Every music catalog deal comes with a number attached — sometimes eye-watering ones. But what does that number actually represent? Golnar Khosrowshahi, founder and CEO of Reservoir Media, pulls back the curtain on how catalog valuations really work in her conversation on Billboard’s On the Record.
1. The multiple is just a way of pricing future cash flow
A catalog’s value starts with one number: how much cash it generates each year. Buyers then apply a multiple to that figure to determine what they’re willing to pay today in exchange for those future earnings. A catalog generating $1 million annually at a 15x multiple would sell for $15 million. The multiple reflects how confident the buyer is that the cash flow will hold — or grow — over time. Higher confidence in longevity means a higher multiple.
“The multiple is essentially valuing what the future cash flow is — you are paying two times that gross profit line, or today anywhere from 15 to 20 times.”
2. Multiples have exploded since the early days
When Reservoir started acquiring catalogs in 2007, assets were trading at just two to four times annual cash flow. The market was depressed by piracy fears and deep uncertainty about whether streaming would ever work. As streaming matured and proved it could grow music industry revenues sustainably, buyer confidence surged. By the peak of the boom, top-tier catalogs were trading at 15 to 20 times — and marquee assets like Bruce Springsteen’s or Bob Dylan’s catalog commanded even more. That’s a tenfold increase in how much buyers were willing to pay for the same underlying asset.
“In 15 years, that 2, 3, 4 times multiple you’re paying today is going to translate into a 20 times multiple for that same asset.”
3. Due diligence goes far beyond the headline number
Arriving at the right multiple requires deep investigation into a catalog’s history. Buyers examine what percentage of revenue comes from licensing versus streaming, whether sync opportunities have been actively pursued or left on the table, whether any samples are uncleared, and whether the music has simply been neglected. A catalog that has never been properly administered may look undervalued on paper but actually represent a major opportunity — or a major headache, depending on what’s lurking beneath the surface.
“Has the music been neglected? Maybe it was just collecting dust. Or maybe you’re buying a catalog that has been maximized. We’re certainly not going to say ‘we’ll do 20% better’ — because that’s just not always true.”
4. Genre, longevity, and sync potential all feed into the number
Not all cash flows are created equal. Buyers discount future revenue more heavily if they believe a catalog’s appeal will fade. A classic rock catalog from the 1970s carries a very different risk profile than a hip-hop catalog from 2015 — not because one genre is inherently better, but because the older catalog has already proven it can sustain listener interest across decades. Sync potential also factors in: music filled with expletives or uncleared samples simply cannot be licensed to advertisers or film and TV, which reduces the ceiling on future revenue.
“What is this going to be worth in 10 years, in 15 years, in 20 years? Are we still going to be able to license ‘Take Me Home, Country Roads’ to Google? Yes.”
5. The unpredictable uplifts are upside, not assumptions
A well-placed sync in a hit TV show, a biopic, or a viral TikTok moment can dramatically increase a catalog’s streaming numbers overnight. Buyers know this happens — but they cannot reliably model it. Responsible valuation treats these events as potential upside rather than baking them into the base case. The core multiple is built on what a catalog demonstrably earns today; everything else is a bonus that makes the investment more attractive in hindsight.
“You just wing it — there’s so much that goes into valuing a catalog, but you cannot account for those random blips on the radar that are really positive.”
Based on Golnar Khosrowshahi’s appearance on On the Record, Billboard’s music industry podcast.
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