Red Hot Chili Peppers’ catalog currently generates between $5 and $6 million a year for publishers, Billboard reported. It was sold for about 25 times that amount.
Visionary Music Group Founder Chris Zarou told Yahoo Finance that selling catalogs is “an amazing way for an artist to monetize their life’s works and to capitalize on beneficial tax incentives.”
Zarou explains that Buyouts are often looked at as long-term capital gains in the U.S., compared to annual and ongoing royalties which are just income. That means the Chili Peppers get to keep more of this money.
“I look at it as a win-win for everyone…it’s a cool evolution.”
“Buyers look at it as a safe asset where you are likely to see annual returns in perpetuity — similar to real estate although this probably has even better returns, especially if you buy the right catalog.”
“I think [the pandemic] played a role for bigger-name artists who would generally be out on the road selling out arenas and stadiums in order to pull some revenue forward.”
“We’re living in an era of the music business when an old record that’s 25 years old can pop up on TikTok and then, all of a sudden, the value of that publishing catalog has dramatically changed.”