Catalogs and Cash:

Tag: music industry

  • What is a music catalog multiple? How catalog valuations actually work

    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.

  • Masters vs. publishing rights: what’s the difference and which is more valuable?

    If you’ve ever read a headline about a music catalog sale and wondered exactly what was bought and sold, you’re not alone. Golnar Khosrowshahi, founder and CEO of Reservoir Media, broke down the distinction clearly in her appearance on Billboard’s On the Record — and the difference matters more than most people realize.

    1. Masters and publishing are two completely separate assets

    When an artist records a song, two distinct sets of rights are created. The master recording — the actual audio file you hear on Spotify — is typically owned by the record label that funded the recording. The publishing rights cover the underlying composition: the melody and lyrics written by the songwriter. These can be owned by a publisher, the artist themselves, or split between multiple parties. Every catalog deal involves one, the other, or both — and the price reflects which rights are actually on the table.

    “You can sell your publishing, which is the songwriting rights. Those are two different things — masters versus publishing. A lot of people want one or the other or both.”

    2. Publishing has historically been the safer bet

    In the early days of the catalog market, publishing rights were considered far less risky than masters. Masters required active marketing investment — vinyl releases, promotion, physical product — while publishing generated royalties more passively every time a song was performed, streamed, or licensed. For investors who wanted steady income without operational complexity, publishing was the cleaner bet. Today, Khosrowshahi says the two asset classes trade at roughly equivalent multiples — but the underlying operational demands remain very different.

    “In the early days, the publishing was far less risky. Today I would tell you that these assets are trading at par.”

    3. Owning masters means running an active business

    Buying master recordings isn’t a passive investment. It comes with real operational responsibilities: releasing vinyl, running marketing campaigns, pitching music supervisors, and managing a recorded music roster. Reservoir maintains entirely separate teams for its publishing and recorded music businesses precisely because the work is so different. Anyone looking to acquire masters needs to honestly assess whether they have the infrastructure and expertise to actively manage that catalog — or whether they’re better suited to the publishing side.

    “Publishing is more like ‘I want checks to come in the mail.’ Masters are ‘I’m out there, I want to market, I want to make it more valuable.’”

    4. Who owns the other side of the rights matters too

    If you buy publishing rights to a song, you’re now in a long-term relationship with whoever owns the masters — and vice versa. Khosrowshahi says Reservoir always investigates this before closing a deal. Are the masters owned by a major label with resources to keep marketing the music? Or are they sitting with a smaller label that may not be around in five years? The quality and commitment of the party controlling the other set of rights has a real impact on how much value a catalog can generate over time.

    “We definitely look at who owns the masters — are they going to keep doing any job? Because that’s what you really want to know.”

    5. Taylor Swift’s situation clarified everything for a mainstream audience

    When Big Machine Records sold Taylor Swift’s master recordings to Shamrock Holdings without her consent, millions of people suddenly understood — viscerally — why the masters vs. publishing distinction matters. Swift had signed her deal as a teenager, which was standard practice at the time: the label funded the recordings and retained ownership. Her decision to re-record her entire back catalog as “Taylor’s Version” was an unprecedented response, and it accelerated a broader industry shift toward more artist-friendly deal structures where ownership eventually reverts to the artist or is shared from the outset.

    “That situation really put a spotlight on the fact that Taylor Swift did not own her own masters — and nowadays we’re seeing much more artist-friendly deals at these record labels.”

    Based on Golnar Khosrowshahi’s appearance on On the Record, Billboard’s music industry podcast.