Music icons like Bruce Springsteen and Bob Dylan have sold their songwriting catalogs for eye-popping amounts of money. It's a growing trend in an industry that's shifted since the start of streaming.

Transcript

RACHEL MARTIN, HOST:

Investment firms have been spending a lot of money, billions of dollars in total, to buy the songwriting catalogues of music icons. We're talking about Bruce Springsteen, Bob Dylan and Stevie Nicks.

(SOUNDBITE OF SONG, "DREAMS")

FLEETWOOD MAC: (Singing) Now, here you go again. You say you want your freedom.

MARTIN: Stacey Vanek Smith and Anastasia Tsioulcas from our daily economics podcast The Indicator from Planet Money are here to explain why some investors are betting these classic songs are the new gold.

STACEY VANEK SMITH, BYLINE: Historically, the economics of the recording industry are messy and pretty complicated, and a lot of artists will tell you that, in fact, is very much on purpose. I mean, this was an industry that had ties to gangsters going back to at least the '30s and '40s.

ANASTASIA TSIOULCAS, BYLINE: And the thing to know right now is that, in many of these gargantuan deals, we're talking about the rights to the composed music and the lyrics, not the recordings that artists make of that music.

VANEK SMITH: Musicians who have written their own material are selling off their songwriting copyrights to investors. They are all intensely aware that these days they're earning way less on Spotify and other streaming services than they did when fans bought CDs or vinyl. So, Anastasia, you went to a couple of the biggest players in the music business to find out - why did music become so attractive to investment firms and venture capitalists all of a sudden?

TSIOULCAS: That's right. One of them is Merck Mercuriadis. As a longtime figure in the music business, he's worked with what seems like everybody - Culture Club, Iron Maiden, Elton John, Guns N' Roses, Beyonce.

VANEK SMITH: And Merck's company Hipgnosis Songs now owns about $2.2 billion worth of assets.

TSIOULCAS: Merck likes to compare songs as an asset comparable to gold and oil, and that's music to investors' ears.

MERCK MERCURIADIS: You know, if there's political upheaval, then the price of gold and oil is affected. But songs are something that you're taking comfort and you're escaping with these great songs. So they're always being consumed.

TSIOULCAS: That's kind of a mix of old-fashioned entertainment business razzle dazzle with investment talk. But investors are clearly liking the returns they're seeing, according to Larry Miller. He's a professor and the director of the music business program at New York University.

LARRY MILLER: The value of music rights is at a historic high. If you were a songwriter who wrote a very important catalog and you perhaps were looking at selling that a decade or so ago in 2011 or '12, you might be able to obtain something between 12 to 15 times annual revenue for that catalog. Today, that same writer, they are able to get upwards of 25 to 30 or more times annual revenue.

VANEK SMITH: That is good money.

TSIOULCAS: And these companies are making their investments pay off by putting these classic songs right back into the public's ears. They license them out for use in advertisements, movies, video games, TV shows, on Peloton and earning some revenue via streaming services, too. So look forward to all these classic songs becoming even more omnipresent, thanks to Wall Street.

Anastasia Tsioulcas.

VANEK SMITH: Stacey Vanek Smith, NPR News.

(SOUNDBITE OF MOKHOV'S "GOLDEN WAVES") Transcript provided by NPR, Copyright NPR.

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