What Does Bruce Springsteen's $500 Million Music-Rights Deal Really Mean?

Bruce Springsteen knows how to play the long game. The rock star pulled every available trick out of his sleeves to get out of a bad record deal and gain full control of his music in 1992. This week, he sold those rights back to the same label, hitting Sony (NYSE: SONY) up for $500 million three decades later.

The lifelong Boss fan in me is unhappy about this unexpected move, but the business analyst inside my head has to respect Springsteen's decision. This catalog deal is a sign of the times, and Bruce is smart to cash in his chips while they're hot.

A person hands over fat stacks of hundred-dollar bills to another person who is studying charts and graphs.

Image source: Getty Images.

But first, some rock history

Catalog deals are nothing new. The most obvious example is The Beatles, whose publishing rights ended up in the hands of fellow superstar Michael Jackson in 1982.

Songwriters Lennon and McCartney played no part in that drama, which played out between the band's early management team and publishers. The catalog bounced around a bit over the years until Paul McCartney regained the rights to his music through a lawsuit against Sony Music.

More recent deals include Canadian rocker Neil Young's $100 million sale of half of his song catalog, Bob Dylan pocketing roughly $300 million for his 600-title songbook, and Fleetwood Mac singer Stevie Nicks getting approximately $100 million for 80% of her song rights. Young and Nicks sent their music rights to private equity groups; Bob Dylan made his deal with his longtime record label, Universal Music Group.

All of this action makes perfect sense from a purely financial point of view, of course. At 72 years old, Springsteen is the youngest name on this list. Dylan is already an octogenarian, and McCartney will get there next summer. At some point, these stars won't be around anymore, and it's probably best to settle their affairs personally rather than leaving that task to their heirs.

And now, some Springsteen history

What makes Springsteen's move unusual is that he fought hard to get control of his publishing rights in the first place. The 10-record contract he signed in the summer of 1972, at the ripe old age of 23, turned out to be a bum deal that he wanted no part of in the long run. With a ton of freshly recorded material in his pocket, Springsteen could have released another double album in 1992. Instead, he released Human Touch and Lucky Town as two separate albums on the same day so he could work out a more favorable record deal as soon as possible.

Bruce Springsteen isn't striking this new deal just to make ends meet. He never stopped recording albums and going on tours. In recent years, the star released an autobiography that became the basis for a Broadway show, where he treats the audience to a live storytelling and acoustic music performance night after night. And if you're not going to New York anytime soon, you can catch a 2018 performance of Springsteen on Broadway on Netflix. The revenue streams just keep coming.

So I had to raise an eyebrow when I heard of the $500 million deal. It's arguably a big step back, and Springsteen is not known as a pushover. What's really going on here?

What's next for Bruce Springsteen?

The New Jersey rocker's catalog spans 20 studio albums and more than 300 songs. Sony Music is paying up for the publishing rights to all of these assets, plus the master tapes of these recordings.

Springsteen's work reportedly earns nearly $20 million a year from album sales, publishing licenses, media-streaming plays, radio airplay, and more. As long as these estimates hold up, Sony should earn its money back by the year 2050 or so. At the same time, Springsteen gets that sweet upfront payment and can put that to work however he likes, without worrying over the day-to-day management of his massive catalog.

He'll probably keep releasing records and touring until he just can't do it anymore. Whatever he does from this point on will belong to Bruce Springsteen, not Sony Music. Maybe he'll rip a page from Taylor Swift's playbook and rerecord some of his legendary material, but I don't think so. Swift probably has decades of unwritten history left to create, while Springsteen is wrapping up a five-decade career.

Rock stars have plenty of reasons to turn their publishing rights into cold, hard cash right about now. Many musicians complain that music-streaming services from Spotify, Apple, and are undermining the value of recorded music by driving the payments per play lower and lower. Today's new rock stars aren't working their way up through radio play and local gigs. They're more likely to hit it big with a couple of viral TikTok or YouTube videos.

A judge's gavel resting on a pile of CD disks.

Image source: Getty Images.

A rapidly changing music industry

That being said, we haven't looked at every top-shelf deal here. Don't forget that Warner Music Group signed buyouts worth $100 million or more with electronic music veteran David Guetta in June and pop-sensation Bruno Mars in May. The intellectual-property landscape for music-related rights is shifting as we speak.

The game has changed, and your old-school rock stars may be better off with a big payout and no pressure to churn out spectacular 30-second videos to the social-media masses. The media-rights buyout trend seems more likely to accelerate with each top-shelf name that signs on the dotted line.

Honestly, I can't be mad about Bruce Springsteen taking this exit from the highway jammed with broken heroes. It's not in Sony's best interest to make a travesty of Springsteen's money-making legacy, so I don't expect a flood of Born in the USA-themed TV commercials or Nebraska lunch boxes. And the music industry keeps on changing.

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