ‘Baby’ and his catalogue,” Gruss said. “So what do you do if you buy those rights? If you’re wrong, it’s a bad, bad investment.”

Gruss, at Round Hill, a company traded publicly on the London Stock Exchange like Hipgnosis, counts “Calendar Girl” singer Neil Sedaka, hair metal stars Skid Row, and more recently alt-rock B-listers Lit and Collective Soul in its stable. Which is how Mercuriadis explains why Bieber is a good buy.

“If you’re buying Lit and Collective Soul,” Mercuriadis said, “those records may be 30 years old, and you can make an argument that, hey, these have a much longer track record than ‘Shape of You’ by Ed Sheeran. But ‘Shape of You’ is going to be a much more important record not only for the next 30 years but for the next 40 years, 50 years, 60 years. I believe the same thing about great Justin Bieber records that have been a part of the fabric of our lives for the last 15 years.”

Then there is the deal from the Bieber side. A no-brainer. The economic downturn and rising interest rates have not been good for Hipgnosis, as analysts and competitors have watched its stock price fall. But Scooter Braun, Bieber’s manager, saw the economy as an opportunity.

“Most wealthy people made most of their money in a downturn because they were able to understand that the market always goes back up,” Braun said. “If you’re a young person, and you’re able to deploy in a downturn properly, you could be setting yourself up for life.”

Braun likes Mercuriadis. In 2021, he struck a deal with him for another one of his clients, Andrew Watt, for his stake in such songs as “Señorita” by Shawn Mendes. But Braun didn’t sign with Hipgnosis out of loyalty.

“We always go to the whole marketplace,” Braun said. “Merck came forward with the best offer.”

Mercuriadis, 59, grew up in Canada, fell in love with Kiss and Aerosmith, and got his start as a marketing and A&R manager for such bands as UB40 and Simple Minds. He eventually got into managing a slate of clients that included Elton John and Guns N’ Roses. In 2018, he founded Hipgnosis, taking the name of the famed design firm that designed album covers for Pink Floyd, Bad Company and Led Zeppelin in the 1970s.

He keeps his head shaved and poses for photos by sucking in his cheeks in Zoolander-esque fashion. His aggressive acquisition approach — he’s spent more than $3 billion on publishing, both by raising money via the London Stock Exchange and partnering with an investment firm, Blackstone — earned him the title of “music’s most hated man,” as Forbes called him in a 2021 cover story. But it’s hard to deny his genuine love of music. Mercuriadis is a record rat who seems as thrilled to show off a Japanese pressing of Paul McCartney’s “Ram” as he is to celebrate a deal worth millions of dollars. The floor of his office is stacked with audiophile pressings from the Electric Recording Co., Sam Records and Analogue Productions.

“He’s a fanatic,” said Chic co-founder and super-producer Nile Rodgers, who both is managed by Mercuriadis and sold his catalogue to him. “Merck and I can just spend hours and hours and hours talking about Eric Dolphy’s solo on a song. It’s very rare that you find a person that musically you feel so comfortable with.”

As he’s built the Hipgnosis catalogue, Mercuriadis has proved a maddening presence to competitors. They attack him for opening his wallet but say he’s not doing much once he’s made the acquisition. Mestel says he does not want to call out anyone by name. But he points out the range of his own Primary Wave, from working with Detroit-based Shinola to create a Smokey Robinson wristwatch to producing the Whitney Houston biopic “I Wanna Dance With Somebody.”

“Most of my competitors sit back, and they put up their feet on their desk, and when the phone rings and they answer it, they think they’ve done a great job marketing,” he said.

Mercuriadis notes that Primary Wave acquired and then in 2013 sold its stakes in songs by the Beatles, Hall & Oates and Bo Diddley to BMG.

“Whether it’s Justin Timberlake or the Leonard Cohen estate that I’ve looked in the eye and said, ‘I’m going to be the custodian of these great songs,’ I can keep my promise,” Mercuriadis said.

Even during his spending spree, there are some artists none of the independents could seduce. Springsteen went with Sony. Dylan and Sting signed with Universal Music Publishing, which manages more than 3 million songs and has been around for decades. (Primary Wave, Round Hill Music and Hipgnosis were founded in 2006, 2010 and 2018, respectively.)

Marc Cimino, the chief operating officer of Universal Music Publishing, has heard all of the arguments made by the leaders of smaller companies. That big companies only care about their younger, hit-making clients. They manage too many songs, so they can’t possibility give the legacy catalogue much attention. He disagrees. Just go see “Dear Mama” on FX, the series about Tupac Shakur that Universal Music Publishing Group produced. He also spoke about Hipgnosis’s 2021 partnership with Blackstone Tactical Opportunities, which describes itself as “the world’s largest alternative asset manager.”

