By Mark Seavy

As bands and musicians sell their music catalogs at ever-higher prices, where does that leave licensing?

Equity investment firms and estate management agencies—attracted to low interest rates—are clamoring to purchase music catalogs that contain publishing rights and master recordings. For example, pop star Katy Perry’s music catalog sold for $225 million to Carlyle Group-backed Litmus last year. And the amounts paid for these catalogs have climbed from 16-20 times artists’ annual net profit to 21-30, industry executives said.

And while the value of the catalogs largely rests in the music, these agreements often also cover the rights to Name, Image, and Likeness (NIL), merchandise, and use in advertising. In order to take full advantage of this demand, music artists or their estates are turning to outside firms to consolidate and manage their assets.

The estate of rock star Buddy Holly, for example, managed his NIL and merchandise before selling that IP to BMG, which owned the recordings. More recently, the estate of singer James Brown appointed Perryscope Productions as global licensing agent and launched an apparel collection with streetwear brand Roots to Fight. Brown’s estate sold the music assets, NIL, and merchandising rights to the agency Primary Wave for $90 million.

“We are increasingly looking at issues of succession now, and what is going to happen when it is Jacob Dylan and not Bob Dylan that is managing these estates,” said Jampol Artist Management CEO Jeff Jampol, whose firm manages the estates of Janis Joplin, The Doors, funk band Parliament-Funkadelic’s leader George Clinton, and Mexican singer Juan Gabriel.

“Every successful artist has magic, but the key is putting that magic back into the cultural conversation in ways that are meaningful, credible, and authentic to 11- to 30-year-olds. Many vendors are focused on the existing fan base, but I focus on my potential fan base. The existing base is increasingly saturated, and they already have the t-shirt, went to the concert, have a poster on wall, and own the greatest hits collection,” Jampol said.

To cultivate that new generation of fans, especially for those musicians who have died or are no longer active, the key is creating new means for discovering them. The singer Prince, who died in 2016, made a return with “Prince: The Immersive Experience,” which opened in Chicago with a recreation of his Paisley Park Studio A and a 3D walk in the Purple Rain cover.

Janis Joplin died in 1970 but “A Night With Janis Joplin” had a 141-performance run on Broadway a decade ago in New York and is being revived at London’s Peacock Theater starting August 24. Jampol, which represents Joplin’s estate, has been working on a movie that has gone through years of iterations, the most recent of which starred actress Amy Adams and was cancelled in 2017.

“IP once appeared very nebulous compared to what we are now used to investing in a music catalog,” said Jonathan Faber, managing partner and general counsel at Luminary Group and an attorney with McNeelyLaw, who has worked with the Prince and Buddy Holly estates. “IP is a business model that has been proven to work and you can do a lot of interesting things. With memorabilia, apparel, alcohol, fragrances, and other products, there is so much you can do with it as an agency or an investor.”

Yet with music catalogs being the central focus of many of the recent deals involving Bruce Springsteen, Bob Dylan, Paul Simon, Neil Young, and others, there are limits to the opportunities for merchandise. Shortly after Jampol started managing The Doors in 2004, it ended 160-180 licenses and in 2008 removed Doors merchandise from Target and Kmart. It now focuses on about two dozen licenses with an emphasis on The Doors’ legacy and “not merely a thing in which to make money,” Jampol said.

“There is no doubt that companies now view licensing as another opportunity to reinforce musicians’ greatness and people want to be associated with that,” Perryscope Productions President Norman Perry said. “Everybody is paying attention to the big picture and licensing is part of a coordinated approach. Right now, there is a lot of interest in unlocking the value of some of these legendary artists.”