“The key word there was asset,” Cimino said. “Right. We look at ‘Like a Rolling Stone’ not as an asset but as a song. That song has changed people’s lives. We are very clear at Universal that this is about the art, and this is about the songs, and this is about the master recordings. It is not an asset class, and if you’re investing in our company, you’re investing in it from that perspective.”

Art, of course, is a relative term.

This spring, a commercial for the home fix-it service Frontdoor began circulating with a tune anyone with an FM radio or MTV in 1985 would know intimately. Except, somehow the words were wrong. Yes, “We Built This City,” the No. 1 hit for Starship, had been recast and rerecorded as “We Fixed This Toilet.”

“I thought it was disgusting and a new low for the business,” said Jeff Jampol, who manages Starship but does not control the publishing of the band’s biggest hit.

He texted Cimino, since Universal administers the song.

But Jampol should have been grumbling to Martin Page, who wrote “We Built This City” with longtime Elton John collaborator Bernie Taupin. He was thrilled about the use. Page and Taupin could have blocked the commercial. Page first heard about it from his manager.

“I said, ‘What’s it about?’” Page said. “She said, ‘Plumbing.’ I was like, wow. And when she told me the amount of money they were going to pay, you go like, ‘Uh, okay.’”

Money can’t buy everything, though. There are still some prominent artists — Joni Mitchell, for one — who retain their publishing. That’s also the case with John Fogerty, not that the author of a string of hits for Creedence Clearwater Revival hasn’t listened to pitches.

This spring, Fogerty walked into his home music studio in Thousand Oaks, Calif., looking very much like the guy choogling through “Proud Mary” at Woodstock in 1969. At 78, he remains a steady touring attraction, still favoring his trademark plaid button-down shirts.

It has been a good moment for Fogerty. For decades, he battled Saul Zaentz, the late executive who had signed Creedence to an onerous deal at Fantasy Records in the 1960s. It got so bad that Fogerty couldn’t bring himself to play his Creedence hits in concert for decades. And in 1985, when Fogerty made a comeback with “The Old Man Down the Road,” Zaentz sued him for plagiarizing himself because he felt the song sounded too much like CCR’s “Run Through the Jungle.” Fogerty won and in January, with the help of his wife, Julie, and legendary music manager Irving Azoff, was able to buy back his publishing. By then, Fogerty had already taken meetings with Mercuriadis to consider his options.

He says now he went to hear the pitch, not to make a deal.

“Never in my life, not for one minute, have I ever thought of a song in terms of money, like a businessman does,” he said. “Let’s say I say to you, ‘You’ve Lost That Lovin’ Feelin’’ by the Righteous Brothers.’ And your reaction is probably — well, if you were anywhere near my age, you’d go, ‘God, what a great record.’ And it resonates in a way that a new pair of shoes doesn’t.”

But Julie Fogerty, whom he credits with saving his career and life when he had fallen into deep depression over his battles with Zaentz, kept nudging him to have meetings with potential publishing buyers.

He liked Mercuriadis. He seemed like a nice guy. He seemed to care about music and actually love music.

“But of course, that wasn’t what the meeting was for,” Fogerty said. “I’ve never gotten to own my songs. I want to walk around, you know, maybe with a cane in one hand and a top hat on my head and go, Yeah, I’ve got ‘Proud Mary’ now.”

Back in the McLachlan meeting, Mestel and his leadership team have gone through a series of brainstorms. They’ve talked about getting more of her work sampled by younger artists. Sam Feldman, her manager, mentions to those on the Zoom that he would love to get McLachlan on Howard Stern. He also talks about her love of the outdoors. That sparks some excitement from McLachlan, as she asks if there is the potential for a line of surfboards.

Mestel asks how she feels about social media. She dropped off because of the vitriol and anger that seemed to dominate online. He suggests somebody from Primary Wave take over her accounts to keep them humming without causing her stress. And while it seems unlikely to become a reality, nobody nixes the idea of a Sarah McLachlan scent. Before she signs off, she gives what is effectively a pep talk to the team.

“There is no bad idea,” she says. “And I’m pretty hard to offend. I mean, there are certain times I’m going to say, ‘No, that doesn’t work for me.’ But as I said, I just haven’t put my mind to thinking in that direction ever, really. So I’m excited at what possibilities you guys can dream up.”